It’s a prime piece of property in the heart of downtown Tacoma, near McMenamins Elks Temple and Old City Hall.
Plans for demolition of what’s known as Graffiti Garages, 725 Broadway, and redevelopment into new apartments date back to 2014. Its 3-year development qualification for an 8-year multifamily property tax exemption (MFTE) expires in December.
The property was among those used by Bellevue-based investment firm iCap in what later was determined to be a Ponzi scheme, according to a ruling in U.S. Bankruptcy Court for the Eastern District of Washington.
Now, the property has hit another benchmark of sorts.
A “Notice of Abandonment” was listed for the property (officially 716-728 Commerce St.) in Pierce County records earlier this year.
725 Broadway LLC, an iCap-affiliated entity, remains as the site taxpayer on Pierce County’s online property portal, and the property has accumulated more than $49,000 in current and past-due property taxes going back to 2024.
The site also is tied to an ongoing investor lawsuit in King County.
The abandonment notice is the latest turn for a property that has long been the subject of redevelopment.
“Savvy investors cautiously love distressed properties,” said Harrison Laird, a principal with Lee & Associates commercial real estate services. Laird specializes in the sales and leasing of office properties throughout the South Sound.
“Often, publicly known injunctions and notices spur activity on a property, though the investor pool will generally be targeting the absolute minimum bid it’ll take to buy the property,” Laird told The News Tribune.
Steven Bender is an associate dean and professor at Seattle University School of Law and is an expert in real estate law.
In response to questions about the abandonment designation, Bender said many factors would play a role in the site’s future, with whoever is in charge of the property opting for as cost-effective offloading as possible.
In such cases, parties involved typically “assess the current highest and best use of the property, the rental market conditions, and the transferability of any existing development permits,” he noted.
According to city media representative Maria Lee, “The development permits have all expired so new permits would be required.”
Bender noted the “abandonment” distinction likely wouldn’t affect any new marketing of the site. Last year, The News Tribune reported that the property was being offered for just over $2 million.
“It probably doesn’t matter,” Bender said. “I mean, it’s mostly a matter of getting it into the hands of somebody who’s going to redevelop it, and what that will take.”
As The News Tribune reported last year, one lawsuit noted that the property had been used by 725 Broadway LLC to secure a loan that eventually exceeded the property’s value. Its most recent assessed value, according to Pierce County, is at just under $2 million.
As for a lender taking on site prep, “Most lenders are not going to be in the business of demolishing something,” Bender said. “Generally, that would be very unusual for a lender to want to reach in his pocket and pay more on a site.”
Chapter 11 and iCap liquidation
iCap Trust in December announced that iCap Enterprises and its affiliated debtors had completed Chapter 11 that included a “landmark Ponzi ruling” under a court-approved joint plan of liquidation, developed with an Official Committee of Unsecured Creditors.
The trust was established to recover assets for more than 1,800 defrauded investors, primarily from overseas.
The Ponzi ruling was part of an October findings of fact, conclusions of law, and order confirming a modified amended joint Chapter 11 Plan of liquidation of iCap Enterprises and its affiliated debtors.
As part of the court-approved plan, the Tacoma property was one of two iCap-related entities listed under “abandonment of certain estate assets.”
The determination meant that the property “shall be abandoned by the Debtors and their Estates pursuant to Section 554 of the Bankruptcy Code and shall not be considered iCap Trust Assets.”
A co-trustee for the iCap Trust did not respond to questions from The News Tribune about what’s next for the Tacoma site.
The other related entity abandoned in the bankruptcy case was iCap’s interest in Airlink Holding LLC and Airlink Markets LLC, which operated in the securities industry. iCap Enterprises was the parent company for Airlink.
In October, the director of the Washington State Department of Financial Institutions entered a final order against Airlink Markets, LLC, finding that “an officer, director, partner, or person performing similar functions for … Airlink Markets engaged in dishonest and unethical business practices in the securities industry, and those practices justified the revocation of the respondent’s broker-dealer registration under to the Securities Act of Washington.”
As a result, Airlink Markets was ordered to pay a $10,000 fine and $500 in costs, and had its broker-dealer registration revoked.
Previous reporting from The News Tribune contributed to this report.