Sunday, July 26, 2009

What next for the “notorious” Deano’s site?

It’s been a solid year since Madison Park resident Jeff Mueller and his partners permanently leveled the blighted Madison Street block that had housed the skuzzy Deano’s nightclub (aka Club Chocolate City). In undertaking this “public service” demolition, Mueller and his company, JC Mueller LLC, earned both the thanks of those of us who regularly drive through the area and, presumably, the undying gratitude of those who actually live there.

Before its implosion, Deano’s--almost universally referred to in press reports as “notorious” or “infamous”--was the scene of police activity virtually daily. The alternative newspaper, The Stranger, described the site as a “convergence zone for drug sellers and crack addicts.” According to the Madison Park Times, the block was a “magnet for criminal activity,” known for its drugs, prostitution, loitering and the occasional shooting. In preparation for the upcoming redevelopment, both Deano’s Grocery and Club Chocolate City were closed in 2007, leading to a decline in criminal activity in the area.

When Mueller rescued the neighborhood (which is called Miller Park by area residents), it was not altogether an altruistic exercise. The plan in 2008 was to follow the demolition with construction of a mixed-use residential building on the 2026 E. Madison Street site. Construction was to begin next month. Mueller’s companion project across the street at 2051 E. Madison Street (former site of the Twilight Exit) was originally scheduled to get underway even earlier. Obviously, construction has not begun; and what we have at the intersection of E. Madison and E. Denny Way is a giant fenced-off dirt lot on one side of the street and a group of vacant buildings on the other, not that anyone is really complaining.

Most of us probably do not have so expansive a view of Madison Park’s reach as to believe (like the landlord of The Summit at Madison Park, which houses the Safeway store) that our community actually reaches up into the Miller Park neighborhood. Because of its proximity, however, I suspect most of us in Madison Park probably are interested in knowing the current status of both Mueller projects. So I decided to find out what’s happening.

As recently as last October, Mueller was being quoted as saying he didn’t expect the national credit crunch to delay either project. That was then. By early 2009, the markets had drastically changed and it was apparent that financing was far from assured. Mueller tells me that both projects are on track in every way except for the financing. “In October we had sources for the financing,” he says, “but they sort of vaporized. Now we’re waiting for the financial markets to stabilize. We could get a loan today, but the terms would be onerous.”

Mueller believes that both projects continue to be economically viable, especially if the costs of construction come down. These had been high relative to historic levels, he says, but expectations are that the financial downturn will lead to lower construction expenses as contractors compete more fiercely for the work that’s available.

In the meantime, both projects continue to move forward on the pre-construction track. In May the City issued a permit for development of the Twilight Exit site. This project, designed by the Mithun architectural firm, is a 95-unit apartment building which will also have about 6,500 feet of retail space:

Unless the existing buildings were to deteriorate in some way, Mueller says, it is not the plan to tear them down before project financing is in place.

Across the street on the Deano’s site, cleanup continues on what was a very contaminated site. Most of that work has been completed, Mueller says, and he expects the City to issue a master use permit for the site late this summer or early fall. On this, the larger site, a 222-unit apartment building, designed by Weinstein AU, will be constructed:

The building will have 9,500 sq. ft. of retail space and, like the companion project across the street, underground parking.

Both projects are designed to provide “workforce” housing, apparently consistent with the target market for The Summit at Madison Park, across the street. Mueller reiterated to me what he’s said elsewhere about never having felt that the sites could support condos, a market he believed was about to implode—which it did.

But what about adding 317 new apartment units at these sites (plus another 92 units at 2203 E. Union St., Mueller’s third area project)? Mueller believes the economics of all three buildings still work. He notes that about 400 new residential units are currently under construction and will soon be coming on the market in the general vicinity. (There are also 48 brand new “rooming house” units coming on line, about which The Stranger has an interesting article: “Thinking Small”).

To date, the apartment market has held up surprisingly well in Seattle, he notes, and he believes that the location on Madison is excellent in terms of access to Downtown and the now-trendy Pike/Pine neighborhood. It’s a fact, nevertheless, that several already-completed apartment buildings not far from Mueller’s sites (including The Summit) are not yet fully leased. If the economics still work, as Mueller believes, it probably won't be at anytime in the immediate future.

So what’s his best guess for when construction will begin? “I can’t say it’ll be next year,” he says, but it could easily be the following year. “We would begin building as quickly as the markets will let us,” he adds, “but I can’t say we’re in a hurry.”
[Photo of the 2026 E. Madison building courtesy of Mithun; photo of the 2051 E. Madison building courtesy of JCMueller LLC, via the Miller Park Neighborhood Association site .]

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