Federal Way City Council approves sale of property for hotel

Federal Way City Council approves sale of property for hotel

A hotel is coming to downtown Federal Way.

The Federal Way City Council unanimously voted Wednesday night to approve the purchase and sale agreement between the city and Ottone-Salinas, Inc. The city-owned 1.86 acre property, which shares Performing Arts and Event Center and Town Center 3 land, will sell for $27 a square foot, or approximately $2.18 million.

Ottone-Salinas, Inc., is a third-generation family-owned real estate investment company in California that will work with Cadius Partners Limited, the company that responded to the city’s request for proposals in spring 2016 to build the hotel. Cadius Partners will be responsible for the design and construction of the project.

“To me, this is a really big deal for the city,” Councilman Bob Celski said. “The sale of this property is really the beginning of fulfilling the vision that we established for the town center quite some time ago.”

As part of the deal, Ottone-Salinas will be responsible for paying $8,080 for city’s staff overtime. The company is also charged with paying the city $25,000 per week for any delay in construction, which is to begin no later than June 1, 2018, as well as $25,000 a week for delay of the hotel’s opening, which is slated for Dec. 1, 2019. If the buyer opts to not pay the fines, then the city has the choice to purchase the property back at the same sale price.

Prior to closing, the developer must design the hotel in a way that “harmonizes with the Performing Arts and Event Center.”

The hotel brand must be mid-to-upper-scale or higher tier, such as a Hilton Garden Inn, Hilton Double Tree, Hyatt Place or Hyatt House. The city also requires that the hotel must include a restaurant with a lounge, meeting rooms and a fitness center, in addition to ensuring it is pedestrian friendly.

Councilwoman Susan Honda questioned the scale of the hotel, as many who had the initial visions for the hotel expected it to be a boutique, upscale hotel, she said.

A hotel study, however, determined the market could not support that type of establishment, Mayor Jim Ferrell said.

Because the city utilized a Community Development Block Grant Section 108 loan, it is required that 51 percent of the jobs created are paid wages equal to 80 percent of the area-median income.

City Attorney Ryan Call said construction of the hotel is confined to 7:30 a.m. to 5:30 p.m. Monday through Friday so as to not interfere with performances at the PAEC.

Money the city receives from the sale will be split. Approximately $334,880 will go toward paying off the PAEC, while $1.8 million will go toward the 7.84-acre Town Center 3 property, which the city purchased in the fall of 2014 for $8.2 million.

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