Former Bally’s property could become new townhouse development

The Federal Way City Council could make a decision as early as Oct. 4.

The Federal Way City Council could vote as early as Oct. 4 to let developers turn the abandoned Bally Total Fitness building into a new market-rate townhouse development.

The property at 32818 1st Ave. S., known for years as Bally Total Fitness (or just Bally’s), closed in 2011. It has been vacant and deteriorating for at least seven years, and for sale for most of that time. (Google Street View images show graffiti speckling the exterior since August 2012, though it has recently been cleaned up.)

The townhouse project is appealing to city council members: It could, within a few years, revitalize a dilapidated property that a city planning report called “a visual blight on the community.” It would boost housing for middle-income residents. And the condominium arrangement means it could provide a pathway to homeownership once constructed, according to council members.

But local residents shared concerns during public comment periods over driveway access, parking on South 328th Street, traffic safety and congestion and crime. Some neighbors circulated a petition against the project, according to city notes from a public comment period in August. Other commenters praised the project for building more middle-income housing rather than low-income housing.

The former Bally Total Fitness property at 32818 1st Ave. S., Federal Way. Image courtesy of Google Maps

The former Bally Total Fitness property at 32818 1st Ave. S., Federal Way. Image courtesy of Google Maps

Next steps

The project requires rezoning the property from “office park” to “multi-family residential.” The council will have to amend the city’s comprehensive plan and zoning map, and adopt the development agreement for the project, for it to officially begin.

City council members first opened a public hearing on the matter Aug. 9, then concluded that hearing Sept. 20, when they also finished a first reading of the agreement to rezone the property. The agreement is now on for a second reading at the council’s Oct. 4 meeting, and if they like what they see, they could strike the deal with developers that same evening.

The homes would feature 2-4 bedroom units each with 2-car garages and private entries, according to developer Intracorp.

Condominiums combine the private ownership of a house with the living arrangement of an apartment complex. Buyers often find “condos” more affordable than standalone properties, and upwardly-mobile families frequently use townhouses as a “stepping stone” between renting and owning their dream home.

Developers, meanwhile, can choose to rent some units out and sell others. The deal will require Intracorp to set up each condominium so it can be sold to a homeowner, though it could choose to rent townhouses instead.

“The residential development market is unpredictable right now,” Intracorp development director Lis Soldano said at the most recent council meeting. “We’re building flexibility into this project to adapt to these market conditions. … We’re still committed … to building a condominium-quality, market-rate townhome community that we think Federal Way will be proud of.”

While they generally agreed Intracorp’s proposal was a good fit for the property, council members expressed some caution over the possibility that the project could fall through after the city had already rezoned the property.

The property is currently worth around $3 million, associate city planner Natalie Kamieniecki said during the Sept. 20 meeting. While it’s a rough estimate, the property could be worth $50 million or more after the townhouses are constructed, Kamieniecki said, adding that it will cost around $70 million to build the project.

The Bally’s building was constructed in the mid-1970s, according to city staff. Bally’s originally purchased the property in 1988 for $2.3 million and sold it to Fitness International LLC in 2011 for $3.5 million. The fitness center then became an L.A. Fitness, but closed in December 2011. Current property owner First Avenue South Apartments bought the the 6-acre property in 2015 for $1.5 million, according to King County Assessor’s Office records.

An initial analysis by the Public Works department found the development would generate less than 1% of the existing traffic on 1st Avenue S. Currently, South 328th Street handles about 150 vehicles an hour. The new development would add 63 vehicles per hour, based on the most recent estimate, or a roughly 30% increase, according to city staff at the most recent meeting.