Where is downtown going?

By ERICA HALL

Staff writer

City officials know they want to boost development in the downtown core of Federal Way. They’re just not sure how much risk they’re willing to take to get it there.

At their January retreat, City Council members tossed around the idea of entering into public-private partnerships or buying land to sell to potential developers.

In line with that, they discussed funding options to pay for the city’s portion of a public-private partnership or land purchase, including bonding excess revenue from the .5 percent utility tax dedicated to public safety facilities, selling, trading or renting the existing city hall building, or seeking a loan from King County.

While council members seemed interested in the ideas, several said they wanted to weigh the risks and see what the rate of return might be for some of the options before them.

Councilwoman Jeanne Burbidge added she’d like some analysis because other cities are already using some of the ideas to boost their city centers.

Councilman Jim Ferrell seemed hesitant to commit to anything that might be a risk for the city.

“The first thing we have to do is look at our budget this year,” he said. “Before we make any other capital investments, we need to figure out what our budget will be. We need to proceed carefully.

“I believe in the forces of letting the market decide. The role of government is to provide a platform for private industry to grow and flourish. The best way to achieve that is what we’re discussing.”

City officials could always choose to do nothing and let developers come to Federal Way when the market is ready. But Patrick Doherty, the city’s deputy director of community development for economic development, said it might be unwise to leave development to the whims of the market.

Take downtown Seattle as an example. Businesses there were responding badly to the recession that hit the region in the early 1990s, and major department stores like I. Magnin’s and Frederick and Nelson’s closed, leaving vacant store fronts and empty sidewalks. The retail hub of Sixth Avenue and Pine Street was dead, Doherty said.

In 1995, then-mayor Norm Rice got federal Housing and Urban Development (HUD) money to address urban blight and entered into a public-private partnership to build a new shopping center on Pine and Sixth. Under the agreement, a private developer would build the center and the city would build a $73 million, underground, 1,200-stall parking garage.

At the time, use of the money created a small scandal. Seattle was proposing a downtown revitalization project that involved Nordstrom moving its flagship store into the vacant Frederick and Nelson’s building at Pine and Sixth with a new skybridge connecting it to the as-yet-unbuilt shopping center with underground parking beneath.

There was some citizen outcry over the cost of the garage — the city paid $73 million when it only cost $50 million — as well as the use of public HUD funds and city money when, critics said, those funds could have been used for city and human services needs.

Despite the criticism and the cost, Seattle officials expected the project would provide $95 million in tax revenue over 30 years. The city still owns the garage and collects the revenue from parking fees.

In addition, the area did realize some revitalization, with an increase in pedestrian traffic — related also to the closure of Pine Street to auto traffic — and a number of shops opening in the area.

“Maybe today it would be okay, or maybe it would have been the beginning of the end,” Doherty said, referring to the economic situation before Seattle’s Pacific Place venture. “The market is not a perfect system. If no other community had development incentives, maybe the market would be more fair. But the market is already being manipulated.”

Federal Way officials’ decisions on what to do in their city center are guided by the comprehensive plan, formally drafted in 1995. Officials check periodically to make sure the written vision for the city center evolves with the city.

Doherty said two recent occurrences have shown city officials that residents and businesses are still interested in a vibrant, mixed-use city center:

• During a process in 2002 of choosing themes for marketing Federal Way, a Seattle design firm called Leonard Fitch conducted community surveys to gauge how people related to Federal Way and what they wanted the city to be known for. Respondents consistently wanted the city center to become more developed and urban.

“That was a real interesting touching of bases,” Doherty said. “Out of everyone’s opinion of Federal Way’s weaknesses or potentials, all mentioned downtown.”

• The second gauge was last year’s major, seven-year update to the comprehensive plan, which offered residents and business owners a chance to voice their opinions or suggest changes to the whole city plan, including the city center.

Doherty said city officials didn’t hear anything about the city center, though they did hear requests for changes, updates and specifications within the plan related to other areas of the city. That makes city officials think there is still support for the vision of a bustling, pedestrian-friendly city center. That also leads council members and community development officials to look to progressive, new ways of drawing developers.

The reputation for having a dull downtown spreads, Doherty said, shaping the decisions of developers, entrepreneurs, businesses and prospective homebuyers. If businesses don’t locate and grow in Federal Way, and residents go somewhere else to shop, that hurts the city’s tax revenue, which funds police, parks, Municipal Court and other city programs and services.

“You get a bad reputation,” Doherty said. “(Downtown) is the heart of the city, whether people feel it or not.”

City officials believe part of the solution is bringing development downtown and creating guidelines to make sure it’s the right kind of development.

“Our city center is a finite place, and every piece of property that doesn’t comport with the development plan is locked up for five or 10 years,” Doherty said. “There will always be something here. The question is (whether it’s) what we want.”

City officials agree they want growth focused on downtown. They just have to decide the best methods for getting there.

Councilman Eric Faison said the city will be limited if it’s not in a position to provide a number of options to future developers, including paying for a parking garage or right-of-way improvements, or owning the land to sell to developers with specific projects.

“The deals are made by people cutting the deals,” he said. “The city can’t develop downtown because the city doesn’t have the ability to deal. That’s the problem. I’m willing to vote for anything proactive.”

Staff writer Erica Hall: 925-5565, ehall@fedwaymirror.com

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