More from Tuesday’s Council meeting: the cost of ‘due diligence’ for Skippers

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Beyond the public comments mentioned in an earlier post,  the ramifications of the Edmonds City Council’s decision to  make a $1.1 million offer on the vacant Skippers restaurant property touched many aspects of the council agenda Tuesday night – from how to fund the purchase to the “due diligence” steps that should be taken before the purchase is finalized.

At the request of Council President Steve Bernheim, City Parks, Recreation and Cultural Services Director Brian McIntosh presented a summary of options the council could pursue if a decision were made to develop the .37-acre parcel into a park, as some council members have suggested.

According to McIntosh, the predominant state grant funding program for parks is the Washington Wildlife & Recreation  Program, which is administered by the state Recreation & Conservation Office.  This grant program generally requires the city to provide a 50-percent matching funds, which would come from the city’s Real Estate Excise Tax (REET) fund. The selection process takes about a year, he added, and if the grant is received, the property would be locked in for use as a park “in perpetuity,” he added: “It cannot be ‘bought out,’ resold or the park use changed in any way.”

The Skippers property would only be eligible for the “Local Parks” category of the grant program, which requires that a specific outdoor recreation park need and use be identified. Landscaped areas, community centers, concessionaire buildings, environmental learning centers, gyms, and covered pools or rinks do not qualify, although walkways and paths as part of a bigger park project would be included, McIntosh said. However, the city would have to convince the evalution team “that this property is contiguous with the existing waterfront parks and an expansion or continuation of them,” which could be a challenge given the separation created by the railroad tracks and Railroad Avenue/Main Street. ”

For a list of evaluation criteria and other grant program restrictions, you can read McIntosh’s presentation here (click on the April 27 council agenda and then on “Funding and Grant Options for Skippers Property”).

In terms of “due diligence” activities the council should follow prior to finalizing the Skippers purchase, Stephen Clifton, Community Services and Economic Development Director, made a report outlining five recommended tasks and the associated costs involved. These included:

– A Council directive authorizing the Mayor to execute a contract to appraise the property. The amount of the base appraisal contract is $4,000. A peer review would also be required to address potential grant requirements, at an additional cost of $1,500, Clifton said.

– Council authorization of a contract to perform a Phase 1 Environmental Site Assessment of the site, at a cost of $2,200, to evaluate the property for recognized environmental conditions. These conditions include “the presence or likely presence of any hazardous substances or petroleum products under conditions that indicate an existing or past release, or threat of a release of any hazardous substances or petroleum products into structures, soil, ground water, or surface water on the property. ”

– A feasibility study that may involve a public process to evaluate potential uses for subject property, and to better understand the costs associated with the development of the property for public or public/private uses. Due to the short purchase and sale agreement feasibility time frames, such a study will require the assistance of a consultant, at a cost of $25,000 to $50,000, Clifton said.

– A special counsel letter of engagement, recommended to assist the council as it considers financing options and costs, including 1) potential future restrictions on use or ability to resell if economic circumstances require and 2)what the public process and eventual council decision must include if the council wants to keep the option of development via a public/public or public/private partnership.  It’s estimated that this activity could add another $50,000 to $75,000 on to the costs of the feasibility study, making that total close to $100,000.

-City Council direction. “The Mayor, City staff and the City Attorney are requesting City Council give direction on a public process,” Clifton said. “If the majority of the council wants to pursue developing the land as a park, “the process will be relatively straight forward given the City’s current Comprehensive Plan provisions,” he said. “If there is a desire to keep the door open on some form of partnership to assist in funding development or create a mix of use on the site, the feasibility and bond counsel processes will be more complex.”

Whether the council will proceed with the idea of park development for the Skippers parcel is unclear. Council and community comment about that concept was mixed Tuesday night, with some thinking thinking it was a good idea and others questioning the wisdom of creating a park surrounded by several lanes of traffic and a railroad — especially when several nice waterfront park parcels are located nearby.

Several of the councilmembers who approved the property purchase offer two weeks ago came to their own defense during the meeting. “I’m here to say we are going to look at it,” said Councilmember Adrienne Fraley-Monillas. “It doesn’t mean we are going to purchase it.” Fraley-Monillas added that she resents “the spin that’s being used” regarding how the potential purchase may affect city staffing. “Nobody is saying we are going to cut the staff if we purchase the property,” she said.

Fraley-Monillas also responded to criticism that the council should have a plan for developing the property before purchasing it. “I think it’s up to the citizens of the city to make the decision,” she said.

As mentioned previously, the council will consider a counter offer to its $1.1 million proposal during executive session in council chambers at 9 a.m.Friday morning, with a public session immediately following to take action.

7 COMMENTS

  1. Ive said what I think the city should not buy that property I agree with Ron Wombolt has said whole hearty I sure wish he was still on the council. Ray Martin can sure come up with some stuff, we have all heard enough Ray, its nice that your involved but give me a break, the comments and accusations about people need to stop just

  2. Mike,
    Trust me during this period of our due diligence I also wish Ron was on the council.
    LOL
    We have an obligation to look at this property. I wish all of us believed in our obligations. If we didn’t look at the property the same group of “nay sayers” would be at the mike screaming “we let this property go to……………without us taking a look at it.” “We were not doing our job in representing the citizens of this city. We missed a chance. We ruined economic development chances for the city.” I can just hear them now.
    To start with; we were damned if we did and damned if we didn’t.
    What really is horrible are all those people screaming that if we buy this land we will have to furlough our staff, take away raises and raise medical from our hard working staff. They are using the staff issues to base their spin. I am confident no council member will do anything to jeopardize the coming contract negotiations.

    Adrienne Fraley-Monillas

  3. @Adreinne,
    As a “nay sayer” I can guarantee you that is not what I would be saying. Furthermore, if the Council buys this property, it will have an awful hard time asking the citizens to vote for a Levy to pay for basic needs such as salaries and keeping the lights on. And, you seem to forget the 8 million dollar short fall in the fire-fighter’s insurance fund.

    Instead of putting words in the “nay sayers” mouths, it is your obligations to listen to all of us; not just push us aside because we are not on the same page as you. Of course, you are the one who tried to have me censored off a list serv because I lost a run at the council.

  4. I sat through an Edmonds School district Budget meeting yesterday and they plan a special levy in August. That will not be helpful to the city of Edmonds trying to run a levy of their own.
    This might all become moot if the counter offer is substantially above the 1.1 million offered by the city.
    Some things not brought up in the comments from the meetings are other costs. Besides the $100,000 for studies there are cost to demo the building and make a park or build something else like a visitors center. This could drive cost up by $500,000. If it is made into a park it is off the tax records so we lose more money. Lets not purchase the site and work on the present important issues.

  5. Ms. Fraley-Monillas;
    While I understand that the Council position is fraught with stresses and difficult decisions, it does not justify labeling anyone who opposes you as a “naysayer”. Take a look at credentials, if you wish. Naysayers are not knee deep in school fundraising events, community building projects and meetings, economic development meetings, and other groups and causes that serve to move our City forward.
    My opposition to this purchase has nothing to do with personalities. I don’t care about elections, I don’t care about who said what about whom. I care about the future of this City.
    1. You have no plan
    2. You have no money
    3. You have no plan on where you’re going to get the money
    4. You have no plan for what you’ll do if you get the money

    What you’re seeing is not public opposition to the Council. What you’re seeing is public outrage at the spending of large amounts of money without due diligence or public input prior to the obligation of funds. As I recall, at the 4/20 Council meeting, one Council member demonstrated almost complete ignorance of the details of what money had been obligated, and under what terms, despite having cast a vote for it only four days prior. This does not inspire confidence in the public.

    I am part of the public. I understand that the Council has a lot on its plate. I propose that you follow the threads of vision laid out in your first few sessions, and work more closely with the Economic Development Commission, vice trying to shoot from the hip with large investments.

    Finally, you owe it to the public to be clear about financial matters, such as the state of the budget. When you imply that taking millions from the City coffers, and removing real estate from the tax rolls, will somehow NOT affect the rest of the City budget, you are suggesting that either the public is very gullible, or that you do not understand how City finances work.

    The Finance Committee is having an emergency meeting on Monday, 5/3, at 1pm, in City Hall, 3rd floor, Fourtner Room, to discuss levy options. Not to discuss whether to have a levy, but rather, how to structure it. Asking for additional funds from the citizens in a deep recession, while also tacking on another million or two in unplanned expenditures, is hardly a recipe for inspiring confidence.

  6. The council met this AM and voted 4 to 1 to counter the bank’s counter offer to the city’s $1.1M offer. The bank had countered because they wanted to shorten up the city’s due dilligence period-as I understand it, nothing to do with price.

    I believe that the city’s latest offer has the $1.1M contigent upon the city receiving an appraisal that supports that price. If that’s the case, then the city has unwittingly made an offer that the bank will not accept. Allegedly the bank has an other offer just below the $1.1M. If that’s the case, then they will take that offer because they know that the city will not get an appraisal that supports a price of $1.1M.

    What this all comes down to is that we no longer have a city council that represents the vast majority of Edmonds citizens, since they have chosen to totally discount the overwhelming oppostion to the city purchasing this property.

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