A $350 million high-rise project in Federal Way is moving ahead.

The city council voted 6-1 Tuesday to assign a purchase and sale agreement for the former AMC Theatre site to local development group Twin Development.

Twin Development is relying on foreign investors to provide the money necessary to purchase the land and launch its project. Three investors have tentatively agreed to contribute to the land purchase, Twin Development partner Steve Smith said. Their contributions depend on Twin Development’s ability to successfully take over the purchase and sale agreement.

The agreement was previously held with Canadian developer United Properties, which requested last month the contract be assigned to Twin Development. This ensures the city receives the original purchase price of $6.156 million for the 4.1-acre site at 31600 20th Ave. S.

The new developer now has until Sept. 30 to close on the property.

Foreign financing

The cost to construct the unnamed project is about $350 million. The site is expected to hold a 1.2-acre park as well as retail, office and residential space in three high-rise towers: Two at 45 stories and a third at 35 stories. Construction is due to be completed in 2013 or 2014.

At an open house preceding the city council meeting, resident Tracy Lone said she approves of Twin Development’s concept. Lone wishes to see expanded business in Federal Way and believes the developer’s project could bring that. Resident Peg Altman agreed.

“I’ve been waiting forever for a vibrant downtown,” she said.

Other audience members disapproved of Twin Development building towers in Federal Way. They worried about the tower heights, traffic impacts and Twin Development’s ability to fill the retail space it builds.

Approximately half the financing for the project is expected to come from investors abroad, primarily in China and Korea, Smith said. Those investment dollars will serve as equity to secure the remaining financing from a bank, he said. The EB-5 foreign investment program is essential to attracting investors in the project. The federal government has granted Twin Development access to the program. Foreign investors that pump $1 million into the project will be granted a legal two-year permanent residency status. Smith expects several investors will pre-purchase a condominium and live in the finished towers.

Moving forward

Smith and his partners, Luke Hwang and Pom Kwak, have experience building. They specifically created Twin Development LLC to take on the Federal Way project. None of them have completed a project as large as that being proposed downtown. Smith has developed a 16-story building in the Puget Sound. The partners have individually worked on projects in Asia.

City council member Jim Ferrell issued the dissenting vote on the reassignment. In 2007, he opposed awarding United Properties its contract.

“With all do respect, I think this is the wrong direction,” Ferrell said.

City council member Jack Dovey is concerned about Twin Development’s ability to attract several investors in the project within a three-month time frame.

“Everybody has good intentions, but I don’t know how much cash is flowing in from the East — Korea and China — to make this happen,” Dovey said.

Smith assured the council he and his partners have the capability of securing foreign investments.

The council, from now until early September, will examine Twin Development and its partners’ records. City staff will rework the purchase and sale agreement to reflect the new buyer. A final version of that contract will be presented to the city council on Sept. 7. If it is approved by the council, Twin Development will then need to close on the property by the end of that month.

“I just pray we’re making the right decision tonight,” city council member Roger Freeman said Tuesday.

Background

United Properties entered into the agreement with the City of Federal Way to purchase and develop the site as a mixed-use project in 2007. United Properties was originally scheduled to purchase the land by Sept. 11, 2008. But it struggled to find the money to finance its Symphony project. The developer received five extensions, with the latest due to expire at the end of September, on the purchase and sale contract.

Twin Development approached United Properties requesting to take over the contract. United Properties agreed, hoping Twin Development will be more successful in making the project a reality.