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Bellingham council agrees to sell Cornwall Avenue parking lot at loss

BELLINGHAM - On a 6-1 vote, the Bellingham City Council approved the sale of a city-owned parking lot at 1100 Cornwall Ave. for a price that is more than 30 percent less than the city paid for it in 2008.

Council member Barry Buchanan cast the "no" vote at the Monday, Dec. 5, meeting, saying he preferred to postpone a decision until Kelli Linville takes over as mayor in January 2012.

According to calculations by Jim Long, executive director of the Bellingham Public Development Authority, the city will eventually make up the difference, and then some, between the $1.18 million sale price and the $1.53 million the city paid for the 0.7-acre site in 2008. In the decades ahead, Long calculates the city will collect additional millions in taxes and fees if the vacant 0.7-acre lot goes back on tax rolls and is developed as the buyer proposes.

Catholic Community Services, owner of the adjoining Kateri Court affordable-housing development and Washington Grocery buildings to the east, is prepared to buy the property and combine it with an 0.2-acre adjacent parcel that the agency already owns. That will create almost an acre for redevelopment into housing and parking in a first phase, with an eventual second phase that could include office and retail space and additional parking.

The council's approval of the proposed sale gives Catholic Community Services six months to study the deal and the development proposal before the sale becomes final. That means the agency could still back out if a more detailed analysis indicates the deal and the development are not workable for them.

Council member Gene Knutson noted that during his first years on the council in the 1990s, the city sold the long-idle Washington Grocery Building to Catholic Community Services at a substantial loss, but since then the agency's redevelopment of that property as shops and offices has helped revitalize that area on the southern edge of downtown.

Long asked the council to agree to return the sale proceeds to the development authority, which would use it to develop parking at more centrally-located sites that could serve downtown, Old Town and a redeveloping waterfront, Long said.

The city-owned Army Street right-of-way, off West Holly Street in Old Town, is one such site. Long would like to launch a major redevelopment there, in partnership with the owners of adjoining properties.

But council members were not yet ready to decide what to do with the money, assuming that the deal is completed.

Council member Terry Bornemann expressed concerns about the impact of the sale on the city's long-running effort to provide more parking for downtown.

Bornemann said the 2008 purchase used money from the city's parking fund, because the lot was supposed to become the site of a new city parking garage. The additional millions necessary to make that happen have not been available.

The existing lot does provide 62 spaces today, and Bornemann said he worried that the redevelopment plan now envisioned will leave the city with less parking, not more.

And if the development authority uses the sale proceeds on a planning effort for the Army Street property that comes to naught, the city would have zero additional parking to show for its investment, Bornemann said.

Catholic Community Services' plans for the property will come into sharper focus in the months ahead, Long said. But he hopes that once redevelopment is complete, the site could provide more than the 62 parking spaces that are there now. Long said the site is big enough for 130 to 150 spaces if some are located underground.

If the new owner can't get the project under way in 18 months, the city has the option to buy it back at a similar price, Long added.

In late 2008, before Long arrived in Bellingham to head the newly-created development authority, the City Council unanimously approved purchasing the property for $1.53 million. The seller was Bank of the Pacific, which had taken over the property after foreclosing on a developer who had planned a 15-story condo development on the site before the real estate bust.

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