Canadian developer United Properties has one last chance to pull financing for the downtown Symphony development.
During a special meeting March 23, the city council voted 6-to-1 to give United Properties a six-month extension on its contract to purchase and develop the land formerly occupied by the AMC Theatre. Council member Jim Ferrell issued the dissenting vote.
The extension is the fifth given to the developer since the city council awarded United Properties the contract, in a 4-to-3 vote in July 2007, to build the mixed-use high rise project on the 4.1-acre land at 31600 20th Ave. S. Although the council approved the extension, it voted unanimously to refuse any more extensions if United Properties is not able to launch Symphony before Sept. 30.
“Is it clear in your mind there’s no coming back to the well?” city council member Jack Dovey asked United Properties president Victor Setton.
Last chance
Setton told the council he knows this is his company’s last chance to hold on to the contract.
“The Symphony project has been, to me, almost like a daughter and a son,” Setton said.
Setton promised he has a potential investor interested in Symphony. He did not say who that investor is. Setton admitted to the council there is no guarantee the person, or company, will commit to the project, but he feels it’s a strong possibility.
“I believe there is an opportunity to make this project a reality,” he said.
Deputy mayor Dini Duclos told Setton, prior to the vote to extend the contract, that she hoped for more details about the potential investor.
“I’m looking for a little bit of assurance that something is going to happen,” Duclos said.
Council member Jim Ferrell said Wednesday that Setton was hesitant to give out details about his potential financial backer during the public meeting because an agreement has not been finalized. Setton revealed, in a more private setting, that the potential investor has shown interest in building in Federal Way in the past, Ferrell said.
A lot at stake
The six-month extension was granted given the economic environment and what the council stands to lose if it starts anew with a fresh developer. Duclos said that it has been challenging for developers across the nation to find financing lately. Duclos, who is also CEO of Federal Way’s Multi-Service Center, said her company had difficulties finding the money necessary for its new capital project.
“Nobody could do anything the last couple of years,” she said.
Considering all options
United Properties’ co-developer, South Korea’s Lander Korus, attended the meeting, but did not partake in discussions. United Properties and Lander Korus joined forces late last year when Lander Korus representatives approached Setton with news of potential Symphony investors residing in South Korea. The developers have not worked together before, but agreed to do so in an attempt to finance the project. Lander Korus’ foreign investors visited Federal Way in January to learn more about Symphony, but have since fallen through on their promise to Lander Korus to invest in the property.
Representative Kyoung-Soo Seo told the council March 16 that Lander Korus needed more time to finalize agreements with two new overseas investors. He was unable to present documentation of the investors’ interest in Symphony. The council voted at that meeting to hold Tuesday’s special meeting in an attempt to give Lander Korus an opportunity to secure the documentation. However, nothing was presented to the city council during the special meeting. Instead, United Properties introduced its newest financing candidate.
“To me, the economic reality is we have to look at all the alternatives to make this project work,” Setton said.
If the council had chosen not to issue an extension to United Properties, it would have likely solicited proposals from other developers. This process was undertaken in 2007 when the council decided to develop the property. In today’s economy, the city would probably receive fewer responses to such a request, economic development director Patrick Doherty said.
Mayor Linda Kochmar added the property value of the land has presumably decreased, and the city stands to lose money on its investment if it starts the purchase and sale negotiations over. The city bought the property for $4.1 million. United Properties agreed to purchase it for $6.156 million. The project was initially slated to break ground June 2008.
