City offered $5 million for church land

MOUNTLAKE TERRACE — To get land needed for its planned Town Center, the city of Mountlake Terrace late last year proposed paying $5 million to buy a city church in the heart of downtown.

But the Dec. 21 offer never went beyond an initial offer.

The city simply yanked the proposal when it became obvious the church wasn’t interested and that church officials were alarmed that the purchase and sale agreement they received from the city included the phrase “Under threat of Eminent Domain” in its heading.

The proposed real estate deal would have paid Calvary Fellowship of Seattle $5 million from an $8.5 million pool set aside for Town Center, a planned revamping of the city’s downtown core. The City Council approved the plan in early February.

Central to the plan is a multi-block area across from the city’s municipal campus. That so-called “super block” is bounded by 58th Avenue W. to the west, 231st Street SW to the north, 56th Avenue W. to the east and 234th Street SW to the south.

As part of the plan, two new streets, a public fountain, plaza and, possibly, a new City Hall would be created within that super block.

In addition to offering to pay $5 million, the city would have allowed the church use of the facility rent-free for a year and offered to pay closing costs.

In his Dec. 21 letter to the church’s attorney, city-contracted lawyer Kinnon Williams of Williams &Williams, PSC in Bothell wrote that the offer was “advantageous to the parties on several levels.”

The church would get “top dollar” for its property “while being able to stay on the premises for an extended period of time,” Williams wrote.

Additionally, he wrote, the deal could have provided the church “with investment funds to acquire, build and/or remodel its new facility during the interim without excessive disruption to its operation and “the city would be able to begin the planning process for its new City Hall and street grid while the church continues to use the premises.”

But the church, which moved to Mountlake Terrace from Seattle 11 years ago, balked at an offer it considered inadequate and was initially taken aback by what its leaders perceived as the threat of condemnation.

Since December, city and church officials have discussed the issue and the matter has been resolved satisfactorily, said City Manager John Caulfield. He said eminent domain — the city’s legal authority to take property for a specific public use — is no longer on the table and called the issue a “misunderstanding” between church and city officials.

“The city is no longer interested in buying that property from the church,” Caulfield said, emphasizing that the city never officially agreed to buy the property and the church never agreed to sell it. “I think there are some other folks that might be interested in buying the property and we don’t want to get in the way of that,” he said.

Caulfield said it was never the city’s intention to pursue condemnation of the church property.

“Any language relating to eminent domain would have been proposed based on the idea that any property owner might obtain tax benefits,” he said.

Under the law, anyone selling property to the government under threat of eminent domain has the right to not pay real estate excise taxes.

Calvary Fellowship of Seattle, located at 23302 56th Ave. W., owns land in the “super block,” designated within the Town Center Plan. Within that block, the church owns its main facility and is the landlord for a building that houses the U.S. Postal Service office and some adjoining businesses.

In 2002, Richard Davis, a super block landlord and owner of the now- closed Ritchie D’s American Grill next to the post office, bought the building that houses his restaurant from the church for $1.3 million. The Snohomish County Assessor’s Office assessed that parcel at $2,430,000 for 2007.

Under an arrangement that was part of his purchase, the church still has parking rights in the strip mall lot in front of his property, Caulfield said.

The Town Center Plan calls for a makeover of the downtown, transforming it from a hodgepodge of scattered buildings into a unified series of pedestrian-friendly streets and multi-story, mixed-use buildings.

Calvary’s Pastor, Wayne Taylor, said his church is open to offers from investors and developers but $5 million wasn’t enough.

Snohomish County assessed Calvary Fellowship’s property at $3,492,100 million for 2007, according to county records.

“We were pretty surprised that we got the purchase and sale agreement under threat of eminent domain and, not totally understanding what all that means, it probably caused more worry than was justified,” Taylor said. “We’re open to leave if it can be a win/win situation. I think all of it’s going to take time.”

Eminent domain —or condemnation — generally allows governments to take title to private property needed for specific public use, such as roads or buildings. But the law also requires that property owners be compensated for relinquishing that property.

Discussion of a new City Hall had been on the back burner during Town Center hearings last year. A January 2004 city-commissioned study recommended a new City Hall be built because of safety and usability concerns.

Just where that new City Hall would go has been the subject of some speculation by residents critical of the Town Center Plan.

Last fall, those critics collected signatures on a petition that, among other questions, asked more than 1,300 residents whether they favored a public vote on a new City Hall.

Caulfield said council members in a non-public executive session gave him authority to contact the church.

Keith Kemper, an attorney speaking on behalf of the church, said Calvary Fellowship is “busting at the seams” as it grows and will need to expand. He said the church’s property is likely to come up again as the city’s Town Center planning moves forward.

“I’m afraid they are going to resist the church’s efforts to grow,” Kemper said.

Taylor, the church’s pastor, said Calvary officials are looking for a possible future site but haven’t found one yet.

“We’re a church and I’m a pastor and we’re here to tell people about God’s love,” he said. “We feel whatever’s going to happen, it’s going to be a good outcome if we trust Him and we want the betterment of the community as well as really protecting the benefits of our own congregation.”