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Originally published July 25, 2013 at 2:11 PM | Page modified July 26, 2013 at 1:28 PM

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PacMed board awaits state’s decision on lease

Proposed lease by the state Department of Commerce could pave the way for Seattle Central Community College and others to fill the mostly empty landmark.

Seattle Times business reporter

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The public authority that owns the Beacon Hill landmark popularly known as the PacMed Center has given the state until 5 p.m. Monday to sign a lease that could result in Seattle Central Community College and community nonprofits occupying the mostly empty building.

If the state fails to sign the proposed 30-year lease and put up $250,000 by the deadline, the authority’s governing council said Thursday in a unanimous resolution that it will look at a competing proposal for 165 market-rate apartments from Lennar Corp., the nation’s third largest homebuilder.

Rosemary Aragon, executive director of the Pacific Hospital Preservation & Development Authority, said both proposals would result in “substantially equal” revenue to fund the agency’s mission of providing health care to the underserved.

The authority and the state have worked hard on an agreement, Aragon said at a public hearing Thursday, but the state has blown deadlines and failed to bring to closure a process that began in February.

One point of contention: The state has asked for 90 days to conduct its due diligence on the condition of the property; the authority gave it 60 days. Aragon said already $50 million in improvements had been made to the property.

The iconic 16-story tower, originally a U.S. Public Health Service hospital, was converted into office space under a 99-year lease signed in 1998 with private developer Wright Runstad. When online retailer Amazon.com vacated the space in 2011, the developer was unable to sublease the space and defaulted on the lease.

Lacking rents from the property has weakened the authority’s ability to fund projects to address disparities in access to health care.

For example, more than 1,000 indigent patients received dental care from a project funded by the authority. “There are thousands more who couldn’t get care because we don’t have a tenant,” said Kevin Fox, a council member.

In April, the state Department of Commerce asked the Legislature for $20 million to renovate the art deco-style building and sublease space to Seattle Central Community College and nonprofits engaged in social services. At the time, the plan was for SCCC to put health training programs in the building.

The department also asked for permission to enter into a 30-year lease with the authority and $4.85 million to cover the lease’s operating expenses.

Once the Legislature granted the funds, the department submitted a proposal to the authority to lease the building.

A department spokesman could not be reached immediately for comment Thursday.

The state’s proposal would convert the building for educational use and call it the Community Health College and Innovation Center.

Seattle Central, which needs 85,000 square feet of space, would put its health-training programs, including a new bachelor of nursing program, in six floors of the tower.

The Innovation Center, a consortium of at least eight nonprofits focused on community health, would fill the remaining floors of the building. They include Neighborcare Health, Cross Cultural Health Care Program and the Northwest Regional Primary Care Association.

Dr. David McLanahan, who was a surgeon for 25 years at the public hospital, told the council during public testimony on Thursday to remember the authority’s mission to caring for the medically underserved.

“People who gave so much for their work and served here would be devastated to see this treasure transferred as another gift to the 1 percent when it should be a beacon of hope to the 99 percent,” McLanahan said.

Stephen Orser, who represented Lennar at Thursday’s meeting, was one of the few there who advocated for a different vision, but said either way, “we’re all winners.”

Lennar has offered the authority a 75-year lease with two 10-year renewal options under which it would invest more than $25 million in improvements to create one- and two-bedroom apartments, as well as a gym and dining room lounge.

More than $7 million of that would go toward repairing the tower’s roof, masonry facade and windows, according to an email Lennar sent the authority earlier this month. After 95 years, Lennar said, it would turn the building back over to the authority.

“Our vision for the project is to provide future residents the opportunity to live in a one-of-a-kind historic home offering outstanding views from Beacon Hill,” the email states.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com On Twitter @sbhatt

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