Downtown Kent Retail
There’s been a fair amount of press about the fact that the city did not renew the Memorandum of Understanding with Right Dimensions so I thought it would be helpful if I could try to give you an update of what’s happening and what’s not happening.
As far as the city is concerned the Retail Project is still on track, the question is who will be the next private partner that will develop the project with us. That partner was Right Dimensions but after 18 months Right Dimensions suffered a setback when it’s major equity investor decided to withdraw from the project. The loss of that investor combined with the lack of progress from Right Dimensions on acquiring ownership of the properties in the block led us to make the hard decision to cut our ties and find a new partner. Obviously, this was not a choice we took lightly. We had worked hard to help Right Dimensions succeed but at the end of the day they were not able to meet their commitments so we decided it was time to move on.
What we’ve learned from 18 months of effort with Right Dimensions is that there is a viable retail project at that location. The project numbers work but the margins are slim and as a result land acquisition can make or break the project. If all the land was able to be purchased at or near market rate then the project is a go but it became clear from the efforts of Right Dimensions that the land acquisition costs were going in the wrong direction. We heard from Right Dimensions over and over that they needed help to assemble the land because the numbers for the project really only worked when the project was the full block — a little piece here and a little piece there was not going to cut it, but that’s all they were able to get.
So when the Right Dimensions investor pulled out just as our agreement was expiring we chose not to renew the agreement so that we could re-group and put all of our focus on assembling the land which had proven to be Right Dimensions greatest obstacle. Although our decision was very difficult for Right Dimensions to accept, as they had made significant personal investments in the project, I actually believe that in the long run this is the best thing we could do for them and the project as we understand now that the key to success will be the land and I intend to make that our sole focus moving forward. Our ability to help make that happen will help any developer, including Right Dimensions, so I think our decision ultimately will give the project a better chance of success.
Although it wasn’t always evident publicly, Right Dimensions had made some head-way and I think it is really important to pick up where they left off so we can keep momentum moving in the project. Although land acquisition had stalled, we were actually making good progress in a number of areas on the project such as negotiating financing options, defining land uses, and structuring the terms of a final agreement that would be the next step required to move the project from the drawing board to construction. Unfortunately we could not take those next steps because Right Dimensions was unsuccessful at securing the land and keeping its major investor in the project.
I have advised Right Dimensions and other interested developers that have contacted us that my goal is to put a land package together that would include the entire block and then solicit a development partner. I am not ruling out any developer at this time, it could very well turn out to be Right Dimensions or some variation of that original team, but at this point my objective is to secure land control so that we can attract quality developers who won’t have to spend so much time and money fighting for every square inch of land in the project area.
This is one of the main reasons Kent has not enjoyed the retail boon that has been (and still is) going on all around us — “greenfield” or new development on vacant land tends to be cheaper and easier for developers because it typically does not involve bargaining with so many different property owners; you just buy one chunk of land from one guy and go build on it. So part of what we’re trying to do is to level the playing field and give re-development a chance to compete for the same businesses that have been more inclined to plow new ground all around us rather than in Kent.
Jim Silver, Charley Bowman and I are working with the property owners in the block to see what agreements we can reach to secure the land and I’ve been pleased with our progress so far. We are also trying to purchase the property acquired by Right Dimensions but that is proving to be a difficult negotiation. I am hopeful we can work out all the issues amicably but I am equally prepared to ask for Council’s approval to use emminent domain if we get stuck.
I’ll be the first to admit that some of the choices we’ve made, and more that we’ll likely have to make down the road, will be hard. On a project like this we try to accommodate as many of the interests as possible but at some point we have to make decisions that may not make everyone happy but are in the best interest of the city. To me that’s what leadership is all about and that’s what I’m doing my best to provide because I think Kent’s downtown is a cause worth fighting for.