Plans for Maple Valley "Donut Hole" not a done deal

A controversial King County land deal has hit a snag after the lone bid for 156 acres of county land in Maple Valley came in $10 million lower than the county expected.

The bid was submitted by the same Kirkland developer, YarrowBay Group, that spent the past two years working with the county to build housing on the so-called "Donut Hole" property.

After that no-bid deal sparked controversy, and The Seattle Times published a story on it in January, King County Executive Ron Sims ordered the land — an island of unincorporated land in the middle of town — put out for a public bid.

Despite initial interest from several developers, only YarrowBay made an offer. The company has proposed building more than a thousand houses on the property, which the county now uses as a gravel pit and roads-maintenance shop.

But YarrowBay's bid of $35 million came in far lower than the $45 million to $51 million the company had offered for the land in January, according to a letter from Kathy Brown, the county's facilities-management director, to YarrowBay managing partner Brian Ross. Brown called YarrowBay's latest offer "completely inadequate" in a May 19 letter obtained by The Seattle Times.

The developer's $35 million bid was dramatically less than the $70 million that a county appraisal estimated the land was worth last July. (YarrowBay countered with a September appraisal putting the value at $40 million.)

YarrowBay's new bid also withdrew a 276-acre swath of forest land along the Green River that the company had dangled as part of its proposed no-bid deal. County officials have long wanted to buy the so-called Icy Creek forest land, which Brown's letter valued at $4 million, to preserve it from development. The chance to acquire the Icy Creek land had been key to the county's argument for negotiating only with YarrowBay.

Now YarrowBay is offering to preserve 90 acres of land near Snoqualmie, at a cost of about $350,000.

In an interview, Brown would not discuss the specifics of YarrowBay's offer, citing confidentiality of real-estate talks. County officials blacked out the financial details of YarrowBay's bid in their response to a public-disclosure request.

"We're still in negotiations. The current proposal does not meet our needs," said Brown, whose letter had threatened to call off talks if YarrowBay didn't raise its bid substantially.

YarrowBay did not respond to phone calls requesting comment.

Martin Durkan Jr., a lobbyist who helped craft YarrowBay's earlier no-bid proposal, said he no longer represents the developer and would not comment.

Despite the impasse, county officials said they're continuing to talk with YarrowBay about whether a deal can be reached.

Metropolitan King County Councilmember Larry Phillips said the council still would like to see a deal that somehow includes the Icy Creek land.

Although county officials were disappointed with YarrowBay's bid, it suits Maple Valley officials just fine.

They have worried that dense development of the Donut Hole could raise Maple Valley's already fast-growing population by 30 percent, overwhelming roads and schools.

In paying less for the land, a developer might not be driven to build as many houses there.

"If they [YarrowBay developers] are not paying an artificially high price for the land, they don't have to maximize a density figure on there that is completely out of whack with the surrounding neighborhoods," said Maple Valley City Manager Anthony Hemstad.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com