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Originally published July 29, 2013 at 6:24 PM | Page modified July 30, 2013 at 1:11 PM

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State rejects PacMed lease; use of building for college up in air

The decision leaves in jeopardy a plan to convert the mostly empty building for use by Seattle Central Community College and others, backed by millions of dollars in funds from the Legislature.

Seattle Times business reporter

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The state Department of Commerce rejected Monday a lease agreement proposed by the public authority that owns the Beacon Hill landmark popularly known as the PacMed Center.

That puts in jeopardy a plan to convert the mostly empty building for use by Seattle Central Community College and others, backed by millions of dollars in funds from the Legislature.

Last week, the authority’s governing council said it would “immediately look to other lease alternatives” if the state didn’t sign a proposed lease by 5 p.m. Monday. That lease required the state to commit to a 30-year lease and provide $250,000 in exchange for 60 more days to conduct due diligence.

With the deadline passed and no state commitment, the Pacific Hospital Preservation and Development Authority plans to hold a special meeting at 9 a.m. Tuesday to discuss the proposed lease with the state.

The development authority could take action right away on a competing offer from Lennar, the nation’s third-largest homebuilder, to turn the tower into market-rate apartments.

It’s the latest twist in the authority’s yearslong quest to fill up the building so it can fund projects to address disparities in access to health care.

The proposal orchestrated by the state Department of Commerce would transform the building into a 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 14-story tower.

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.

Lennar, a Miami-based homebuilder, has offered the authority a 75-year lease 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.

Rosemary Aragon, the authority’s executive director, couldn’t be reached for comment late Monday.

Last week Aragon criticized the state for taking too long to finish its due diligence.

On Monday, Brian Bonlender, the Commerce Department’s director, disputed that characterization.

“While this due diligence began some time ago, we have not been able to complete the process because we have not received information that we first requested,” Bonlender wrote. “What information has been provided has either been incomplete or not as described.”

The state offered an alternative lease for the PacMed authority to consider. “I remain committed to working in good faith to find a mutually agreed upon solution,” Bonlender wrote.

The art-deco-style tower, originally built as a U.S. Marine Hospital in 1932, was converted into office space under a 99-year lease signed in 1998 with private developer Wright Runstad.

Online retailer Amazon.com vacated the space in 2011. Wright Runstad was unable to sublease the space and defaulted on the lease.

Century Pacific, the authority’s leasing agent, said the tower has about 274,000 rentable square feet and, thanks to a renovation, is extremely energy efficient.

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

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