KPFD Key Center Property Purchase Update and Possible Outcomes

Update: After the January edition went to press, the KPFD fire commissioners voted to immediately terminate the lease on the Calahan property at their December 27 meeting. No further action was taken, but a majority of commissioners expressed skepticism about retaining the property.

The Key Peninsula Fire Department had been contemplating replacement of Station 46, its district headquarters, for some years without a specific plan when three real estate parcels in Key Center came on the market in 2021.

KPFD bought the three parcels for $2.125 million at the end of the year in separate deals negotiated by then Fire Chief Dustin Morrow, who left to run Central Pierce Fire & Rescue Dec. 1, 2021. 

The properties were bought to provide options for a possible new headquarters, training facility, community rooms and perhaps a health clinic, according to Fire Commission Chair Stan Moffett.

The existing Key Center headquarters structure was built in 1975 and has undergone numerous renovations. Further work would require extensive seismic and sprinkler upgrades, among other things, according to KPFD Fire Chief Nick Swinhart, who succeeded Morrow in May 2022.

The first two parcels are known as the Olson estate and consist of two lots located almost immediately across KP Highway from Station 46, with a residence and a portion of the pasture behind it totaling 2.8 acres. The third parcel is the Calahan property, site of the former O’Callahan’s restaurant (aka Reed’s and Buck’s) located at the corner of KP Highway and 92nd Street NW.

The Olson parcels were appraised at $460,000; the department bought them for $1.2 million on Dec. 15, 2021.

The Calahan property was not appraised or inspected before the purchase, but the Pierce County Assessor-Treasurer tax valuation was $473,600. KPFD paid $950,000 Nov. 8, 2021. 

At the time of the purchases, Moffett told KP News, “We felt these properties, in our estimation, fit the bill so well to what we feel the district needs, that’s why we offered what we did.”

The department financed the deals with a private bond for $2.125 million at 1.82% interest with no prepayment penalty.

Biannual debt service is interest only, and started at $13,106.53 Dec. 1, 2021 until Dec. 1, 2024, when principal and interest payments starting at $129,337.50 will become payable every six months until 2040.

The Olson house is rented and a lease for the former O’Callahan’s was signed in April 2022, but the building requires extensive renovation and remains vacant. The department spent $23,000 on urgent roof and other repairs and estimated that another $50,000 would be needed to complete them.

Instead of spending more money on the property, the department attempted to negotiate a lease amendment permitting the lessee to make repairs in lieu of rent for a period of time. The property was expected to generate about $70,000 in annual rent as a steak and seafood restaurant.

After some months of discussion and delay, the lessee indicated he may be willing to agree to an amendment as of December 15.

“We’re working out some details,” Swinhart said. “Our attorney is working with his attorney and thinks they can get it done.”

Despite the difficulties, Moffett said, “I think our feeling right now is that it’s best to have that property leased and an operating business in there regardless of whether we’re going to re-sell it, and, at least for myself, that’s the way I’m leaning at this time.”

Multiple ideas were floated over the last year about possible use for the properties, including a new station and training facility, community meeting rooms, and a medical clinic.

“When we decided to purchase that property, we had visions of putting a clinic on that corner,” Moffett said. “Going back three years, we had been given authorization to be able to operate a clinic. Since that time, we’ve taken a closer look at what it would take to run something like that and it’s just beyond our capabilities financially. Personally, I don’t see us utilizing that corner property at this point.”

A capital facilities planning committee formed by the department is reviewing architect proposals and options for new construction or renovation of the properties and existing stations, or some combination.

“What the architect is looking at are the cost estimates of doing a new headquarters station on the Olson estate,” Moffett said. “At the same time, we’re looking at the possibility of tearing down and rebuilding where our current (headquarters) station is, and also taking a look at some of the remodeling that was recommended for some of the other stations.”

Those alternatives will be presented at town hall-style meetings for public input to adjust, finalize or veto, according to Moffett, early in 2023.