Redeveloping Kenmore’s downtown core has been a main priority for the city council since incorporation in 1998. Kenmore Camera is slated to move into its new renovated location and anchor the Kenmore Village shopping center this fall. But plans for the area’s redevelopment took another step forward as the city announced a purchase and sale agreement with two separate buyers for the two Kenmore Village properties on June 10.

The Benaroya Company and Real Property Investors agreed to buy the Kenmore Village lower parcel, while MainStreet Property Group LLC is still in negotiations to purchase the upper lot, formerly used as a King County Park & Ride.

“These are valuable new partners for our downtown,” said Kenmore Mayor David Baker in a press release. “We’re glad to have them on board because they understand the city’s goals, and they want what we want.”

The agreement means that construction on the Kenmore Village properties could begin as early as the summer of 2014.

Real Property Investors and the Benaroya Company will partner to form a limited liability company called “BCC-RPI Kenmore” and have signed the agreement to purchase and then redevelop the Kenmore Village commercial site. BCC-RPI Kenmore is required to build 20,000 square feet of new construction for the property with planned uses and at least 5,000 square feet of retail.

“We are feeling really good about this particular buyer,” said Kenmore City Manager Rob Karlinsey. “They want what we want.”

A feasibility review period of 180 days will allow BCC-RPI Kenmore to secure tenants and create a more detailed plan for the site. The company can also back out of the agreement during that period. There are ongoing discussions with potential new tenants but none are confirmed.

Karlinsey said city officials discussed including a schedule for construction but they ultimately decided against it due to the feasibility review period.

“It they have tenants they are going to have to move as quick as possible,” said Karlinsey. “They were unequivocal that they don’t intend to buy the land and just sit on it.”

The sale agreement also states that BCC-RPI Kenmore has to include in the redevelopment a “public gathering space or town green for public use.” The new construction will also include retail and office space.

Both Kenmore Village projects will generate approximately 200 construction jobs.

“This means $25 million of construction investment,” said Karlinsey. “That is a pretty big chunk of change to put right in the center of the city.”

The sale agreement includes the building that houses the Post Office but not the future Kenmore Camera building. Kenmore Camera purchased the 17,000-square-foot building from the city last year for $1.25 million. The city purchased all of the Kenmore Village lower parcels between 1999-2003 for a combined $5.7 million and will receive back $3.05 million for the agreements with BCC-RPI Kenmore and Kenmore Camera.

But Karlinsey said the city looks at the project as a catalyst for economic growth and not just an isolated construction project.

“The upper parcel will sell for more than we bought it for,” said Karlinsey. “The full picture has not come into view.”

He also points out that there is 14,500 square feet of property that is slated for public use, including the 10,000-square-foot “town green” space that the company will develop. Another 4,500 square feet has already been redeveloped for angled parking on Northeast 181st Street.

Other issues also impacted the sale price, such as putting utilities underground, the requirement to construct new buildings and a minimum retail square footage requirement. BCC-RPI Kenmore has also agreed not to flip or re-sell the property.

BCC-RPI Kenmore is also not allowed to “flip” the project, added Karlinsey.

“We took this to the open market and cast a big net,” he said. “The price we agreed on was the highest of any potential buyer.”

The Benaroya Company’s recent developments include the Toysmith warehouse and distribution center in Sumner and Group Health Medical Center in Puyallup. Real Property Investor acquires, manages, leases and rehabilitates commercial real estate. All projects are purchased by forming a partnership or limited liability company consisting of Real Property Investors and an equity partner. The company has acquired more than 75 properties with a market value of more than $270 million.

Overall, the city of Kenmore purchased the entire 9.6 acres for more than $8.2 million. Karlinsey said that after the development is complete, he expects the city to at least break even when all the direct public benefits are taken into consideration and not just the sale price. Those benefits include “public spaces and public improvements, such as the town green, new sidewalks and utility undergrounding.”

The project for the upper parcel would be MainStreet Property’s fourth in the Northshore area, as it is already working on two apartment buildings in Bothell, Six Oaks and The 104, and Slater 116 in Kirkland. The potential plan in Kenmore is for MainStreet to build 160-apartment units. A portion of the units will be affordable under King County definitions and in keeping with the current deed restriction for the site. If the sales agreement is signed, MainStreet plans to begin construction in June 2014. Negotiations are ongoing with MainSteet and city staff hopes to bring it back for council consideration on July 8.

The city purchased the 4.75-acre upper parcel for more than $2.5 million in 2003.

Karlinsey said that the agreement with MainStreet will likely have a construction time table included.

Originally, the city received interest from 16 separate companies to purchase one or both of the Kenmore Village parcels. City staff narrowed the list of offers down to eight and then selected the two finalists from those eight.

“I was very impressed with the stiff competition,” said Karlinsey. “They were all quality investors.”

Both companies’ reputations, experience and access to capital were a big reason for their selections, said Karlinsey. Another reason was how committed the companies were to the city’s goals and their sense of urgency.

This is the second time the city has attempted to enter into an agreement to redevelop the Kenmore Village land. The city was engaged in a Disposition and Development Agreement with Urban Partners (later known as RECP/UP Kenmore, LP) for redevelopment of the Kenmore Village property from 2007 to March 2012, when the parties mutually agreed to end the agreement, partly due to the economic downturn.