Applebee's Delay May Hurt Town Center's Retail Hopes

(Editor's note: An earlier version of this story incorrectly stated that the City of University Place had extended a $30,000 gas line to the lot of the proposed Applebee's. The city has yet to do so, and won't until the restaurant begins construction. Changes are reflected in the story) 

University Place officials thought momentum was on their side when they .

But after the national restaurant chain opted to exercise the first 30 days of its 90 allotted days to hold off on the final sale for further examination last week, and knowing what that could mean to attract other business, that momentum appears to have stalled.

Now the questions are whether Town Center's only signed retail tenant is still going to become the mix-use development's first business, and if not, will the signing of a theater or other tenant be enough to persuade Applebee's to move ahead?

Depends on who you ask.

"If a deal can be reached with the theater group, and we actually have more than one looking at this project, that can turn the tides," City Councilman Ken Grassi, who owns a flower shop in downtown Tacoma told Patch.

"I think because they (Applebee's) have the option, they're trying to bide time to protect their investment," he said. "They have 90 days. At the end of 90 days, it's a different story."

Councilman Javier Figueroa, a developer himself, had a more dire outlook on the restaurant's delay.

"This decreases our credibility in every sense of the word," he said. "No. 1, the community was told this thing was a strong purchase agreement ... Now, (Applebee's) management is saying it is concerned about being alone. That's a credibility issue."

Whatever the case, one thing is clear: Applebee's will not be opening at Town Center this year, as was originally planned.

UP City Attorney Steve Victor said because the company and the city have worked in good faith, Apple Washington, its parent company in this state, has up to August to complete the sale, which is for $420,000.

The company has expressed concern about being Town Center's anchor tenant before and even tried to make the signing of its purchase agreement contingent on the development having another anchor, he said. That element was eventually scrapped.

Victor told Patch that it's unclear exactly why the company opted to delay construction on "Lot 4" along Bridgeport Way West, but the city wanted to make sure it affords the company all the opportunity it needs to conduct its due diligence to complete the deal, for which it has already put down $5,000 in earnest money. The city plans to extend a $30,000 gas line to the lot once Applebee's starts to build.

Aside from allowing more time, another thing officials hope could keep Applebee's, which could cut short its plans for Town Center come August, is the signing of another tenant.

"I am also mindful that regardless of the outcome, how we treat Apple Washington will be noted by other potential investors in the site," he said. "And in this very difficult and intensely competitive market, the city must do its best to be viewed as a good site to work with."

Grassi says the city actually has three potential theater developers vying to build on the site, "but one is much farther than the others."

That signing, which Grassi says he hopes will come before Applebee's 90-day due diligence period ends in August, would not only help keep the restaurant, but it would attract other retailers.

Another issue for the theater is parking, although the city got good news regarding that element last night. Officials learned that Town Center had been approved to receive $500,000 for 10 years from the state, as it's a project that will ultimately increase state sales tax revenue once it's built. That means more spaces can be built.

All of it means this is a crucial period for Town Center's retail success.

"Right now, any setback is going to be perceived by the community as negative," he said.

But Figueroa says he's unhappy with the way Town Center has been marketed, and he actually voted against extending the city's contract with broker Jeff Kraft of Neil Walter Company of Tacoma for another year.

He added that although the city has been in discussion with theater developers, a deal isn't imminent.

Figueroa, who questioned the City Council on Town Center even before he was elected in 2009, said it's time for residents to start asking "hard questions" about why this project is stalling.

No matter the answer, the truth is a mix-use retail project that's fighting its way through a struggling economy is nowhere near out of the financial woods yet.

Here is Victor's full e-mail to Patch today:

Last week Apple Washington, LLC exercised one of three options to extend their due diligence period prior to closing on property within University Place Town Center until the end of June. To date, Apple Washington and the City have worked in good faith on all issues related to closing. Because Apple Washington has worked with reasonable progress toward closing, they are entitled to the extension without providing a specific reason as to why they want the extension. Assuming continued progress toward closing, they may exercise two additional extensions taking them to the end of August.

Apple Washington has expressed that they have some concern about being the only commercial use on the site for an unknown period of time, but I cannot say that this is the reason for the extension. At the earliest stages of discussion with Apple Washington last year, they were interested in a contingency that would delay their project until Town Center had an anchor, but after subsequent discussions that contingency was not included in the Purchase and Development Agreement. At the time, we presented the Purchase and Development Agreement for Council consideration last year, our public statements accurately reflected our discussions with Apple Washington and the contents of the Purchase and Development Agreement.

In dealing with Apple Washington on this transaction, I want to afford them every opportunity to close and develop their project. I am also mindful that regardless of the outcome, how we treat Apple Washington will be noted by other potential investors in the site, and in this very difficult and intensely competitive market the City must do its best to be viewed as a good site to work with.

While in comparable private sector development such delays are common, I can certainly identify with the public frustration with any more delay in development in Town Center. The reality is that the economy is very difficult, and we are competing for investment with private sites in which the private owners can provide incentives to desirable businesses that a city simply cannot. With that said, while I do not expect to see construction on the site this year, our broker continues to work very hard to market site and I believe it is possible that the administration will be able to bring more agreements, with desirable uses, for Council consideration this year.

Finally, I think it is important to note that at the administrative level, we work to implement the Council’s legislative policy. Prior to last year, the legislative policy had the City seeking a single master developer for the site. Last year, the legislative policy expanded to add the potential for individual sales, or a master developer, or some combination of both. What has remained consistent in the legislative policy though, is that the Council wants to know the specific use to which the property or properties sold will be put, and a specific enforceable timeline for construction. The purpose of this legislative policy is to ensure to the greatest extent possible that the development that finally occurs is consistent with the City’s vision for Town Center established almost as far back as incorporation. What this means is that the city is not simply seeking to sell the property without any conditions other than zoning. To simply put the property up for sale without any conditions on use or timing of construction would require a significant shift in the Council’s legislative policy.