Bank publishes notice to foreclose on Old City Hall; City to study public development authority for historic buildings

Union Bank of California plans to auction off Old City Hall in downtown Tacoma next month if an ownership group fails to pay a little more than $320,000 in missed mortgage payments, late fees, and related costs by Dec. 27, according to a legal notice published in Thursday’s edition of the Tacoma Daily Index.

The notice of trustee’s sale, filed by the law firm of Keller Rohrback on behalf of the bank, claims Old City Hall LLC owes $155,691.49 in monthly interest-only payments (interest accrued at default rate starting on Feb. 12, 2010) due on the fifth of each month beginning Feb. 5, 2010; $21,477.53 in interest accrued from date that most recent monthly payment was due (at a default rate of 9 per cent per annum); $7,481.20 in late charges for each monthly payment that was missed or late by 10 days; $126,373.19 in property taxes and assessments; and $9,054.00 in estimated foreclosure costs and fees.

If payment is not made to the bank in full by Dec. 27, the building will be auctioned to the highest bidder on Jan. 7, 2011, at 10 a.m. at the County-City Building in Tacoma, according to the legal notice.

It is the latest round of bad news for a 117-year-old building, located at 625 Commerce Street, whose iconic clock tower is an important part of downtown Tacoma’s skyline.

On Nov. 24, water pipes froze then burst following an arctic storm, spreading 30,000 gallons of water throughout the six-story building and causing much damage. In March, Frontier Bank, which held the mortgage on the building before being taken over by Union Bank of California, claimed The Stratford Company and Old City Hall LLC, the ownership group, owed $120,000 in back payments on its mortgage. It posted a foreclosure notice on the building. At the same time, Tacoma Power threatened to shut off power to the building due to unpaid bills.

Meanwhile, Tacoma City Council is expected to study the possibility of creating a public development authority aimed to preserve old buildings that face similar perils. In 2009, the 1890s-era Luzon Building, owned by Gintz Group, was demolished after decades of neglect and deferred maintenance. The City declared the six-story downtown building was a public safety hazard that could collapse at any moment, and ordered it razed. Similarly, the 85-year-old, 12-story Winthrop apartment building, owned by Prium Companies and currently for sale, is in dire need of repairs after decades of deferred maintenance.

The idea to create a public development authority was raised by Councilmember David Boe during Tuesday’s city council committee of the whole meeting. “It does not help the situation right now [with Old City Hall], but it potentially is a mechanism for buildings that are iconic and historic in our town,” said Councilmember Boe. “We have historic districts. We have the Landmarks Preservation Commission. We have all these requirements. And yet, Old City Hall slips through the fingers. This may be a mechanism that . . . gives us another tool in the tool box.”

The idea will likely be taken up next year either by city council’s neighborhoods and housing committee or community and economic development committee. Tacoma City Council is scheduled to receive an update on the status of Old City Hall during its noon study session on Tues., Dec. 14.

During this week’s committee of the whole meeting, several councilmembers had a variety of thoughts and questions related to the public development authority plan. Here are some of their comments:

CITY COUNCILMEMBER DAVID BOE – I wanted to know if councilmembers are interested in having — I suppose it would be the economic development committee — potentially look at what it would take to get a public development authority looking at historic buildings or being responsible for historic buildings like Historic Seattle. [Historic Seattle is] a public development authority [that has] been very successful and actually self-sustaining. We are somewhat fortunate. We have people in our local community who are very involved in Historic Seattle, including the executive director, Kathleen Brooker, who is a Tacoma resident. It does not help the situation right now, but it potentially is a mechanism for buildings that are iconic and historic in our town. We have historic districts. We have the Landmarks Preservation Commission. We have all these requirements. And yet, Old City Hall slips through the fingers. This may be a mechanism that is totally appropriate time-wise for where we are in our maturation and give us another tool in the tool box. I think we’ve got to look at every option there is. I know the city manager came to us last week and said there isn’t much we could do. But I’m wondering if there’s anything else we can do short of sitting and waiting. Because if we’re going to wait, the building is going to win.

MAYOR MARILYN STRICKLAND – I would like an overall presentation of how a public development authority works, what kind of financial commitment is required from the city, and what that means in terms of how we would use that. In this situation, you have an owner who has gone into foreclosure. At the study session, I asked the question, ‘Could the City go in there, clean it up, and then send them the bill?’ The reason I asked that question was if you get graffiti painted on your garage door, you get a note from the City that says, ‘Clean it up or we’ll clean it up for you and we’ll bill you for it.’ I was thinking about the same concept. Does having a public development authority give you the ability to go in and do something like that? How do we solve an immediate problem in front of us like we have right now? We really can’t just go inside a building. It’s private property.

CITY MANAGER ERIC ANDERSON – The public development authority has no more authority to go onto private property than the City would have. But what [a public development authority] could do is put together a development alternative that would not necessarily be available — particularly if they’re self-sustaining — that would not be available to the City. They would have their own bonding. They would have to have their own revenue streams for that. But that is an alternative that may or may not be helpful in this situation. It’s hard to say. There are a lot of variables. Another approach — and one that we’re working but we’re not going to say very much about it because other individuals are involved — is if there are folks who want to come forward and work on that building, we’re going to work with them. As you say, it’s gone into foreclosure. I’m not sure where it is in that process. Other people may express an interest and go forward with it. Of course we will work with them as well.

MAYOR MARILYN STRICKLAND – So why are we able to tell a private property owner that they better clean up their graffiti or we’ll do it for them and we’ll bill them? Why is that different?

CITY ATTORNEY ELIZABETH PAULI – State law authorizes cities imparting use of its police powers to develop regulations to control nuisance and, in fact, to define nuisance. Part of the nuisance authority that we have is after the due process piece, we can abate. It follows a specific line of authority that we have through the state.

CITY MANAGER ERIC ANDERSON – We do not have the authority to go inside a building and abate a private nuisance inside a building.

CITY COUNCILMEMBER DAVID BOE – [A public development authority would be] more proactive. To say we have an iconic building. I don’t know how many times it’s gone into foreclosure since the City left — I think it’s gone three or four times into foreclosure — so you have something that’s having great difficulty. The public development authority would sit there and purchase it and through grant-funding and borrowing, it’s a non-profit so it’s got all kinds of abilities that a city doesn’t have to restore it and sell it, or restore it and have part ownership — there are many models. I think it’s more looking at [a public development authority] where you have iconic buildings and buildings that have definitely been in distress — and this building has been in distress for many, many, many years. That’s what the concern is. I’m not real clear when buildings go into foreclosure who is really owning the building, who is really watching out, and that’s my concern. There’s a point where the insurance is more valuable than the building and [they say], ‘Hey, I’m going to lose it anyway.’

CITY MANAGER ERIC ANDERSON – We do have a public development authority. I believe the council created one in collaboration with the Tacoma Housing Authority. I think that public development authority would have the capacity to do what you’re talking about. I’m not sure if you would have to create a new [public development authority]. We might be able to use the one that exists or charge them with that purpose. That’s another piece to look at.

MAYOR MARILYN STRICKLAND – As we talked about Old City Hall being the possible next Luzon building, which is not going to happen, we’ve got the Winthrop that may be the next Old City Hall. Seriously. As you start to go down the list of historic properties of significance, I would look at the Winthrop as being something that we need to act on. So if we could get a public development authority established, that would at least give us some power.

Downtown Tacoma's Old City Hall. (FILE PHOTOS BY TODD MATTHEWS)

 

To read the Tacoma Daily Index‘s complete and comprehensive coverage of Old City Hall, click on the following links:

Todd Matthews is editor of the Tacoma Daily Index and recipient of an award for Outstanding Achievement in Media from the Washington State Department of Archaeology and Historic Preservation for his work covering historic preservation in Tacoma and Pierce County. He has earned four awards from the Society of Professional Journalists, including third-place honors for his feature article about the University of Washington’s Innocence Project; first-place honors for his feature article about Seattle’s bike messengers; third-place honors for his feature interview with Prison Legal News founder Paul Wright; and second-place honors for his feature article about whistle-blowers in Washington State. His work has also appeared in All About Jazz, City Arts Tacoma, Earshot Jazz, Homeland Security Today, Jazz Steps, Journal of the San Juans, Lynnwood-Mountlake Terrace Enterprise, Prison Legal News, Rain Taxi, Real Change, Seattle Business Monthly, Seattle magazine, Tablet, Washington CEO, Washington Law & Politics, and Washington Free Press. He is a graduate of the University of Washington and holds a bachelor’s degree in communications. His journalism is collected online at wahmee.com.