From left, Mike and Brian McMenamin stand in the ballroom of the old Tacoma Elks Lodge. When they redevelop the abandoned building, it will have hotel rooms and a bar. Peter Haley phaley@thenewstribune.com
From left, Mike and Brian McMenamin stand in the ballroom of the old Tacoma Elks Lodge. When they redevelop the abandoned building, it will have hotel rooms and a bar. Peter Haley phaley@thenewstribune.com

Business

Old City Hall talks on pause as McMenamins secures more money for Elks Lodge rehab

August 10, 2016 03:49 PM

UPDATED August 12, 2016 12:05 PM

Negotiations between Portland-based developer McMenamins and the city of Tacoma for the use of Old City Hall are on pause as the developer ties up its funding sources for the Elks Lodge property across the street.

The city of Tacoma had started negotiations with McMenamins earlier this year on the development agreement for Old City Hall. The company was the top choice of four proposals in 2015 to renovate Old City Hall as a destination hotel.

The negotiations are on pause until McMenamins secures the rest of the financing for the Elks project, said Elly Walkowiak, business development manager for the City of Tacoma.

“Raising the additional capital (for Elks) took a lot more time and effort than they envisioned,” Walkowiak said. “We have been talking regularly, but we haven’t gotten to that point (of resuming negotiations) because they are wrapping up the sale of historic tax credits.”

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Though McMenamins is familiar with historic renovations, the Old City Hall-Elks Lodge complex would be unlike anything McMenamins has ever developed. Old City Hall would feature a 60-room hotel, with Elks having about 45 rooms.

The McMenamins show some progress renovating the old Elks

Mike and Brian McMenamin talk about the extra millions that will go into the heavily damaged old Elks Temple that they're redeveloping into a restaurant, hotel, brewery and performance space.

Peter Haley phaley@thenewstribune.com

When asked about Old City Hall, McMenamins chief financial officer Chris Longinetti said Wednesday in an email: “Our priority is Elks Lodge right now, and have not yet completed agreements with the City of Tacoma, nor identified our funding strategy for Old City Hall, which would only begin once the Elks Lodge is complete. This has been our original plan since we submitted our proposal for Old City Hall.”

The city bought Old City Hall in 2015 for $4 million to prevent it from falling apart after years of neglect by its former owner, George Webb of The Stratford Co.

Walkowiak stressed that it’s important to the city for McMenamins to start working on Old City Hall.

“We are very cognizant of the loss of time,” she said. “My sense is we should be able to have something (an agreement to develop the property) this fall. I don’t believe we are far away.”

In the interim, the city has shored up various elements of Old City Hall that are threatening to fall apart in a plan to reopen the sidewalk around the 123-year-old building.

Before Elks Lodge’s renovations can begin, the company needs to sell historic tax credits, Longinetti wrote to The News Tribune on Tuesday.

The company remains committed to the Tacoma Elks Lodge, he wrote. The project has received “nearly 40 individual contributions, many of which come from Tacoma residents.”

In May, the company said it needed more investors to proceed on restoring the Tacoma landmark and turning it into a brewery and destination hotel. McMenamins also nudged its projected opening date from summer to fall 2017. The company’s project website continues to seek outside investors.

The company bought the property in 2009 for $1.2 million. Bringing the Beaux-Arts-style lodge back to life will cost many times that.

Walkowiak said she recalls when the Elks project first came to her attention late in the past decade. At that time, she said, renovation costs had been estimated at $18 million.

Earlier this year, the company said renovating the historic structure is expected to cost around $32 million. Contractors removed asbestos, tons of garbage and lead paint from the structure and its adjacent annex. A rotted beam that holds up the roof had been discovered and water damage was more extensive than originally thought.

“In just a short period of time, that’s a dramatic change,” Walkowiak said Tuesday of renovation costs. “The fact is they are very dedicated to renovating the structure in the best way possible that respects its historic heritage.”

“Elks is going to be full of surprises,” said architectural historian Michael Sullivan, who is a contractor with the company. “It’s very labor intensive. It’s not like new construction.”

Kate Martin: 253-597-8542, @KateReports