EVERETT — A developer stands to take ownership of city land next month to build a downtown hotel, but it could pay a hefty price if it fails to start construction by next fall under a deal set to close next month.
The hotel project at the corner of Colby Avenue and Wall Street has been plagued by delays, causing disappointment and frustration among some civic leaders.
The agreement, originally inked in 2008, has undergone nine amendments.
The latest turn is a real estate deal between Everett and Touchstone Corp. of Seattle, set to close Dec. 18. That would make for amendment No. 10.
If all goes as planned, the city would give Touchstone a half-acre parcel to build an eight-story Courtyard by Marriott hotel. The developer would give Everett $500,000, which it could eventually get back.
Touchstone would forfeit the money if it fails to begin construction by Oct. 31. The developer also must secure more than $5 million in equity financing for the project by the end of June.
The city would get the land back if timelines aren’t met.
The potential penalties led City Councilman Arlan Hatloe to lend his reluctant support to the agreement.
“It’s disappointing that it took so long to get developed, and I’m not all that convinced that it will,” he said.
Hatloe was one of six council members who voted unanimously on Nov. 14 to authorize Mayor Ray Stephanson to move ahead with the project.
That said, Hatloe and others in city leadership believe it’s a good idea to encourage the construction of a hotel to revitalize Everett’s downtown core.
Touchstone’s earlier predictions for groundbreaking have passed with no discernible progress. One was in the spring of 2011, another was last summer. The company has cited trouble obtaining financing as a reason for the delays.
The latest agreement would call for completion by October 2015.
The land in question is behind the Everett Police Department and is used as a city parking lot. Everett bought the former site of a car dealership for $250,000 in the early 1970s.
Earlier iterations of the deal had the developer paying Everett $1.6 million for the parcel, slightly more than the land’s appraised value.
Instead of money for the land, Everett now expects to get the right to use 48 spaces in the hotel’s parking garage. That number is based on an estimated market rate of $33,000 per space.
Touchstone has developed several projects throughout the metro Puget Sound area, including big-box retail stores, office buildings and a 150-room hotel in Kirkland.
For the Everett project, the developer’s architect has shown designs for a 156-room hotel, with most rooms having mountain or water views. Other features include a pool and street-level shops. An underground parking garage off Wall Street would have at least three levels.
The project is designed and permits are ready once everything else is in place, according to a City Council briefing earlier this month.
Noah Haglund: 425-339-3465; nhaglund@heraldnet.com.
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