Is ‘land banking’ by Pierce County hurting development in downtown Tacoma?

There is a city block in the heart of Tacoma some people believe is not being put to its best use, stifling economic growth and blunting vitality.

Four buildings and three parking lots now occupy 11 parcels along Tacoma Avenue, not far from the City-County Building. Six of the parcels have been tied up since 2005, awaiting a grand plan that’s never come to fruition.

“At a minimum they’ve been underutilized, under-leveraged,” said Tacoma City Council member Robert Thoms, who represents the district.

Their owner: Pierce County.

There’s talk now about the county selling the properties, and the County Council in November voted to fund a study of options.

County spokesperson Libby Catalinich told The News Tribune recently none of the four buildings are vacant. Probation services is currently at 901 Tacoma Ave., 925 Tacoma Ave. is being remodeled for probation services, 945 Tacoma Ave. holds South South 911 and 933 Tacoma Ave. is being used for contractor storage, Catalinich said.

That’s not the kind of use that leads to the invigoration of a downtown core, said Ali Modarres, director of urban studies at University of Washington Tacoma.

The area should have more housing, activities and retail, Modarres told The News Tribune.

“If the lots are left empty and abandoned, it devalues the area,” he said. “I’m puzzled because given the fact that county building is there, we should see some more active buzz than we do.”

Some County Council members, including Marty Campbell, agree.

“One of the biggest challenges we’ve had to a thriving downtown Tacoma is multiple entities land banking vacant spaces and not developing them in a way that brings jobs downtown so that other jobs — particularly retail jobs — can work alongside them,” Campbell said at the Nov. 18 meeting where the County Council approved the study.

Campbell, who did not respond to requests for comment for this story, was a small business owner in downtown Tacoma for more than 20 years. He headed the Downtown Small Business Association for about four years.

“Vacant parcels do nothing to help the economic activity of the city,” he said at the Nov. 18 meeting.

County amasses Tacoma Avenue property

The county amassed the 11 Tacoma Avenue parcels over a number of years. The land value is estimated at $5,285,000, according to Pierce County records.

Under former Executive John Ladenburg’s direction, the county purchased six Tacoma Avenue properties in hopes of creating an $105 million public service campus in 2004 and 2005. The proposal never won council support.

Current Executive Bruce Dammeier is expected to present recommendations for the properties after the study is finished in August, Catalinich said.

Dammeier told the County Council his intent was to buy the remaining private property on the 900 block to add to the 11 parcels and sell the block in bulk, Council member Derek Young told The News Tribune. The county confirmed it had sought to purchase 955 Tacoma Ave., but its bid was unsuccessful.

The county does not pay taxes on publicly owned buildings. According to The News Tribune’s estimates, the 11 parcels could have collected $632,618 from 2019 to 2012 in property taxes.

The properties are zoned as downtown mixed use, which allows for retail, office, residential and light industrial uses. Height is restricted at 100 feet, or about eight stories. Among uses not allowed: drive-thrus, recreational marijuana stores, correctional detention facilities, billboards, or outdoor storage, to name a few, according to city principal planner Shirley Schultz.

Bruce Kendall, president and CEO of the Economic Development Board for Tacoma-Pierce County, said while there isn’t a specific, missed opportunity, properties that aren’t actively being marketed stop getting paid attention to.

“I would say there’s a factor whether public or private property that sits dormant without a motivated owner, private or public, they get stale and the market starts to ignore them,” Kendall said.

“If you put the supply out there, demand can often follow.”

Kendall said there’s not so much an issue with vacant buildings as it is vacant lots holding back Tacoma’s growth.

What are options for the land?

Jeff Robinson is director for the city’s community and economic development department. Robinson said he hopes any plans for redevelopment can be “realized in as short a time period as possible.”

“Any time underutilized real estate can be redeveloped into more productive and appropriate uses, it creates a more vital Tacoma, and that is a good thing,” Robinson wrote in an email to The News Tribune. “Timing is largely determined by market forces, and the “ripeness” of any specific real estate for redevelopment is contingent on the market’s view of its current upside.”

The Downtown Tacoma Partnership is a collection of businesses and stakeholders. Its border ends about half a block away. Executive director David Schroedel said the interest in seeing active development downtown is pretty much the same across the board. He said parking lots, including those owned by the county along Tacoma Avenue, aren’t active use.

“Parking lots are a pretty low intensity use that don’t make full use of the land that is there,” Schroedel said.

The parcels are located within one of Tacoma’s six designated Opportunity Zones, Robinson pointed out. Opportunity Zones are part of a federal tax exemption program meant to boost development in economically-distressed areas by deferring capital gains taxes of investors who pay into a fund.

Federal regulations recently were completed, further clarifying the process for investors. That could be an important factor for the county to move forward with a plan, Robinson said.

Modarres said the best use would be affordable housing, which would allow the county to sell the property and help address increasing rents to create more equity.

“This major street needs reactivation,” he said.

Council member Keith Blocker’s district borders Tacoma Avenue from the west, agreed that housing or retail would be a good fit.

“In terms of what Tacoma needs, we need housing,” Blocker said.

Thoms wants to see what the market says.

“In an ideal world, you’d get one big company that wanted to locate here and that footprint worked out well for them,” he said. “What we know now is we have several buildings now that are underutilized that could use an investment to be rehabbed, maybe taken down and built entirely new — and that’s exciting.”

Josephine Peterson covers Pierce County and Puyallup for The News Tribune and The Puyallup Herald. She previously worked at The News Journal in Delaware as the crime reporter and interned at The Washington Post.