Port eyes major purchase of downtown real estate

By Vicki Hillhouse, September 6, 2014, Walla Walla Union-Bulletin

A three-corner hub for auto sales and service could be redeveloped in a major but rare economic investment by the Port of Walla Walla at the heart of downtown.


Five parcels of property — three of which currently house Legacy Ford of Walla Walla — are the focus of a potential $1.8 million acquisition that would target Port investment in the core of the city and change the use of the majority of the property after decades as an automotive destination.


The Port has been offered an option to purchase the real estate holdings, which run from the corner of Rose and Colville streets up to Rose and Spokane streets, by the Brownell family who long operated Teague Motor Co.


The property has been on the market for several years with no movement from the private sector.


But the three Port commissioners who will decide whether to move forward on the option are split. Commissioner Peter Swant has said he will support exercising the option.


Commission President Ron Dunning plans to abstain from the vote. As the owner of an adjacent downtown property, the Whiteside Building on Main Street, Dunning said he has a conflict of interest. He also personally believes the Port could be seen as competing with the private sector.


“I definitely care what happens there,” he said. “And I’ve taken the stand that I think a private entity needs to do it. Not a public group.”


That leaves Commissioner Mike Fredrickson as the swing vote.


Sentiment during the last election about the Port’s real estate holdings make him hesitant to move forward, he said.


“It goes back to some of the same stuff I heard through the campaign: We own too much real estate; we do well in industrial (developments), should we really be competing downtown; that there is an active market downtown that may not need us,” Fredrickson said.


On the other hand, there may be an opportunity to use some of the property for additional downtown parking, a project that may have the most chance of seeing the light of day through the public sector. The project also represents an opportunity because it includes so much contiguous ground. Done correctly, it could represent an enormous economic victory for downtown and the community.


“The last thing Walla Walla needs though is those buildings to stay vacant for years and years and years,” Fredrickson said.


The Port is looking for as much feedback as possible before making a decision.


Port Executive Director Jim Kuntz has pitched the idea to a group of at least a dozen downtown business owners. The Downtown Walla Walla Foundation board voted 10-0, with two board members absent, to endorse exercising the purchase option.


The Walla Walla Valley Chamber of Commerce board will next consider supporting the option at a meeting Wednesday.


After that, Kuntz said the Port will make a presentation at its Sept. 23 Economic Development Advisory Commission meeting before Port commissioners ultimately vote on the option.


The option would tentatively begin Jan. 9. The first portion of the option would cost $25,000 and run Jan. 10-June 30, 2015. An extension of that for an additional $22,200 would run July 1-Feb. 4, 2016.


The option period would give the Port time to conduct environmental and feasibility studies. The property includes two underground storage tanks that have reportedly been pumped out and filled.


The existing lease for Legacy Ford runs through Jan. 31, 2016. Kuntz said one major part of the project would also include examining where Legacy would go.


He said with $4.2 million invested in Burbank in the last couple of years, and more than $3 million in the Port’s Dodd Road property, the timing could be right to spread the economic investment downtown.


But he emphasized the Port will not take on the work as a community donation. The agency would expect a reasonable return on investment.


Ideas batted around so far for redevelopment have included a Craftsman District in the property’s two existing buildings that could potentially house a microbrew or distillery cluster if the manufacturing would be allowed in the city.


Another idea includes a Marketplace District with what Kuntz has described as a “farmers market on steroids.”


The investment would be one of just a few downtown from the Port over the years. Past Port projects include the former Metropolitan Mortgage building across from the Marcus Whitman Hotel & Conference Center; facilitation of ownership changes for the former power building that has since led to development of the Gesa Power House Theatre; and the current parking lot at Second Avenue and Sumach Street.


The current assessed value of the Brownell family’s properties is $1.85 million. The fair market value is estimated by the family at $2.3 million.


The family is willing to sell it to the Port for $1.8 million. The incentive for the family at that price is multifaceted, according to Kuntz’s presentation: Not only would it allow an IRS-approved charitable tax deduction by selling it below fair market value to a government entity, it would better ensure a redevelopment plan with a public element that could also be named after the family.


“I give credit to (them),” Kuntz said. “They have kind of a vision here. They could have sold each parcel individually. But they see this as an opportunity to do something special for the Valley.”


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