City of Tukwila buys third TIB motel, works on financing package

The City of Tukwila purchased the final motel, the Boulevard, on Monday for nearly $1.1 million, the same day the City Council, meeting as the Committee of the Whole, agreed to move forward with a $6.1 million financing plan to buy up to seven properties along the Boulevard. NOTE: The City Council meets Sept 2. An earlier version of this story had the incorrect date.

The Boulevard Motel on Tukwila International Boulevard was seized in August 2013.

The City of Tukwila now owns the three shuttered motels on Tukwila International Boulevard but the City Council is still debating how to pay for them.

The city purchased the final motel, the Boulevard, on Monday for nearly $1.1 million, the same day the City Council, meeting as the Committee of the Whole, agreed to move forward with a $6.1 million financing plan to buy up to seven properties along the Boulevard.

The city is using money from existing city budgets to buy the properties and will reimburse those budgets once the financing package is approved and generating money.

The recommendation that will go to a formal council vote Sept. 2 includes a $2.25 million taxable line of credit and $3.85 million in 20-year taxable bonds.

The city would pay interest on the bonds of approximately $313,000 for 2015 and 2016 and then $287,000 annually for 2018 through 2034.

Council members debated whether the city should use some of its reserve cash – about $9 million – rather than get a line of credit. Council members generally favor selling the bonds, which are basically a loan to the city.

“I am not in favor of taking on city debt when it’s not necessary,” said council member Alan Ekberg at Monday’s Committee of the Whole meeting.

Mayor Jim Haggerton cautioned the City Council that bond-rating agencies don’t like cities to use cash and could lower a city’s bond rating, which is what happened when the city used cash to pay upfront for a Klickitat Avenue LID, knowing it would get its money back.

The City Council will receive a briefing on the reserve fund and other budget issues at its Sept. 3 meeting.

Besides the Boulevard Motel, the city has purchased the Great Bear Motor Inn and the Travelers Choice Motel on Tukwila International Boulevard. The three motels were seized in August 2013 by federal authorities after a months-long investigation into criminal activity in them, followed by a massive raid.

The city purchased the three motels from the federal government for nearly $3.6 million. The city will recover most purchase costs when it sells the land for development.

The city plans to buy the Spruce motel and the Smoke Shop. The city and a pawn shop ended negotiations after a purchase agreement couldn’t be reached.

However, the Tukwila city administration is preparing a selection process for a developer for its Boulevard properties; the city could purchase the pawn shop at a later date, according to city spokeswoman Rachel Bianchi.

All the properties, except Traveler’s Choice, are in a stretch of the Boulevard the City Council designated for urban renewal in 2013. That designation allows it to use a condemnation process to buy properties.

That urban renewal area also includes the Jet Inn and the Knight’s Inn, which are north of South 144th Street on the Boulevard.

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