It was meant to help revitalize downtown. Is Tacoma Town Center circling the drain?

The future of the planned Tacoma Town Center development has grown more complicated amid a multi-million dollar judgment and a lien fight taking shape over repayment for site work.

The same development partner that took on the Tacoma project also faces financial entanglements in its home state of Idaho, including eviction from its offices over delinquent rent.

With no viable permits in place for Tacoma Town Center, it’s unclear when the project will come back to life.

The 6.4-acre Tacoma property, bordered by South 21st to South 23rd streets and from Jefferson to Tacoma avenues, has just one building completed by its original developer at the planned six-building campus.

The News Tribune reported in November that the project remained stalled amid various delays, liens and legal challenges spanning the past few years.

Two months later, Boise-based Galena Equity Partners, which took on the project from the original developer, received a more-than $10 million judgment against it in King County Superior Court for breach of contract with the first developer.

Idaho news outlets have reported on legal and financial issues Galena has faced in that state, too.

How we got here

The more-than $300 million Tacoma Town Center project originally was to be completed in phases, bringing hundreds of new apartments and retail space, a 200,000-square-foot-office building, accompanying infrastructure and a public plaza.

The original developer, Bellevue-based North America Asset Management Group, entered into a development agreement with the city for the project in 2015, purchasing the parcels in fall 2017.

Tacoma Town Center’s Building 2 was completed by NAAMG in March 2021. The site is Jefferson Yards Apartments at 409 S. 23rd St., which includes ground-floor commercial spaces.

An amended agreement in 2021 conveyed remaining undeveloped property to NAAMG subsidiary Tacoma Town Center Parcels LLC, which would assign its interest to one or more LLCs formed and controlled by Galena Equity Partners.

Galena was introduced to Tacoma in City Council sessions as the group that would successfully shepherd the site to completion, furthering revitalizing downtown and the nearby University of Washington Tacoma campus.

As NAAMG’s lawsuit in Seattle has detailed in numerous filings, things didn’t turn out as planned.

Lawsuits, debt and deed transfer

In April 2023, NAAMG sued Galena over the Tacoma project for repeatedly defaulting on an agreement to purchase NAAMG’s interest in Tacoma Town Center Parcels LLC.

“Defendants continue to own and possess a multi-million-dollar entity that owns multiple commercial parcels without payment of over $10 million dollars owed to NAAMG for this purchase,” NAAMG attorney Kim Sandher wrote in a Dec. 6, 2023 filing.

In January 2024, King County Superior Court Judge Matthew Segal ordered Galena Equity Partners and subsidiary GIC Tacoma LLC to pay NAAMG more than $10 million.

That judgment, entered Jan. 12, 2024, has been followed by supplemental proceedings in King County focused on reviewing Galena’s financial records.

Galena’s financial interests in Tacoma Town Center Parcels LLC and an LLC affiliated with a Vancouver, Washington, project known as 192nd Plaza Lofts were seized in an order issued to help satisfy the $10 million judgment.

Attorneys for Galena in the King County case disputed the amount of damages owed. In a Dec. 29, 2023 filing, Galena attorney Katie Daniel wrote that the requested award of damages included “amounts above and beyond those which they are entitled to, either at this stage or in this lawsuit entirely.”

In a June 2023 response to NAAMG’s initial complaint, Galena’s attorneys argued among other defenses, “Plaintiff’s damages, if any, are the result of the fault of others.”

In September, Galena’s attorneys offered additional details, essentially asserting funding fell through to maintain their end of the deal with NAAMG.

“The transactions contemplated in the underlying agreements required defendants to obtain investment funds through third parties, which did not occur,” wrote Brennan Schreibman, one of the attorneys for Galena.

Galena also disputed payment amounts reported by NAAMG compared with its own record of payments.

Galena officials as well as the office of attorneys representing the firm in the King County case did not respond to requests for comment from The News Tribune.

Meanwhile, other litigation has involved Galena in Pierce County.

A lawsuit was filed last fall in Pierce County Superior Court against Tacoma Town Center Parcels LLC by general contractor Northwest Cascade of Puyallup. It claims nonpayment for work to build a storm-line connection to the property.

The company seeks to collect more than $200,000, and it entered a lien claim on the site’s 2112 Jefferson Ave. parcel in February 2023. A landscaping company also filed a lien against that parcel in November 2023, county property records show.

Northwest Cascade’s attorney, Michael Murphy, entered an updated filing in April 2024, noting that the LLC had “recently recorded a deed of trust against the property in favor of Kurtin Properties, Inc.,” of California, “and then almost immediately transferred the property outright to that same company ‘in lieu of foreclosure.’”

In the motion to amend Northwest Cascade’s original 2023 complaint, Murphy wrote, “The transfers may constitute fraudulent conveyances.”

(Tacoma Town Center Parcels) “has no counsel of record and has been nonresponsive to discovery. Moreover, NWC believes that the transfer to Kurtin was intended to impair or at least delay the lien foreclosure process,” he wrote.

Attorneys for the LLC withdrew from the case in January 2024 and the LLC has not responded to the latest allegations in court.

In response to questions from The News Tribune, Murphy said via email there had been no communication with anyone representing Tacoma Town Center Parcels LLC or Kurtin Properties since the amended complaint was filed.

“They have been non-responsive,” he wrote.

He also noted there was no advance notification the LLC was transferring property to Kurtin.

“We are attempting to serve Kurtin in California,” he wrote.

Meanwhile, $180,823.98 is owed in property taxes, going back to 2022 for the parcel transferred to Kurtin, Pierce County tax records show.

Six tax parcels tied to Tacoma Town Center Parcels LLC, but with NAAMG’s office address listed as taxpayer, also show delinquent and current amounts owed to Pierce County as well as sewer/utility liens and landscaping liens.

Those parcels, between Fawcett and Tacoma avenues, show a total tax debt (not counting liens) of $255,474.56 as of mid-May 2024 dating back to 2022.

In Pierce County, properties enter tax foreclosure if they are three or more years delinquent in tax payment that is more than $100 (cumulative).

Another legal battle in Tacoma over nonpayment of an earlier settlement with Seattle-based Caron Architecture on the project totaling more than $591,000 ended last fall, with Caron’s attorney noting judgment had been “fully satisfied.” The case was dismissed in October 2023 ahead of its November trial date.

Across the state line in Idaho, meanwhile, the financial picture also appears grim for Galena.

Idaho issues

A website that tracks development news in the Boise area has reported that Galena has essentially disappeared from a project it’s been involved in there, and Galena recently was evicted from its Boise offices amid unpaid rent.

Boisedev.com reported April 23, 2024, that Galena faces approximately $1.87 million in liens and about $18.9 million in lawsuits over a mixed-use project in Merdian, Idaho, just outside Boise.

Both the Tacoma and Meridian sites are Opportunity Zone projects, which offers tax incentives for investors redeveloping distressed areas.

The Idaho Statesman reported in February 2024 that seven contractors and subcontractors had sued Galena Opportunity Fund after working for months without payment. An attorney representing Galena in that litigation acknowledged funding had fallen through on the Idaho project but that Galena would pay back what it owed and remained optimistic about that project’s eventual completion.

Galena Equity Partners’ business listing on Google shows it “permanently closed,” but its website remained online as of May 22.

“Whether your investment is in our real estate opportunity fund or our other multifamily real estate offerings, our focus is on becoming the best possible operating partner working on your behalf,” the website states.

What about Tacoma?

Maria Lee, media representative for the City of Tacoma, told The News Tribune via email in response to questions that there has been no recent movement on the property’s development.

“City staff last spoke with representatives of Galena Equity Partners in December 2023,” Lee wrote. “At that time, Galena expressed its intention to continue with development of the Town Center project.”

Lee with the city noted that since December, “the City has received inquiries regarding the Town Center properties from third parties, but there has been no follow-up activity from anyone inquiring.”

At this point, there are no current permits in the works for the site and no further extensions possible on any that were previously under review.

The city’s new building code kicked in March 15, requiring new permit applications and updated design to meet current code.

The News Tribune archives contributed to this report.