Yelm city staff and council members will examine the financial situation and consider paying the final bond payment of a 640-acre portion of the Thurston Highlands property that was deeded to the city by a developer in lieu of foreclosure a couple years ago.
City staff say they don’t definitively know how much the final payment on the parcel will be without looking at the financial situation, but the number “$366,000” was circled informally at a recent meeting on the topic and mentioned by councilmembers online.
In a presentation to the Yelm City Council on Tuesday, Jan. 7, during a study session, Community Development Director Grant Beck updated the council on the parcel and how the city plans on moving forward with it.
The Killion Road Local Improvement District was formed in 2006 to help develop the property. In 2009 and 2010, the property owners, Thurston Highlands Association, missed payments on the 640 acres.
The city does not own the property.
A Local Improvement District, or LID, is a form of financial structuring formed by the city to assist the developers or property owners with financing capital projects.
In 2012, the city refinanced payments with a new property owner, DDD Inc. But in 2016 and 2017, DDD also missed payments. The city started the foreclosure process, but instead the deed was forfeited over to the city.
The deed redemption period for DDD ended on Jan. 3 of this year. Now, the deed to the property is under city ownership. The property is an asset of the LID.
City Administrator Michael Grayum said the next steps are for city staff to meet with the bank and personnel who support the LID to determine options with moving forward for development.
The city has mediated bond payments on behalf of the LID, which has enough funds to make payments on the parcel through 2023. The city will have one final bond payment on the property in 2024 before the LID closes.
The council and staff will review the full scope of the financial situation at the end of this year during the biennium budget process to determine how much they’ll need to allocate for the final bond payment.
The 640-acre plot is located just southwest of downtown and is only accessible by private access roads.
“Development for the property really depends on the development for the rest of the Thurston Highlands,” Beck said.
This story has been updated with details to better reflect the ownership of this property.