City Of Kenmore, Washington

Memorandum

Date: May 31, 2022

To: Rob Karlinsey, City Manager

From: Nathan Loutsis, Planning Commissioner

Regarding: Attracting Developers to Lakepointe

Background
The Lakepointe property in downtown Kenmore at the mouth of the Sammamish River is
an underutilized property on desirable real estate. The City currently relies on the development
of Lakepointe to meet future housing needs and targeted growth in order to achieve its
County-Wide Growth Center goals. Currently, CalPortland and Cedar Grove Composting are
located on the property. A developer is needed to acquire and improve the property. The City
has remained unsuccessful in attracting a developer to take on Lakepointe.

Analysis
Lakepointe is a brownfield– an under-used industrial facility with perceived
contamination that reduces surrounding property values and prevents community revitalization.
The property was a former dump and requires environmental remediation before development.
The price of acquisition, remediation, vacancy during remediation, demolition of existing
structures, financing, and stigma that could reduce marketability, rentability, and value of the
property of brownfields creates significant costs for developers. Developers have been deterred
from Lakepointe for these same direct and indirect costs. The price to develop Lakepointe does
not indicate its relative scarcity and has driven away prospects. The City’s intervention is
needed to overcome the market failure and increase Lakepointe’s return to developers in order
to make it attractive to acquire and develop.

Policy Options
1. The City could take responsibility for land improvements at Lakepointe. Improvements to
the property could include water and sewage lines, access roads, street lighting, and
sidewalks. Taking on these responsibilities reduces the financial burden on the
developer;
2. The City could designate Lakepointe area as a Tax Increment Financing (TIF) district.
The district would include Lakepointe, the industrial-zoned properties adjoining it, and
potentially part of the downtown. Taxes collected in this district would go directly towards
the improvement of Lakepointe during its development. A TIF district would offer a more
direct form of subsidy without burdening residential taxpayers. Assessed property rates
within the district would determine its tax rate;
3. The City could offer general subsidies for developers and help secure further
subsidization through the Washington Department of Ecology and Small Business
Liability Relief and Brownfields Revitalization Act. City property acquisition funds could
18120 68th Ave NE, Kenmore, WA 98028

Office: (425) 398‑8900 · Fax: (425) 481‑3236 · cityhall@kenmorewa.gov ·

www.kenmorewa.gov
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 City Of Kenmore, Washington

Memorandum
be allocated as a subsidy to Lakepointe developers along with the securement of state
and federal grants to cover part or all remediation and site cleanup costs.

Recommendation
The best policy option for the City would be option three. Direct subsidies from the local,
state, and federal government levels would reduce the financial burden imposed on a developer,
particularly with the cost of remediation. Subsidies from three levels of government have more
impact than what the City can offer through a TIF district or taking on land improvements.
Combining local, state, and federal funds has successfully improved other brownfields around
the country. Option three is the most likely to attract developers because it offers the greatest
cost offset.

Counter Argument
Residents and other city staff may challenge the reallocation of city funds from property
acquisition to the Lakepointe project. There are likely a number of departments that rely on
those funds for their annual work to meet current objectives. Other city work remains important
but Lakepointe has remained unacquired for years. The development of the property would
revitalize the downtown, bring new jobs, offer more housing units, contribute open space, and
encourage commerce. The achievements of Lakepointe would help the City meet its goals as a
County-Wide Growth Center.
The policy recommendation could also be challenged for its effectiveness. Funding from
different levels of government has been successful in similar cases elsewhere but has not been
tested in Kenmore. Specific market forces are different in each location, so this recommendation
does not guarantee a positive outcome. Yet the recommendation is better than the status quo.
Lakepointe has still not been developed, and government subsidies and grants make the
property more attractive than it currently sits.

18120 68th Ave NE, Kenmore, WA 98028

Office: (425) 398‑8900 · Fax: (425) 481‑3236 · cityhall@kenmorewa.gov ·

www.kenmorewa.gov
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 City Of Kenmore, Washington

Memorandum
(Brief Methodological Note)
In this memo, I relied upon my own professional experience to articulate the necessity of
Lakepointe for the City. My interview with the Development Services Director gave me the
necessary context on the property and the problem itself. The Caroll and Eger piece provides an
understanding of the definition of brownfields while discussing their cost to developers. It also
defined the TIFs and their use in improving brownfields. I relied on Wolf to discuss the current
market for the property as a failure and that it requires government intervention. The Blakely
and Leigh book had suggestions that cities take on land improvements to lower the cost of the
project for developers. The book also brought up using the SBLRBR Act from the federal
government to offset remediation costs. Paull’s piece introduced the different spheres of funding
for brownfields from the different levels of government, highlighting the potential to utilize each
of them. Paull further explained how cleanup costs were the biggest burden on developers and
grants/subsidizations reduced or eliminated those costs. Together, this wove an idea of what
brownfields are, why they deter developers, what can be done to mitigate this deterrence, and
the benefit of developing these underutilized properties.

18120 68th Ave NE, Kenmore, WA 98028

Office: (425) 398‑8900 · Fax: (425) 481‑3236 · cityhall@kenmorewa.gov ·

www.kenmorewa.gov
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