Bothell City Council has approved a settlement agreement with a development company to repurchase four lots the city had sold them in 2017 after Bothell Hotel LLC failed to begin construction this summer.

In the settlement, neither the city nor Bothell Hotel LLC, which is owned by 360 Hotel Group, admitted liability for the development plans falling apart. The city re-purchased the property for $1.27 million, the price it was sold for, and additionally paid the developer a settlement fee of $865,000 to avoid the costs of litigation. The city sold property adjacent to Bothell City Hall to 360 Hotel Group in 2017 to build two hotels as part of the city’s downtown development plan.

Bothell staff notified 360 Hotel Group on June 20 of this year that it believed since the company had failed to begin construction by the deadline, the city was justified in using its repurchasing option. However, in July, the company said it disagreed and that the city did not have a right to repurchase the property and filed a notice of claim with the city. It additionally drafted a complaint to be filed in King County Superior Court.

The disagreement was mediated and an agreement was reached for the city to buy back the property. In emails obtained by the Reporter, Shaiza Damni and Alif Nurani of Bothell Hotel, LLC wrote the city on July 12. The company’s representatives expressed concerns about Bothell’s decision to begin the repurchasing agreement. In it, the company wrote that Bothell had failed to notify the state Department of Ecology of the sale until Jan. 31, 2018, when the company said the city was supposed to notify them 30 days prior to the sale.

“Because it was not raised and addressed before our transaction closed, it has caused significant (but not insurmountable) complications. For example, our lender (which had completed its environmental review in December 2017) has now reopened the matter,” the letter read.

The company had not responded to a request for comment on this story by the time of publication. This story will be updated if 360 Hotel Group responds.

Also in the email, the company said they had requested to lease nearby lots for a staging area, but had not made it a condition of their development agreement. City lots EFG are currently undergoing an environmental cleanup.

In previous coverage it was discovered that the developers asked for a six-month extension for construction that was approved by council. Construction was supposed to begin by June 15 of this year. However, 360 Hotels still hadn’t received all the necessary permits by that date. A representative of 360 Hotel Group said during a July council meeting they had spent $3 million on the project and would be ready to start construction on Sept. 1.

It is unclear what will happen to the property now. A press release from Bothell stated that the city will begin looking at what to do with the land beginning early next year. The property was purchased by the city as part of a downtown development strategy. The city has been selling off parcels in recent years to developers. This has included bringing in McMenamins Anderson School, realigning SR 522 and implementing mixed-use development requirements downtown.

If the hotels project had progressed, it would have built a six-story hotel next to a five-story hotel adjacent to City Hall that would have offered around 190 rooms. The hotels would have been a Mariott SpringHill and a Marriott TownePlace along with a drugstore and commercial space.