King County committee gives due-pass to sale of Federal Way public health clinic to HealthPoint with 10-year leaseback

The Metropolitan King County Council's Budget and Fiscal Management Committee on March 12 gave a unanimous due-pass recommendation to proposed Ordinance 2025-539 to convey the county-owned Federal Way Public Health Clinic property to HealthPoint, a nonprofit community health center network, under a negotiated purchase-and-sale agreement. The committee vote was 6 ayes, 0 noes (Councilmember Balducci excused).

Council legislative staff described the agreement as an installment sale in which HealthPoint will pay $800,000 over 10 years at 5% interest (staff said that the payments plus interest total just over $1,000,000). HealthPoint must invest no less than $8,000,000 in capital improvements and will lease back approximately 7,500 square feet of dedicated space plus about 1,200 square feet of shared space for use by Public Health at no base rent or operating expense for an initial 120-month term. The transaction package includes a purchase-and-sale agreement, a consideration agreement, a lease agreement and a restrictive covenant that requires operation of a federally qualified health center (FQHC) at the site for 15 years.

The clinic property is a roughly 13,000-square-foot lot with a single-story 20,000-square-foot medical office building built in 1993; an April 2024 appraisal in the staff materials placed the value above $5.7 million. Central staff said Public Health declared the property surplus in 2022 after concluding the department did not have funds to maintain the facility in a safe condition. The executive negotiated a direct sale to HealthPoint under King County facilities disposition rules that permit direct negotiation with bona fide nonprofits that serve the poor and infirm.

Sam Porter of council central staff summarized remaining open items in the agreements: the consideration agreement requires milestones and periodic reports demonstrating the $8 million capital investment and currently lacks completed project timelines or project schematics. Executive staff told the committee they expect to insert project timeframes and milestones into the contract documents before execution. HealthPoint has applied to the Washington State Department of Commerce for approximately $2.6 million toward dental expansion; HealthPoint said that grant is one of several funding sources it will pursue and that failure to receive that particular grant would not negate its commitment to the project. Executive staff and HealthPoint representatives told the committee the renovation work could take an estimated 36 months to substantial completion, and they described two options to avoid service disruptions during construction: (1) temporarily relocating both Public Health and HealthPoint services nearby, with HealthPoint covering relocation costs, or (2) phasing work while both providers continue to operate in the building and shift within the space as necessary.

Committee members sought and received legal clarification about the timing and recordation of the 15-year restrictive covenant that obligates operation of an FQHC on the site. Real-estate staff explained that HealthPoint would hold equitable title upon council approval and that, if executed as written, the covenant would be recorded by HealthPoint in 2025 and run for 15 years from recording (anticipated to run 2025–2040). Central staff said they would confirm the covenant language and effective dates in the final documentation before full-council action. Staff also confirmed that HealthPoint will not receive legal title to the property until it satisfies payment and performance obligations under the consideration agreement, which occur over the 10-year installment period.

Supporters on the committee said the deal preserves on-site public-health services, allows a partner with capital capacity to modernize an aging facility, and keeps continuity of services including WIC, reproductive health, first steps maternity support, dental and immunizations. Some members raised policy concerns about selling publicly owned health facilities that the county continues to occupy as a tenant, and asked central staff for a list of public-health properties sold in the last 10 years for context.

No amendments were made in committee. The committee forwarded the ordinance to the full King County Council with a due-pass recommendation. The committee discussion included requests for final confirmation of milestone dates, covenant recordation language, and documentation showing how Public Health services will be maintained during construction.