South Sound News

Surge Tacoma selected for Old City Hall redevelopment negotiations

TACOMA, Wash. — Third time was the charm.

Tacoma’s third request for proposals to bring new life to Old City Hall yielded five bids by the end of July.

On Tuesday, the city made a decision.

Surge Tacoma, led by co-founder Eli Moreno, was selected to enter negotiations with the city to reimagine the 125-year-old building at 625 Commerce St. as a self-contained location for living, working, shopping and dining. The proposal promises more than 300 jobs.

“Surge Tacoma submitted a compelling proposal to reactivate the historic Old City Hall by infusing the building with uses that will appeal to our entire community — residents, entrepreneurs and visitors,” Mayor Victoria Woodards said in a statement released Tuesday.

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“The redevelopment proposal aligns with the building’s storied history as a welcoming public place. It has the potential to be an economic catalyst while providing affordable housing that helps ensure those who work in Tacoma can continue to live here as well.”

Moreno said he was happy to move forward with the city.

“We’re delighted that the Surge Tacoma Old City Hall proposal has been accepted by the city of Tacoma,” he said. “We look forward to preserving this historic landmark so that it be enjoyed in new ways by the community for years to come.

“We’re very excited, and can’t wait to get started.”

The city and Surge Tacoma will start negotiating a development agreement and a purchase and sales agreement, anticipated to be reached as early as January.

Surge Tacoma's mixed-use project includes:

▪ A restaurant in the basement and bar on Pacific Avenue.

▪ Nearly 20,000 square feet of retail space on the first and second floors.

▪ More than 20,000 square feet of office and co-working space for a tech center on the third and fourth floors,

▪ Forty “micro” apartments on the fifth floor (10 to 20 units renting at market rate and described as 20 to 30 “affordable” units.)

▪ Two rooftop restaurants.

▪ Event space in the clock tower.

The development team consists of Harlow & Falk LLP, NBS Financial, Pacific Engineering, Easyway Contractors, CBRE and Artifacts Consulting Inc.

The plan, submitted in July, proposed paying $2 million in cash for the building and providing $2 million in “public benefits.”

The benefits would include free use by the public of a conference room, free community access to the clock tower with tours during specific hours and rent-free space for the Tacoma Historical Society to use as a public exhibit and work area.

As for parking, the plan stated that “relationships will be built” with nearby parking lot owners for designated parking, along with encouraging use of public transportation, biking or walking.

“Young people are selecting urban settings to live and work that offer unique experiences — very different from the generic suburbs in which many of them were raised,” the proposal stated. “Cities that understand this dynamic have thrived.”

Developers in this round were not required to offer a $4 million minimum bid for the building, which the city paid for the site in 2015. Rather, they could offer “creative deal structures” that included public value, such as free community access to some of the interior space.

Each was delivered with $10,000 bid bond checks.


THE OTHER PROPOSALS
Here are highlights of the other plans with links online to the proposals and other examples of their work, obtained through a records request.

Proposed by: Gerald Allan Hennessey, CEO of Bentley Kensington

Idea: Micro retail (Marketplace at Old City Hall), 46 loft apartments (Renaissance at Old City Hall), Tacoma History Museum, Jack's Bar & Grill (named after Tacoma's Jack the Bear) and an emphasis on getting the building's clock and bell tower ringing again.

The developer anticipated the project would provide 61 new full-time equivalent jobs in retail, residence and at the museum. It noted the marketplace would benefit guests of the nearby McMenamins Elks Lodge.

One of its primary pitches was to provide display space for a Tacoma History Museum.

Financing: The developers offered two options:

▪ Buy the building for $4 million with a down payment of $400,000 and the city financing the deal over 360 monthly payments. Absher Construction estimated renovating and improving the building would cost about $10 million. The money would have been raised from crowdfunding through investors and institutions.

▪ Pay the city $2 million for the property and raise the money needed to cover the puchase and construction costs.

Parking: Use existing paid parking spaces and lots for retail customers. Residents could contract with private parking structures or potentially negotiate permit fees with the city for overnight street parking.

Commencement Bay Development (Tacoma) and Heritage Group Land Company, (Seattle)

Proposed by: Eric Cederstrand, president of Commencement Bay Development

Idea: Office space, food/beverage and retail in "a vibrant and modernized hub offering creative office and technology space" and providing an anticipated 200 full-time equivalent jobs.

Photos submitted showed open office spaces, a conference area with swings for chairs, collaborative work spaces and an open floor plan for retail with what looks like a coffee shop, clothing kiosks and a cafe and bakery.

“Our proposed project will secure the long term economic vitality of one of the Pacific Northwest’s most important and iconic landmarks,” according to the plan.

Financing: The developers would have financed an estimated $17 million investment with 50 percent equity and 50 percent debt. The city would have been paid by being credited with a $2 million equity stake.

Parking: The developers would work with the city or local partners to create 120 parking spaces that would be either owned or leased.

Proposed by: Donald M. Golden, CEO of Greenspring

Idea: About 20 studio live/work units renting at $1,000 a month with preference given to "painters, sculptors, mixed media and electronic media, musicians, writers, performing artists."

There would be a ground floor art gallery and studio space for sculpture, large canvasses, performance art and music rehearsals, along with space offered to the Tacoma School District’s School for the Arts.

Also mentioned are a small food market, winery, wine bar, coffee shop and Pho and Asian street food. Second floor: research; third floor: artist housing; fourth floor: artist housing; penthouse/greenhouse: rooftop yoga, cycling, cross-training and a wellness studio possibly shared with the McMenamins Elks Lodge.

The penthouse/greenhouse space would be rented out for weekend evening functions.

Financing: The developer would have paid $4 million for the building and would have covered restoration costs "solely using equity sources." Short-term debt might be needed to cover construction costs.

Parking: The proposal said there was adequate parking within 500 feet of the building, which would provide some bicycle storage and parking, along with one parking space for a car-sharing service, one for an electric car charging station.

Proposed by: Grant McCargo, CEO of Urban Villages

Idea: Support entrepreneurs and relocating businesses with "business incubator space, makers space for technical training, subsidized shared workspace," along with long-term space for the city's economic development offices.

There also would be a rooftop restaurant, bar and event venue. The clock tower and rooftop would be publicly accessible through the bar and event space. A bike room would be equipped with “appropriate amenities” and possibly open to the public, neighboring residents and employees.

Upper floors offered “coliving” space – about 110 apartments leased short term for people needing part-time or temporary housing downtown. The units would be fully furnished with housekeeping and other basic services provided.

Living suites would have four to six private bedrooms and bathrooms and share space with a gathering room and kitchen.

Financing: Urban Villages proposed a 99-year lease with rent based on the building/land being valued at $2 million. It would have leased back two floors to the city and the city's economic development department would have converted the floors into a "workforce learning environment combined with incubator retail businesses."

In addition, the city would have agreed to book 52 events a year in the event space.

To cover its costs, Urban Villages initially would have provided equity through investor partnerships and then secured construction loans.

Parking: Contact owners of neighboring parking lots and structures to acquire parking either permanently or through a long-term lease. "Given the location ... we believe the need for parking will be minimal," the plan said.