Costs hit $800,000 for Kent’s Pine Tree Park sale termination

The taxpayers’ tab for the Kent City Council’s decision to terminate the Pine Tree Park sale is $800,000 – $40,000 higher than what city staff initially released.

The additional $40,000 will go to Maple Valley-based Pendergraft Development, the real estate broker who handled the transaction, said Derek Matheson, city chief administrative officer. The city will pay $760,000 to Oakpointe Communities, the developer who bought the 10-acre neighborhood park, to cover its expenses in the proposed 64-home development.

“We also owe approximately $40K to the real estate broker who represented us in the original transaction and did everything required by his contract even though we are not moving forward with the sale,” Matheson said in an email reply to Neil Dressler, a city resident who used to live by the park near 114th Avenue Southeast and Southeast 274th Street, and shared his email exchanges with city officials with the Kent Reporter.

Councilmembers Dana Ralph and Jim Berrios made references to the sale termination costing the city $800,000 at the April 5 council meeting when the council voted 5-2 to end the sale. Matheson and a city press release listed the costs at $760,000.

The council initially thought when it approved the sale in September that the $2 million in proceeds could be spent to upgrade any park. After a protest by park neighbors against the sale and finding out proceeds must be spent to buy other land of equal or greater park or open space value, the council reversed itself and stopped the sale. Residents also were upset with the lack of public notice by the city about the sale in September.

“This is a result of some mistakes that we made at the staff level,” Matheson said prior to the vote. “We apologize for those mistakes. We’ll learn from them and we will do it differently next time.”

When asked specifically about the mistakes in an email, Matheson explained his comment further.

“I was referring primarily to the lack of a robust public process to surplus Pine Tree Park and also to anything else staff had done to disappoint the city council or public,” he said.

Matheson said it was uncertain whether any city employees will face reprimands or any other type of discipline for the handling of the park sale.

“We still need to conduct a final debrief or after-action review of the Pine Tree Park issue,” Matheson said. “Everyone involved feels terrible and has learned valuable lessons to apply to future land sales.”

As far as how the city and Oakpointe agreed on a settlement cost, Matheson said City Attorney Tom Brubaker and City Economic and Community Development Director, Ben Wolters, visited Oakpointe offices in Kirkland to confirm the costs.

“Oakpointe’s expenses were incurred in fall 2015 through March 2016,” Matheson said. “Oakpointe agreed not to continue to incur expenses while we were negotiating the settlement. The expenses themselves are a trade secret owned by Oakpointe and are not in our possession, but our economic and community development director and city attorney spent several hours at Oakpointe’s headquarters reviewing documents and concluded the expenses were reasonable.”

Councilwoman Tina Budell described in an email to Dressler the settlement costs with the developer.

“The money owed to Oakpointe is for costs incurred from start of sale on the project, plans, permits, wages for staff working on development, contracts with suppliers, etc. …,” she said. “The number we reached is actually lower than what they have spent to date, but they want to be good business partners in any future dealings with the city.”