Riverfront developer unfazed by downturn in economy

EVERETT — When it opens, Everett Riverfront will be one of the largest commercial developments in the city’s history with a mix of shops and condos, a hotel, and a movie theater along the Snohomish River.

That opening is expected to move a step closer to reality today when city officials sign an $8 million agreement to sell 139 acres between the river and I-5 to a San Diego company.

“This is probably one of the most significant initiatives that the city has undertaken through four administrations,” Everett Mayor Ray Stephanson said Tuesday.

The deal will pave the way for the company — OliverMcMillan — to start work on the land, which is a former city dump and sawmill. The company expects a formal groundbreaking ceremony next year with most of the commercial buildings opening in 2011.

Despite the nation’s housing slump, mortgage mess and weakening economy, OliverMcMillan President Paul Buss said his company is bullish on Everett.

That position stands in contrast to the Port of Everett’s $400 million Port Gardner Wharf project, which is on hold right now because the developer, Maritime Trust of Chicago, couldn’t get a loan to start the first phase of condos.

Buss said his company plays the long game and has weathered economic ups and downs in its 30-year history. He said retailers are still very interested in the property and they expect the economy to recover by 2011.

The Everett City Council is expected take up the sales and development agreement with OliverMcMillan at its meeting this morning. Stephanson is then expected to sign it.

The planned deal is the culmination of more than 15 years of work, including extensive environmental cleanup, engineering studies, legal wrangling and public workshops. It also required getting Burlington Northern Santa Fe Railway to agree to move tracks.

OliverMcMillan expects to build more than 700,000 square feet of retail space and eventually about 1,000 homes and condos.

More than a simple land sale with OliverMcMillan, the deal hammered out over three years of negotiations includes a series of obligations and benchmarks for both the city and the developer.

The construction of a methane gas collection system above the former landfill is one of the developer’s key commitments. While the dump closed in 1974 and methane levels are past their peak, rotting refuse still produces a potentially explosive mix of methane and carbon dioxide.

Another is to develop the outdoor mall to a silver level under the U.S. Green Building Council’s Leadership in Energy and Environmental Design program.

“We’ve put a lot of work getting to this point and we’ve got a lot of work ahead of us,” Buss said.

The challenge of developing on a former landfill, which also includes highly compressible soil, is expected to add $50 million of construction costs, Buss said.

Even after groundwork is done, which includes hauling in mountains of topsoil, the landfill portion of the project is still expected to sink up to two feet over time.

That will require buildings to be constructed on concrete piles, drilled into solid ground 60 to 70 feet beneath the soil. Sidewalks will also have to be constructed in a way that compensates for settling.

For its part, the city has agreed to build a three-acre park, more than two miles of trails, streets and a system to collect water from the former landfill site. It will also take charge of about $22 million of groundwork that has to be done before construction can begin.

If OliverMcMillan doesn’t meet its obligations, Everett could purchase the land back, said Craig Schrontz, an attorney with Seattle law firm Perkins Coie, which represented Everett in negotiations.

“Neither party approached this as a zero-sum discussion,” Schrontz said. “Obviously both sides came up with protections as we worked through the process. It took a lot of effort and a lot of cooperation, but I think both sides are really going to get a fair deal.”

The city will also enhance wetlands and salmon habitat as part of an agreement reached in 2003 and 2004 with the Tulalip Tribes, the Pilchuck Audubon Society and Public Employees for Environmental Responsibility.

OliverMcMillan also has similar large mixed-use projects planned in Ontario, Calif.; Lindhurst, Ill; and Houston.

In 2004, it opened Glen Town Center, a mixed-use retail development on the former Glenview Naval Air Station, 20 minutes north of downtown Chicago.

At Everett Riverfront, the city’s total bill for preparing the land for development could reach close to $100 million, including environmental cleanup and the construction of roads and parks. Officials say it will pay for itself through taxes and in less tangible ways, such as community perception, which affects Everett’s ability to attract new companies and good jobs.

A feasibility study conducted by Berk &Associates of Seattle last year predicts sales and business taxes at Everett Riverfront could recover up to $45 million in five to 30 years.

City officials have long sought to transform the languishing industrial site, made infamous by two separate fires that engulfed 2 million tires in 1983 and 1984. Stephanson first became involved on the project 15 years ago when he was an official in former Mayor Ed Hansen’s administration. He later worked on it as a councilman and finally as mayor.

“For a lot of us, we view this as a day that we wondered if it would ever come,” Stephanson said.

Herald writer David Chircop: 425-339-3429 or dchircop@heraldnet.com.

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