Lynnwood hotel deal on school district land rescinded

Published 9:00 pm Tuesday, August 15, 2006

LYNNWOOD – The Edmonds School District is again looking for a buyer of prime land near the Lynnwood Convention Center after a developer planning a hotel and condominiums opted out of the deal.

The district had planned to use the $6.4 million from the sale of the nearly four-acre site for building projects. Now the land is back on the market.

“We’ve decided it’s in the district’s best interest to remarket the property,” said Marla Miller, assistant Edmonds school superintendent. “We will go back to the market and do the best we can. We think we are in a good position to have a good development on that site and we look forward to getting there.”

The developer, Inland Group of Spokane, backed out because of recent decisions by its hotel partner, KVC Development of Spokane, and the Lynnwood Public Facilities District, which owns the convention center, according to Inland Group spokesman Chuck Daiger.

KVC is one of at least two hotel operators who recently approached the facilities district and asked for a long-term lease to build and operate a hotel on public land next to the convention center. The other is 360 Hotel Group, formerly Northgate Hotels.

As a result, the facilities district asked for developers to submit proposals for the public site, due on Friday. Members of the district’s board could decide on a proposal as early as Aug. 25 and start negotiations.

“There are too many unknowns,” Daiger said of the failed deal with the school district. “It is disappointing. You spend the time and the effort and it didn’t happen.”

KVC officials did not return calls for comment.

Daiger said one advantage to placing a hotel on the facilities district property is that those using the center won’t have to cross busy 196th Street SW.

“We do not have a preference on where (the hotel) goes,” said Grant Dull, executive director of Lynnwood Public Facilities District. “We issued the request for proposals because we got two unsolicited proposals and did not think it was fair after talking to a number of hotel developers about the environment in Lynnwood just to talk to those two. Unfortunately, the timing of the request for proposals and the school district’s deadline did not meet up very well. But, that is real estate, I guess.”

The school district’s sale has been pending since September 2005 because Inland Group and the school district mutually agreed to wait until the Lynnwood City Council adopted the City Center zoning, which occurred in July.

With the zoning, a developer can build a project with commercial and residential uses on the school district property, according to city officials. The buildings can be up to 350 feet tall and can cover the entire lot.

Under the previous zoning, the school district land could not be used for residential development and buildings could only cover 35 percent of the lot.

Inland Group and the school district extended the deadline to close the deal several times – the most recent deadline was Thursday. The school district did not want to extend the deadline again, Miller said.

“We are disappointed that the deal with Inland is not going to go forward,” Miller said. “We have enjoyed working with them. We were optimistic about the project.”

Daiger shared a similar sentiment: “We worked really well with the school district. We had a good relationship with them.”

Inland Group might try again if it can find another configuration of buildings or uses that could work, Daiger said.

“We shared our thoughts with the school district and told them to keep us appraised of when they go back out (to the market). We obviously know the property pretty well,” Daiger said. “We have to sit back and figure out what that would be … We’re back to square one.”

Jenny Lynn Zappala is editor of the Lynnwood-Mountlake Terrace Enterprise.