Washington's Vargas Foreclosure Ruling Was Withdrawn: What Lenders, Borrowers and Commercial Owners Should Do Now

Last spring, the Washington Supreme Court issued an opinion that, if it had stood, could have shut down nonjudicial foreclosure for a large category of loans. On September 4 the court withdrew it. Marquez Vargas v. RRA CP Opportunity Trust 1, No. 103735-0, is now waiting on a second decision, and nobody outside the court knows when it will come.

The case involves a homeowner's line of credit, not an office building. But if you lend on, buy, or own Washington commercial real estate, the reasoning matters, because it turns on how Washington's Deed of Trust Act defines who may foreclose. Here's what happened and what I'd do while we wait.

The Facts

According to the opinion as published by Justia, Gabriel Marquez Vargas financed his home in 2005 with an "80/20" setup: a traditional mortgage for 80% of the price and a subordinate home equity line of credit (HELOC) for the rest. The HELOC had a $59,900 credit limit, and a separate draw acknowledgment showed an initial draw of $59,900. He defaulted in 2011. RRA CP Opportunity Trust 1 bought the note and deed of trust in 2016. In April 2022, the servicer signed a sworn declaration that RRA was the "holder" of the HELOC, and a trustee's sale was noticed that summer.

Vargas sued in federal court in the Western District of Washington. The federal judge certified two state-law questions to the Washington Supreme Court.

The Legal Issues

Under RCW 61.24.030(7)(a), before a notice of trustee's sale goes out, the trustee must have proof that the beneficiary is "the holder of any promissory note or other obligation secured by the deed of trust." A sworn beneficiary declaration is enough. The two certified questions were:

• Is a typical HELOC a negotiable instrument under UCC Article 3 (RCW 62A.3-104)?
• Can a beneficiary satisfy the Deed of Trust Act's "holder" requirement by declaring it holds a HELOC agreement?

What the April 30 Opinion Held

Justice Gordon McCloud wrote for the majority and answered no to both. A HELOC promises repayment of draws up to a limit, not a fixed amount stated on its face, so it isn't negotiable. And "holder" under the Act means the holder of a negotiable instrument, so a beneficiary can't use a "holder" declaration to foreclose on a nonnegotiable one. The court said lenders keep their judicial remedies. Justice Barbara Madsen, sitting pro tem, dissented, arguing the Act covers nonnegotiable obligations and that "holder" isn't tied to the UCC definition. I haven't been able to confirm the exact vote count, so I'm not stating one.

The Department of Financial Institutions described the case as involving a HELOC on residential property of four units or less. But a Ballard Spahr alert read the reasoning more broadly, saying it could also keep multiple-advance loans, such as construction loans, out of nonjudicial foreclosure. Whether and how the reasoning reaches commercial deeds of trust is a point I haven't analyzed in depth, and it's the first thing I'd want a lawyer to look at for any specific loan.

Reconsideration and Withdrawal

RRA moved for reconsideration on May 20. Amici supported it, including a brief on behalf of Community Bankers of Washington, the Washington Bankers Association and GoWest Credit Union Association, according to Ballard Spahr, whose lawyers wrote that brief. As summarized by Snell & Wilmer, the motion argued that:

• the Act isn't limited to negotiable instruments, since it refers to "other obligation[s]";
• a negotiability rule conflicts with RCW 61.24.100(6), which allows nonjudicial foreclosure of deeds of trust securing guaranties, and guaranties aren't negotiable;
• the 2018 amendment swapping "owner" for "holder" wasn't meant to restrict foreclosure.

The amici also argued the opinion could affect commercial loans, including "approximately 8,400 commercial construction loans totaling $14.2 billion in Washington in 2025," per Snell & Wilmer's summary. That is an advocacy estimate from the amici's arguments, and I haven't seen the underlying data. Treat it as a sense of scale, not a verified count.

On September 4, the court granted reconsideration and withdrew the April opinion. It will reconsider on the existing briefing, with no oral argument and no new briefs. The DFI's update says the prior decision is "no longer binding." A GoWest post noted that discussions about legislation remain active. A Beresford Booth alert described the situation as "limbo." That firm published an alert on the case, and I haven't seen anything indicating it was involved in the litigation.

What's Next

As of October 30, I haven't found a new opinion, a reargument date or an enacted legislative fix. Possible outcomes range from reinstating the April holding, to a narrower ruling limited to HELOCs, to a reversal. I won't guess which. Watch for:

• the new opinion, and whether it speaks to multiple-advance or commercial loans;
• any DFI follow-up, which promised another update once the court rules;
• any legislative proposal to clarify "holder" in the Deed of Trust Act.

Practical Steps

Lenders: Ballard Spahr says lenders may proceed cautiously with nonjudicial foreclosures consistent with past practice. Snell & Wilmer suggests considering a separate negotiable promissory note alongside new credit lines, and reviewing loan files and foreclosure procedures. Have counsel review any pending sale on a nonnegotiable or multiple-advance loan.

Borrowers and guarantors: Don't assume a trustee's sale notice is valid or invalid because of this case. The opinion has been withdrawn, but the question is open. If you've received a notice, get a lawyer to look at it promptly, because timing can matter if you want to challenge a sale.

Buyers at trustee sales and title insurers: I haven't found published guidance on these two groups. My own view is that an open legal question about a foreclosing party's authority can add risk to a purchase, so closely review the chain of foreclosure documents and talk to your title officer before bidding.

Commercial owners: If you're refinancing or taking on construction or revolving debt, ask how the loan is documented and how the lender plans to enforce it. Use a refinancing advisory conversation to compare lenders' structures before you sign.

What This Means in Snohomish County

Construction financing, bridge loans and revolving lines are common in Snohomish County commercial real estate. That includes apartment and industrial projects in Everett commercial real estate and the surrounding cities. Owners there should know how their loans are documented, because the way a lender can enforce affects the cost and availability of credit. The same applies to Seattle commercial real estate and the rest of the region. If you're planning a sale, purchase or lease of a property with a loan on it, make sure the debt is clean before you go to market. If you invest alongside others, the same question applies to the financing behind a syndicated deal.

Key Takeaways

• Vargas is a HELOC case on a residential property, and the April 30 opinion has been withdrawn and is no longer binding.
• The court is reconsidering on the existing briefing, with no reargument, and I haven't found a decision date.
• The 8,400 loans and $14.2 billion figure is an amici advocacy estimate that I couldn't verify.
• Whether the reasoning reaches commercial loans is unresolved, so have counsel review pending foreclosures and new loan documents.
• Watch for the new opinion and any legislative fix.

Let's Talk

If you have a loan, a pending trustee's sale, or a deal that could be affected, I can look at it from both the legal and the brokerage side. Visit Weitz Commercial or contact us to set up a conversation.

This post is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Consult your own attorney about your situation.

Light Rail May Be Coming to Your Property Line: What Snohomish County Owners and Tenants Should Do Before the Nov 2 Comment Deadline

Sound Transit and the Federal Transit Administration have published the Draft Environmental Impact Statement for the Everett Link Extension, and the public comment period closes November 2, 2026. According to the October 15 Snohomish County Tomorrow presentation, the project would add about 16 miles of light rail from Lynnwood into Everett, with 7 new stations, opening between 2037 and 2041.

If you own or lease Snohomish County commercial real estate near I-5, SR 99, Airport Road, or Evergreen Way, this is the moment to find out whether your property is on the study list. Here's what the Draft EIS says, what Washington law provides if property is acquired, and what I'd do this week.

Where the Project Stands

The Draft EIS studies nine segments. Per the county presentation, Sound Transit has identified preferred alternatives in some and not others:

• Preferred alternatives identified: West Alderwood, SW Everett Industrial Center, Broadway/I-5, and Everett Station.
• No preferred alternative identified: Ash Way, Mariner, SR 99/Airport Road, SR 526/Evergreen Way, and the Operations and Maintenance Facility (OMF) North, which needs 80 to 100+ acres.

Sound Transit's schedule has the Board confirming or modifying preferred alternatives in late 2026 or early 2027, a Final EIS in late 2027, and the federal Record of Decision in early 2028. I'm not going to guess which alternatives will be chosen. Nobody outside the Board knows yet, and that's the point: input now can still shape the choices.

Is Your Property Listed?

Sound Transit says it has contacted owners whose property may be affected under any of the alternatives. The Draft EIS's Appendix G.2 lists potentially affected properties, and you can search it by address or parcel number. Sound Transit's own guidance is clear: being listed "does not mean we have decided to buy your property." It means the property is close to one or more of the options being studied.

Tenants should check too. A landlord may get the letter, but the tenant is the one running a business in the space. If your building is listed, ask your landlord what they've received.

What Washington Law Gives a Displaced Business

Two statutes matter most if a public agency acquires property or a business has to move.

Relocation: RCW 8.26.035. When a project displaces a person, the displacing agency must pay actual reasonable moving expenses, direct losses of tangible personal property, and reasonable expenses of searching for a replacement business. A displaced small business, nonprofit, or farm can also recover reasonable reestablishment expenses at the new site, capped at $200,000 or the federal amount under 42 U.S.C. 4622, whichever is greater. The statute also directs annual 2% inflation adjustments to the $200,000 figure, so confirm the current number. A business can instead elect a fixed payment in lieu of those items, but a person whose sole business at the displacement property is renting it to others does not qualify for that fixed payment.

Attorney fees: RCW 8.25.075. A court must award the property owner reasonable attorney and expert witness fees if a condemnation is finally adjudicated as unauthorized or the condemnor abandons it. In an inverse condemnation case, where an owner claims property was taken or damaged without compensation, fees are awarded if the judgment exceeds the agency's highest written settlement offer, made at least 30 days before trial, by 10% or more.

These are summaries, and the details matter. Whether and how they apply depends on the facts, the agency, and the funding behind the project.

What I'd Do Before November 2

• Search Appendix G.2 for your address or parcel number. Screenshot or save the result.
• Submit a comment. You can comment online, by phone, by mail, by email, or at meetings through November 2. Comments can be in any language. The project page has the details.
• Preserve your records. Keep letters from Sound Transit, emails, notes of phone calls, the names of the people you spoke with, and any appraisals. Document your business too: lease, build-out costs, equipment, and revenue history.
• Review your lease. If you're a tenant or landlord, a lease review is a good first step. Look for condemnation or eminent domain clauses. Who gets the award? Can either side terminate? What happens to rent and to your improvements? Many leases are silent on tenant relocation rights, which is a problem to find before a notice arrives.
• Talk to counsel before signing anything. That includes right-of-entry agreements, appraisal access, and settlement documents.

What This Means in Snohomish County

This project touches several markets in Snohomish County commercial real estate. The county presentation covers segments from West Alderwood and Ash Way through Mariner to Everett Station, so the effects reach well beyond one city. Owners of Everett commercial real estate along Evergreen Way or in the Southwest Everett Industrial Center, and owners of Lynnwood commercial real estate near Ash Way and Alderwood, should look first. Mill Creek commercial real estate and Mukilteo commercial real estate owners and tenants will see the traffic, access, and construction effects of a major transit project nearby, even if their parcels aren't listed. The County Council has scheduled a special meeting on the Everett Link Extension for October 28 at 5:30 PM at Mill Creek Foursquare Church, 1415 164th St SW, Lynnwood. That's a chance to hear the discussion in person.

Transit can lift values around stations, and construction can disrupt businesses for years. Both can be true, so how your parcel and your lease are positioned matters.

Key Takeaways

• The Draft EIS comment period closes November 2, 2026.
• Appendix G.2 lists potentially affected properties. Being listed doesn't mean Sound Transit has decided to buy yours.
• Five segments or sites, including Ash Way, SR 99/Airport Road, and SR 526/Evergreen Way, have no preferred alternative yet.
• RCW 8.26.035 provides relocation and reestablishment payments for displaced businesses, and landlords whose only business there is renting the property can't claim the fixed payment.
• RCW 8.25.075 can shift attorney and expert fees to the condemning agency in certain cases.
• Save records, read your lease's condemnation clause, and get advice before you sign anything.

Let's Talk

If you own, lease, or are weighing a purchase near the proposed route, I can look at your situation from both the legal side and the brokerage and leasing side. Learn more about my background, visit Weitz Commercial, or contact us to set up a conversation before the deadline.

This post is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Consult your own attorney about your situation.

Microsoft's 60,000-Employee Buyout Offer: What It Means for Puget Sound and Snohomish County Commercial Real Estate

On Monday, October 26, Microsoft announced a new Voluntary Exit Offer for eligible employees in the United States, Canada, India, and the United Kingdom. CNBC reported that about 60,000 people are eligible, roughly 27% of Microsoft's 223,000-person workforce, and CRN says Microsoft confirmed that figure.

Headlines are calling it layoffs, but it's technically a buyout. Nobody is being terminated today. Still, when the region's largest private employer invites a quarter of its workforce to leave, that matters for Puget Sound and Snohomish County commercial real estate. Here's what was reported and how I'd think about it.

What Microsoft Announced

According to Chief People Officer Amy Coleman's post, the offer is time-limited and voluntary. It's open to employees at level 70 and below in participating organizations, and it comes with financial support and career-planning resources. Not every organization is participating.

• Timing: employees decide in early December, and participants leave December 31, per CNBC.
• Who's in: Bloomberg reports that Xbox, Windows, Copilot, and finance are fully participating. Some data center, sales, marketing, cybersecurity, and quantum computing groups are excluded. Microsoft declined to comment on those specifics.
• Why: CNBC ties the move to the cost of Microsoft's AI build-out. The company said September-quarter capital spending would exceed $50 billion.
• No target: a person briefed on the plan told CNBC that Microsoft has no set participation goal.

The Bigger Pattern

This is the latest step in a long run of reductions. CRN recaps about 6,000 cuts in May 2025 and 9,000 in July 2025. Then came a voluntary retirement program this spring, which more than 30% of eligible employees took (about 3,000 people), and about 4,800 layoffs announced in July 2026. If participation in the new offer runs near 30%, CRN estimates about 18,000 departures worldwide. That's an estimate, not a reported number, and Microsoft hasn't said how many of the eligible employees are in Washington.

Office: More Sublease Space Likely on the Eastside

Fewer workers usually means less space needed, but it takes time to show up. Microsoft owns its Redmond campus, so the first signs are more likely in leased space in Bellevue and around the region, either as sublease listings or as leases that aren't renewed. For tenants, that's an opportunity: sublease space often comes furnished, on shorter terms, and at a discount. For landlords competing with that supply, expect more pressure on concessions, free rent, and tenant improvement packages in lease negotiations.

Retail, Restaurants, and Housing

Restaurants, fitness, and service retail near campuses rely on weekday foot traffic. A large drop in headcount, even a voluntary one, cuts into lunch counts and evening spending. Buyout money cushions household spending for a while, so the impact may be gradual rather than sudden. On housing, some departing employees will start their own companies, some will relocate, and some will take jobs elsewhere in the region. The net effect on Eastside rents and home prices is hard to call yet, and I'd be skeptical of anyone who says otherwise this early.

A Short Legal Note: WARN and Washington's Mini-WARN Act

The federal WARN Act generally requires 60 days' notice before a covered mass layoff or plant closing. Washington's own law, chapter 49.170 RCW, adds state notice requirements, and the Employment Security Department posts WARN notices filed in Washington. Voluntary departures generally don't count as an "employment loss" under WARN, so a true buyout usually doesn't trigger notice. That changes if a program pressures people to leave or is followed by involuntary cuts. As of this writing, I haven't seen a new Microsoft WARN filing tied to today's offer. Watch ESD's list in January.

What This Means in Snohomish County

Snohomish County isn't Redmond, but many Microsoft employees live here and commute south. A few things I'd watch in Snohomish County commercial real estate:

• New businesses: buyout money plus experienced talent often turns into startups and acquisitions. That means demand for small office, flex, and businesses for sale in places like Everett commercial real estate and Mill Creek commercial real estate.
• Local spending: fewer commuters can actually help neighborhood retail in Mukilteo, Marysville, and Snohomish commercial real estate, as more people spend their weekdays near home.
• Office competition: if Eastside sublease space gets cheap, some tenants who would have leased in Everett may look south. Local landlords should price renewals with that in mind.

Key Takeaways

• Microsoft's October 26 offer is a voluntary buyout for about 60,000 eligible employees in four countries, not a layoff notice.
• Decisions are due in early December, and participants leave December 31.
• Microsoft hasn't disclosed the Washington share of those eligible or how many people it expects to accept.
• Expect gradual pressure on Eastside office subleases and near-campus retail, and possible new business formation.
• Voluntary exits usually don't trigger WARN notices. Watch ESD for any follow-on involuntary cuts.

Let's Talk

Whether you're a tenant looking to take advantage of a softer market, a landlord planning for renewals, or a departing employee thinking about buying a business, Weitz Commercial can help from both the legal and the brokerage side. Contact us to set up a conversation.

This post is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Consult your own attorney about your situation.

Everett's New B&O Tax: What Commercial Landlords and Tenants Should Do Before January 1

On October 14, the Everett City Council voted unanimously to approve the first rework of the city's business and occupation (B&O) tax in more than two decades. The Everett Herald reported that the changes take effect January 1, 2027. Thousands of small businesses will stop paying the tax, and service, wholesale, and manufacturing businesses will pay more.

This isn't just a tax story. It's an occupancy-cost story. If you own or lease Everett commercial real estate, the new rates will show up in your budget, and possibly in your lease. Here's what changed and what I'd do before the new year.

What Changed

According to the Herald's report, Everett used to charge a flat 0.1% B&O tax on annual gross revenues across four sectors, with an exemption for businesses earning under $20,000 a year. Starting January 1, 2027:

• Exemption threshold: rises from $20,000 to $250,000 in annual revenue. City officials estimate about 3,000 more businesses become exempt, or about 6,500 of the city's roughly 9,000 businesses.
• Services and wholesale: rise from 0.1% to 0.15%, a 50% increase.
• Manufacturing: rises from 0.1% to 0.12%.
• Retail and restaurants: fall from 0.1% to 0.075%. Deputy Mayor Mike Fong estimated about 2,000 companies will see a cut.

The city expects the changes to raise about $3.5 million a year. The new money goes into a separate economic development subfund, with $2.5 to $2.9 million a year expected to go toward the proposed downtown Outdoor Event Center stadium, and $300,000 to $500,000 a year each for a new business-support team and a commercial district grant program. Spending that money still requires a budget amendment, likely in 2027.

To put the rate change in dollars: a professional services tenant grossing $2 million a year in Everett would go from roughly $2,000 to roughly $3,000 in city B&O tax. A restaurant with the same revenue would drop to about $1,500. How a given business's gross receipts are taxed and apportioned depends on the city ordinance and the state framework for municipal B&O taxes in chapter 35.102 RCW, so check your own numbers with your accountant.

How It Hits Occupancy Costs

A B&O tax is a tax on the business, not on the real estate, so in most leases it stays with the business that earns the revenue. A tenant's own B&O bill usually isn't a lease issue at all. It matters to the deal in three ways:

• Tenant affordability. Office, medical, professional, and distribution tenants just saw a fixed cost go up. That affects what they can pay in rent and how hard they'll push at renewal.
• Landlord pass-throughs. A landlord's own B&O liability on its rental or management revenue may be passed to tenants through operating expense or tax clauses, depending on how the lease is drafted. Whether and how Everett's B&O applies to a particular landlord's rental income is a question to confirm with the city's ordinance and your tax advisor.
• Retail relief. Retail and restaurant tenants get a modest cut, which helps retail centers and mixed-use projects slightly.

Read Your Lease's Tax and Pass-Through Clauses

In a triple-net or modified gross lease, the language that matters is usually in the definitions of "Taxes" or "Operating Expenses." Look for these:

• Broad "Taxes" definitions. Many landlord forms define Taxes to include "any tax on rents" or "any tax measured by gross receipts from the Property," which could arguably pull in a landlord's B&O tax. Tenant-friendly leases usually exclude the landlord's income, franchise, estate, and B&O taxes.
• Gross-up clauses. Some leases require the tenant to "gross up" rent so the landlord nets the same amount after any new tax on rent. If yours has one, the rate change could flow straight to you.
• Base-year resets. In a gross or base-year lease, a tax increase after the base year flows to tenants as an expense escalation. Leases signed with a 2026 base year will capture the 2027 increase.
• Change-in-law clauses. Some leases address new or increased taxes after signing. Read who bears them.

What to Do Before January 1

Landlords: Have your accountant tell you whether and how much your own Everett B&O liability changes. Then review your lease forms and current leases to see what you can actually pass through, and budget your 2027 CAM reconciliations accordingly. Don't assume you can recover a new cost your leases don't clearly cover.

Tenants: Run your 2027 B&O number at the new rate, or confirm you're now under the $250,000 exemption. If you're negotiating a new lease or renewal now, this is the time to tighten the Taxes definition. Ask for an express exclusion of the landlord's B&O and income taxes, and strike any gross-up language you don't need to accept.

Buyers and sellers: If you're underwriting a purchase or sale, look at the tenant mix. A building full of professional service tenants carries a slightly different cost picture than a retail center.

Negotiation Tips

• Use the change as leverage. A tenant facing a 50% B&O increase has a real argument for a smaller rent bump or a tenant improvement allowance.
• Define taxes precisely. Vague language creates fights at reconciliation time.
• Cap controllable expenses, and decide in writing whether tax increases sit inside or outside the cap.
• Ask for audit rights on pass-throughs so you can verify what's being charged.

What This Means in Snohomish County

Everett is the county's largest city, so its tax policy sets the tone for Snohomish County commercial real estate. Tenants who are comparing sites will now factor in the B&O difference between Everett and neighboring cities. Service and distribution users may look harder at Marysville commercial real estate, Arlington commercial real estate, or Mukilteo commercial real estate. Users weighing a move east may also compare Snohomish commercial real estate, Monroe commercial real estate, and Mill Creek commercial real estate. Each city's B&O rules are different, and some don't levy one at all, so verify before you move. On the other side, Everett is sending the new revenue into economic development, the stadium, and commercial district grants, which could support values in the downtown core over time. For Everett commercial real estate owners, the question is whether those investments offset the higher costs for office and industrial tenants.

Key Takeaways

• Everett's new B&O rates take effect January 1, 2027, and the small-business exemption rises from $20,000 to $250,000.
• Services and wholesale rise to 0.15%, manufacturing to 0.12%, and retail and restaurants drop to 0.075%.
• A tenant's own B&O tax usually stays with the tenant. A landlord's B&O tax can reach tenants only if the lease allows it.
• Check your Taxes definition, gross-up clause, base year, and change-in-law language now.
• Use the change as leverage in renewals and new leases for Everett commercial real estate.

Let's Talk

If you own, lease, or are buying property in Everett and want a second look at how these changes affect your lease or your deal, I can review it from both the legal and the brokerage side. Visit Weitz Commercial or contact us to set up a conversation.

This post is for general information only and is not legal or tax advice. Reading it does not create an attorney-client relationship. Consult your own attorney and tax advisor about your situation.

Deed in Lieu or Foreclosure? What Washington Owners and Lenders Are Choosing in 2026

Two headlines from this week tell you where commercial real estate in our region is right now. On October 21, the Puget Sound Business Journal reported that Keelbase Capital took over The Baxter, an 80-unit apartment building in downtown Bellevue, through a deed in lieu of foreclosure recorded October 14. Keelbase first bought the existing loan from the lender, then took the deed. A day later, the PSBJ reported that downtown Seattle's Central Building is back on the market, three years after it faced foreclosure.

When a loan goes bad, owners and lenders in Washington usually have two ways out: a negotiated deed in lieu, or a nonjudicial trustee's sale. Here's how I explain the choice to clients.

The Trustee's Sale: Washington's Default Path

Most commercial loans here are secured by a deed of trust, so the lender can foreclose without going to court under the Deed of Trust Act, chapter 61.24 RCW. The deed of trust must contain a power of sale, and the borrower must be in default (RCW 61.24.030). A notice of default goes out at least 30 days before the notice of sale. The trustee then records and mails the notice of sale at least 90 days before the auction, including to junior lienholders and tenants of record (RCW 61.24.040).

The trustee's deed conveys whatever the borrower could convey when the deed of trust was signed (RCW 61.24.050). In other words, the sale wipes out junior liens recorded after the deed of trust, and those liens then attach to any surplus (RCW 61.24.080).

The big commercial wrinkle is deficiency. For residential borrowers, a trustee's sale generally ends personal liability. For a commercial loan signed after June 11, 1998, the lender can still sue a borrower or guarantor for the gap between the debt and the property's fair value, but must file within one year of the sale (RCW 61.24.100(3)–(4)).

The Deed in Lieu: A Negotiated Handoff

In a deed in lieu, the owner simply deeds the property to the lender, or to the lender's designee, in exchange for some release of the debt. It's faster, quieter, and cheaper than an auction. It also gives the parties room to negotiate a smooth handover of tenants, records, and service contracts, a cash payment to the owner for cooperating, and the scope of any release.

One Washington rule every guarantor should know: under RCW 61.24.100(7), when a lender accepts a deed in lieu on a commercial loan, the guarantor is released from liability for the debt unless the guarantor agrees otherwise as part of the deal. That makes the guaranty the real bargaining chip.

The Risks on Each Side

• Junior liens. This is the biggest weakness of a deed in lieu. It doesn't wipe out second deeds of trust, mechanics' liens, or judgments. The lender takes the property subject to them, which is why lenders order a title report before agreeing to anything.
• Merger. When the lender holds both the deed of trust and the ownership, the two interests can "merge," and the lien can disappear, letting junior liens move up in priority. Well-drafted deeds in lieu state that no merger is intended, and many lenders keep the loan alive in a separate entity.
• Deficiency exposure. Borrowers should get a written release. Without one, the debt may survive the transfer. Lenders who want to keep a guaranty in place need the guarantor's written agreement, because of RCW 61.24.100(7).
• Title insurance. Title insurers look closely at deeds in lieu. They want an estoppel affidavit confirming the transfer was voluntary and for fair value, so it can't later be attacked as a fraudulent transfer or a bankruptcy preference.
• Tax. Washington's real estate excise tax generally doesn't apply to a deed in lieu given to satisfy a deed of trust (RCW 82.45.010(3)(j)). Federal tax is another matter. A deed in lieu is treated as a sale, and forgiven debt can be taxable to the borrower (IRS Publication 4681). Talk to your CPA before you sign.

What This Means for Buyers of Distressed Assets

The Baxter shows the 2026 playbook: buy the note, then negotiate the deed in lieu. You step into the lender's position and take title without an auction, but you inherit whatever is on title, so a full title and lien review is essential.

Buying at a trustee's sale is different. Title comes clear of junior liens, but you're bidding at a public auction with limited time to inspect, usually for cash, and you take the property as is. Assets like the Central Building that have already been through distress often come back as ordinary listings. That can be the best time to buy, because the capital structure has been reset.

What This Means in Snohomish County

Big Seattle and Bellevue deals make the headlines, but the same pressures are reaching smaller owners in Snohomish County commercial real estate. In Everett commercial real estate, owners of older office and mixed-use buildings who face 2026 refinancing at today's rates are the most likely to be talking to their lenders. The same is true for owners of retail and flex buildings in Marysville commercial real estate and Arlington commercial real estate. Investors watching Mukilteo, Mill Creek, Snohomish, and Monroe commercial real estate should know that note purchases and deed-in-lieu deals rarely hit the open market. They come through relationships with lenders and owners.

Key Takeaways

• A trustee's sale under RCW 61.24 wipes out junior liens. A deed in lieu does not.
• On commercial loans, lenders can pursue a deficiency for up to one year after a trustee's sale.
• Under RCW 61.24.100(7), a deed in lieu releases commercial guarantors unless they agree otherwise.
• Insist on a non-merger clause, an estoppel affidavit, and a title review.
• Washington REET generally doesn't apply to a deed in lieu, but federal income tax on forgiven debt might.
• For buyers, buying the note and then taking a deed in lieu is the quiet way into distressed assets.

Let's Talk

If you're an owner facing a loan maturity, a lender weighing your options, or a buyer hunting for distressed opportunities, I can help with both the legal and the brokerage side. Visit Weitz Commercial or contact me directly.

This post is general information, not legal or tax advice, and reading it doesn't create an attorney-client relationship. Every situation is different, so talk to a qualified attorney and tax advisor about yours.

Everett Light rail update - Fall, 2026

By Nathan, October 15, 2026 Light rail is coming to Everett as we have talked about, and the plan for getting there is now public. On September 18, Sound Transit released the Draft Environmental Impact Statement (EIS) for the Everett Link Extension, a 16-mile line from Lynnwood to downtown Everett with six new stations. Phase 1 would reach the Southwest Everett Industrial Center in 2037, and Phase 2 would reach Everett Station in 2041. The line promises faster trips and new growth, but it would also displace hundreds of households and bring years of construction. The public has until November 2, 2026 to weigh in. What the community gains Faster, more reliable trips. Sound Transit estimates about 33 minutes from Everett Station to Lynnwood and about 60 minutes to downtown Seattle, with trains every 4 to 6 minutes at peak. A direct line to jobs. The Southwest Everett Industrial Center station would serve the Paine Field/Boeing area and its roughly 44,370 jobs. Growth around stations. The Economic Alliance Snohomish County says economic activity is already following Lynnwood Link and expects the same for Everett. With Washington's new law allowing housing in commercial zones, station areas are likely to see new homes and mixed-use projects. What the community gives up Homes and neighborhood anchors. Every Mariner alternative would displace 287 to 300 residences and dozens of businesses, including a library, grocery stores and HUD-assisted apartments. The Ash Way and Broadway/I-5 segments would each displace dozens more homes. A large rail yard. The line needs an 80- to 100-acre maintenance facility. One candidate site would take 186 to 189 residences; another would fill a stream and affect manufacturing jobs; a third would disturb the most wetland. Years of construction. Starting around 2030, nearby businesses face months-long road closures, noise, lost parking and reduced visibility. Small local businesses are the most exposed. Weighing the trade-offs Routes for the Ash Way, Mariner, SR 99/Airport Road and SR 526/Evergreen segments, and the rail-yard site, are still undecided. Those choices will determine which neighborhoods lose homes and businesses and which gain stations. Done well, Everett Link can connect thousands of residents to jobs and bring new housing to station areas. Done poorly, it could push out the residents and small businesses those benefits are meant for, so commitments on relocation help, replacement affordable housing and construction support matter as much as the route. About Us: at Weitz Commercial, we specialize in Snohomish County Commercial Real Estate efforts if you own property or want to explore investment in the area.  Have your say Comments are open through November 2, 2026 online or by email to everettlinkcomments@soundtransit.org. Sound Transit expects a Final EIS in late 2027 or early 2028, with the board's final route decision to follow.

New Washington Commercial Zoning Law - SB 6026

 

SB 6026 Explained: What Washington's New Commercial-Zone Housing Law Means for Snohomish County By Nathan, October 7, 2026 Washington's Senate Bill 6026 took effect June 11, 2026, and it changes what many commercial properties in Snohomish County are allowed to become. In most of the county's larger cities, commercial and mixed-use land must now be open to housing, and cities can no longer require ground-floor retail across most of that land. For owners of aging strip centers, vacant big boxes and oversized parking lots, that opens a new path to value. What the law does SB 6026 has three main parts, according to the Legislature's final bill report. Housing must be allowed in commercial and mixed-use zones. Cities and counties with 30,000 or more people (and non-rural counties) that plan under the Growth Management Act can no longer exclude residential uses from land zoned commercial or mixed-use. Ground-floor retail mandates are capped. These jurisdictions can't require ground-floor commercial or retail as a condition of building housing on more than 40% of their commercial and mixed-use acreage. Affordable housing that is publicly subsidized can't be required to include ground-floor commercial at all. Waivers must be available. Cities and counties must offer an administrative process for owners to ask for a reduction or waiver of ground-floor retail rules, weighing the number of homes the change would add. What's excluded. The housing requirement doesn't apply to parts of a lot that are: in an industrial zone; within 3,200 feet of an active oil or gas refinery; where housing is barred because of a military installation or a public general aviation airport; in a tax increment financing area created before the law took effect; outside the urban growth area; in a critical area or its buffer, or next to shorelines where multifamily is prohibited; or where development would require demolishing a designated historic landmark. Station areas and zones allowing buildings of at least 85 feet also don't count toward the 40% retail cap, so cities can keep ground-floor retail rules there. Where it applies in Snohomish County Six cities in Snohomish County are above the 30,000-person threshold, along with the county itself for unincorporated commercial land inside urban growth areas next to covered cities. Jurisdiction 2025 population Covered by SB 6026? Everett 114,700 Yes Marysville 75,640 Yes Bothell (King and Snohomish counties) 51,760 Yes Edmonds 43,510 Yes Lynnwood 42,540 Yes Lake Stevens About 42,100 Yes Snohomish County (unincorporated) Non-rural county Yes, in qualifying urban growth areas Mountlake Terrace 24,640 Not yet Mill Creek 21,630 No Mukilteo 21,600 No Smaller cities such as Mill Creek, Mukilteo, Monroe and Arlington aren't covered, though they can choose to adopt similar rules. Mountlake Terrace is worth watching: it has grown about 16% since 2020, and it's still well short of 30,000. Owners in any city should confirm their parcel's status with the local planning department, since the exclusions above can apply lot by lot. A local example: the Evergreen Way Walmart For a preview of what SB 6026 is meant to encourage, look at 11400 Evergreen Way in south Everett. The Highway 99 Walmart there closed in April 2023 and has sat empty since. D.R. Horton, the nation's largest homebuilder, now plans to replace it with 248 for-sale homes in a project called Rowan Park (Everett Herald). Site Just under 19 acres Homes 92 single-family, 156 townhomes Replaces ~147,000 SF store and ~715 parking stalls Amenities Playgrounds, dog areas, basketball and pickleball courts Rowan Park was filed in April 2026, before SB 6026 took effect, but it's exactly the kind of project the law is built around: a dark big box and its parking lot turned into homes, with no ground-floor retail required. The City of Everett supports it, saying it fits its South Everett strategy of connecting residents to nearby manufacturing jobs. The Paine Field/Boeing industrial center nearby holds about 44,370 jobs (PSRC). As of May 2026, the project was on a city correction hold pending more information. Watch for preliminary approval and demolition of the old store. This is something that we think will become more and more common in Everett and throughout Snohomish County. The county and state are implementing laws to increase housing and there is an abundance of big box retail and large parcels that will start to turn into these mixed use and neighborhood centered builds. I like this direction and think it is good for the community, we need more spaces and laws like this to promote growth. What it means for owners and investors More potential uses, more potential buyers. A commercial parcel in a covered city can now attract homebuilders and apartment developers as well as retail and office users. That wider buyer pool can support land values on underperforming sites. Retail requirements get easier to remove. If your site carries a ground-floor retail mandate that has kept a project from penciling out, the new waiver process gives you a formal way to ask for relief. Industrial land stays industrial. The law excludes industrial zones, so places like the Paine Field/Boeing manufacturing center aren't affected. That protects industrial owners from residential encroachment. Retail landlords may benefit too. Each big box converted to housing removes retail space and adds nearby households, which can help the remaining well-located storefronts. Timing matters. Cities are rewriting their codes now. Owners who track these updates and comment early will be better positioned than those who wait for the December 2027 deadline. Key dates March 27, 2026: Gov. Ferguson signs SB 6026 in Everett. June 11, 2026: The law takes effect. December 2027: The 18-month deadline for cities and counties to update their codes. After that, state rules override conflicting local regulations. For more information on Snohomish County Commercial Real Estate, please contact our Everett Commercial Real Estate Brokerage.  Scott Weitz Scott@weitzcommercial.com  T: 206.306.4034

2027 Washington Real Estate Excise Tax Bracket updates

Washington's graduated real estate excise tax (REET) brackets move up $26,000 on January 1, 2027. 

The rates themselves don't change, so the effect is a small tax cut for most sales over $525,000 — roughly $47 to $494, depending on price. Every four years, the Department of Revenue adjusts the thresholds under RCW 82.45.060, and this is the 2027 reset.

The new brackets

Each rate applies only to the slice of the price inside its bracket, like income tax brackets. Every threshold rises by $26,000.

State rate	Through Dec. 31, 2026	Starting Jan. 1, 2027
1.10%	$525,000 or less	$551,000 or less
1.28%	$525,000.01 – $1,525,000	$551,000.01 – $1,551,000
2.75%	$1,525,000.01 – $3,025,000	$1,551,000.01 – $3,051,000
3.00%	Over $3,025,000	Over $3,051,000

Classified agricultural land and timberland stay at a flat 1.28% state rate. Source: Washington DOR

What it saves

The savings cap at $494 on the state portion, no matter how high the price goes. That's because only $26,000 slices move to a lower rate.

Sale price	State REET savings in 2027
$525,000 or less	$0 (no change)
$525,001 – $551,000	Up to $46.80
$551,001 – $1,525,000	$46.80
$1,525,001 – $1,551,000	$46.80 to $429
$1,551,001 – $3,025,000	$429
$3,025,001 – $3,051,000	$429 to $494
Over $3,051,000	$494

Two quick examples. An $800,000 home pays $9,295 in state REET in 2026 and $9,248.20 in 2027. A $2,000,000 home pays $31,637.50 in 2026 and $31,208.50 in 2027, a $429 difference.

Year-end timing

The new thresholds apply to sales dated January 1, 2027 or later. DOR treats the date of sale as the date the deed is executed and delivered to the buyer — generally the notarization date — not the recording date.

For a deal already set to close in late December, the savings rarely justify moving the date. A few hundred dollars can be outweighed by a rate lock, a 1031 deadline, a lease end, or a buyer's need to move. Where a closing is already flexible and the price is above $1,525,000, it's worth mentioning so the client can decide.

REET is usually paid by the seller, so sellers are the ones to flag. If the seller doesn't pay it, the buyer becomes liable.

The fine print

• Local REET still applies. Cities and counties add their own REET on top of the state rate, and the 2027 change doesn't touch it. Check DOR's local rate table for the property's location code.
• Ag and timberland are unaffected. Qualifying classified land stays at a flat 1.28% state rate.
• Multiple parcels are added together. When several parcels sell in one transaction, the brackets apply to the combined price.
• Fees don't change. The $5 state technology fee per transfer still applies.

This post is general information, not tax or legal advice. Confirm figures for a specific sale with escrow or a tax professional.

For more information on Buying or Selling Lake Stevens, or Snohomish County Commercial Real Estate, you can find our Everett Commercial Real Estate Brokerage information below. 

Weitz Commercial

Scott Weitz: 206.306.4034

Scott@weitzcommercial.com 

Nathan Cuda: 425.268.9796

Nathan@weitzcommercial.com 

September 2026
Local Perspective.
Real Insight. Real Value.

WC  |  Weitz Commercial

MARKET WATCH

SNOHOMISH COUNTY MARKET UPDATE

THE 9 THINGS WE’RE WATCHING

1. RESIDENTIAL ACTIVE LISTINGS (YOY)

Inventory continues to build compared to last year, giving buyers more options and creating a more balanced market.

2,875August 2026

2,064August 2025

+39.3%YOY Change

2. NEW LISTINGS (YOY)

More sellers are entering the market compared to this time last year, adding to available inventory.

1,286August 2026

1,125August 2025

+14.3%YOY Change

3. MONTHS OF INVENTORY (YOY)

Months of inventory shows how long it would take to sell all active listings at the current sales pace.

3.64August 2026

2.38August 2025

+1.26YOY Change

A balanced market is typically 4–6 months of inventory.

4. MEDIAN SALE PRICE (YOY)

Median sale price has softened slightly compared to last year, reflecting higher rates and increased inventory.

$724,500August 2026

$755,000August 2025

−4.0%YOY Change

5. MORTGAGE RATES (YOY)

Higher mortgage rates continue to impact affordability and buyer demand.

6.67%August 2026

6.59%August 2025

Monthly payment on median-price home ($724,500 with 20% down)

$3,729August 2026

$3,854August 2025

−$125Less per month

6. NOTABLE COMMERCIAL SALE

Notable sale activity as of late September 2026

Bank of America building at 501 N Olympic Ave, Arlington
Listed for $3 million; sold for $2.1 million
7,124 sq ft on 0.63 acres
New HVAC and roof
Owner-operator purchase

Full details available upon request.

7. LEGAL & GOVERNMENT WATCH

The Federal Opportunity Zone program is transitioning to a permanent “OZ 2.0” starting January 1, 2027. See IRS Notice 2026-40.

Key points for 2026 deals

• Deferred gain(s) from the old program generally must be recognized by December 31, 2026.
• New zone designations take effect January 1, 2027.
• Practical takeaway: anyone holding a 2026 gain, a pending 1031/OZ structure, or a project in a current Snohomish County OZ tract needs a year-end plan locked before December 31.

8. POTENTIAL OPPORTUNITY

We see the potential for land purchases at noticeable discounts. Inventory has risen fairly dramatically, so well-positioned land with improved zoning can have notable upside.

9. Scott’s Perspective

Market thoughts.

Well — the verdict is in; even the biggest proponents have to admit we are facing notable weakness across the residential sector. Inventory up 40% YOY; new listings up 14.3%; and median sale price down 4%. Add on that the 10-year Treasury (which sets mortgage rates) is at historical highs. It’s hard to make an argument for a short-term turnaround at this point.

Why it matters.

A more balanced market creates opportunities for well-prepared buyers and positions strong properties to stand out. Land-use changes and housing reforms continue to create long-term opportunities, but selectivity is advised for buyers and investors. We believe opportunities are forthcoming.

What we are watching.

We continue to look most closely at inventory numbers. Unless we have an uptick in purchasing, which we think will be challenging with rates where they are, inventory will steer the pricing ship. Based on ATTOM stats, YOY pre-foreclosure numbers are up 21% nationwide. Unfortunately, we expect that trend to continue and to see more of that locally.

Scott Weitz
President | Broker, Weitz Commercial
206.306.4034 | scott@weitzcommercial.com

Trusted Advisors. Local Knowledge. Lasting Relationships.

Weitz Commercial is a full-service commercial real estate firm focused on helping clients navigate opportunities and solve problems.

WEITZCOMMERCIAL.COM
© 2026 Weitz Commercial Real Estate Services, LLC.

Fed Rate raise - What does it mean for Snohomish County Real Estate?

September 16, 2026

The Federal Reserve raised its benchmark interest rate by 0.25 percentage points today, bringing the federal-funds target range to 3.75%–4.00%. The decision was unanimous and represents the Fed’s first rate increase since 2023.

More important than the increase itself, the Fed signaled that interest rates may remain elevated and could move higher before policymakers are comfortable that inflation is returning to the 2% target.

Why the Fed Raised Rates

The Federal Open Market Committee described the economy as surprisingly resilient. Consumer spending remains healthy, capital investment is strong, unemployment has changed little, and economic activity continues to expand at a solid pace.

That resilience gives the Fed room to focus on inflation, which remains stubbornly above its target. In explaining the increase, the Fed stated that the action was intended to produce a more timely return to 2% inflation. The vote was 12–0.

Energy prices and geopolitical uncertainty have added to the inflation concern. Rather than treating those pressures as entirely temporary, the Fed appears determined to prevent them from becoming embedded in broader prices and inflation expectations.

Another Increase May Be Coming

The Fed’s updated projections point to a year-end federal-funds rate of approximately 4.1%, suggesting one additional quarter-point increase before the end of 2026. Sixteen of the 18 participating policymakers projected at least one more increase.

The median projection also keeps the rate near 4.1% through the end of 2027. That is a meaningful shift from the June projection, when policymakers anticipated a year-end 2026 rate of approximately 3.8% and a 2027 rate of 3.6%.

In other words, this was not merely a one-time adjustment. The Fed is telling markets that borrowing costs may remain higher for longer than previously expected.

The Economic Forecast

The Fed’s projections describe an economy that continues growing despite elevated interest rates:

• 2026 GDP growth: 2.3%
• 2026 unemployment: 4.1%
• 2026 PCE inflation: 3.7%
• 2026 core PCE inflation: 3.4%
• Projected year-end federal-funds rate: 4.1%

The basic message is that inflation remains too high, but the economy and employment market appear strong enough to absorb additional monetary tightening.

What This Means for Commercial Real Estate

For commercial real estate, today’s decision is another setback for borrowers waiting for materially cheaper financing.

The Fed does not directly determine commercial mortgage rates. Those rates are influenced by Treasury yields, lender spreads, property risk, and loan structure. Nevertheless, a higher policy rate — and the expectation that it will stay elevated — affects nearly every part of the lending market.

Borrowers should anticipate:

• Continued pressure on floating-rate loans;
• More difficult refinancing for loans originated at lower rates;
• Conservative lender underwriting and debt-service coverage requirements;
• Additional pressure on property values where capitalization rates have not fully adjusted;
• Wider gaps between buyers’ and sellers’ pricing expectations; and
• More opportunities involving loan maturities, distressed ownership, and recapitalizations.

Long-term borrowing costs remain particularly important. Following today’s announcement, the 10-year Treasury yield was still near 5%. That means even if the Fed pauses after one more increase, commercial mortgage rates are unlikely to fall quickly unless longer-term Treasury yields also decline.

The Snohomish County Perspective

Snohomish County’s underlying growth, industrial base, and relative affordability remain positives. However, local properties are not insulated from national credit conditions.

Owners with strong occupancy, manageable leverage, and fixed-rate debt should generally be able to weather this environment. The greatest vulnerability will likely be among owners facing near-term maturities, significant vacancies, unfinished capital projects, or loans underwritten when borrowing costs were substantially lower.

At the same time, tighter credit conditions may create opportunities for disciplined buyers. Properties that remain fundamentally sound but have an overleveraged ownership structure or an approaching loan maturity could become attractive acquisition or recapitalization candidates.

Owner-user transactions may also remain active, particularly where SBA financing and the long-term benefit of controlling a business location outweigh the immediate interest-rate cost.

Our Take

Today’s increase is not catastrophic, but it is clearly unfavorable for commercial real estate in the near term. The more significant development is the Fed’s projection that rates may remain around current levels through 2027.

The market has spent several years expecting meaningful rate relief just over the horizon. Today’s announcement challenges that assumption. Buyers should underwrite conservatively, owners should examine upcoming maturities early, and investors should avoid basing an acquisition on the expectation that inexpensive debt will soon return.

And now comes my rant: THIS. IS. INSANITY. According to the Fed, “economic activity is expanding at a ‘solid pace’. While uncertainty remains elevated, in part to geopolitical developments, domestic spending remains resilient.” Let me sum this up for you, and this is not meant to be political whatsoever….frankly, we try to remain as neutral as possible but will call out ANY policymaker that we believe is acting against the best interest of this Country and therefore our community….. THE IRAN WAR is the “GEOPOLITICAL DEVELOPMENT” leading to higher energy costs…. this is not inflation based on demand…it’s based on artificial crap fully within the control of our Government. The sad reality is anyone with half a brain who keeps an eye on the real estate markets sees 1) the market softening; and 2) inventory increasing with not enough buyers to absorb. Simply put, our Fed Chair Kevin Warsh (who happened to receive $100M upon signing on as Fed Chair from an undisclosed source (see congressional testimony)) is either a complete idiot or trying to deflate the market. Perhaps that’s the goal, but to hide behind artificial inflation is infuriating as an outsider.

For more information on Everett commercial real estate, consider contacting a Snohomish-based commercial real estate broker.

For brokerage, leasing, and investment support across Snohomish and King County, visit www.weitzcommercial.com or email Scott@weitzcommercial.com / Nathan@weitzcommercial.com.

Regards, 

Scott Weitz

T: 206.306.4034

Scott@Weitzcommercial.com 

Trusted Advisors. Local Knowledge. Lasting Relationships. Weitz Commercial is a full-service commercial real estate firm focused on helping clients navigate opportunities and solve problems.

WEITZCOMMERCIAL.COM | © 2026 .

Mill Creek's Annexation Crossroads

Weitz Commercial | Market Insight

Mill Creek's Annexation Crossroads: Four Scenarios, One Big Decision

What four annexation scenarios could mean for Mill Creek's tax base, its commercial corridors, and the property owners watching from the sidelines.

The Mill Creek City Council reached a pivotal moment on annexation at its July meeting, reviewing four expansion scenarios and signaling a direction without locking anything in. Consultants Rob Fenty (1961 Consulting) and Sarah Emmans (SME Consulting) led the presentation, while City Manager Moto framed the study as a chance to strengthen the city's financial footing.

The Big Picture

The consulting team split Mill Creek's growth area into five blocks and modeled each one's costs and revenue through 2044. The headline finding: single-family residential areas cost the city more than they generate, while commercial and industrial corridors pay their own way.

That's a dynamic we see across Snohomish County: commercial and industrial development tends to carry more than its share of the municipal tax load, subsidizing the residential services around it. It's one more reason we watch annexation and zoning decisions closely for clients evaluating Snohomish County commercial real estate.

Council set three tests for any scenario:

• Real financial impact within about three years
• Infrastructure that meets Mill Creek's standards
• Lasting city influence over what happens next

The Four Scenarios

1. Mill Creek East (Blocks A + B)
About 10,700 residents, mostly built-out and residential. Nets roughly $1.1M in year one but declines to around $500K by year 18 as a tax credit expires. Low-risk and familiar, but adds no commercial base, and part of Block B may not clear the Boundary Review Board.

2. Mill Creek South (Blocks C, D, H)
About 11,700 residents along Highway 527. The strongest financial performer, roughly $2.7M net in year one, rising to about $5.3M by year 18, but it includes neighborhoods likely to resist annexation and unresolved questions around Mays Pond, North Creek Park, and a sliver in the Northshore School District.

3. A + D + H
About 15,000 residents, following the power lines south. Financially in the middle, but seen by some on Council as costing more in process than it saves. Mayor Pro Tem Duque favored starting with Blocks A and B first.

4. All Five Blocks
About 22,400 residents, staged over several years. This option delivers the largest return, roughly $3.8M growing to $5.9M, and is the only one that meaningfully boosts the city's bonding capacity. But Council Member Cavaleri warned it could trigger state growth mandates that force more apartments into blocks the city wants kept commercial, a tension worth watching for anyone tracking Mill Creek's commercial zoning.

Pushback and Where Things Stand

Council Member Steckler challenged cost estimates tied to Block A as hard to trace; Fenty responded that staffing projections were modeled on Mill Creek's own employee ratios and will be refined later. Emmans also revised Block H's population estimate upward, from about 1,000 to roughly 2,600, after finding more multifamily housing than originally expected.

Steckler favored Blocks D and H alone as the cleanest financial play. Cavaleri argued Block C is likely needed for Boundary Review Board approval, and Mayor Vignal agreed that C, D, and H would be her pick if a third block is added. Council Member Paddock raised the question no one else had: what's the exit plan if the city announces intent to annex and later decides against it?

What's Next

No final decision has been made. Staff will build a staging plan for the favored scenario, and early talks with the Boundary Review Board will begin in parallel. A go/no-go decision is expected in the coming months.

Our Take

Annexation studies like this one are worth watching well beyond city limits. The blocks under discussion sit along growth corridors that matter for retail, industrial, and multifamily positioning throughout south Snohomish County, and how Mill Creek stages this decision will shape zoning, infrastructure investment, and commercial demand in the area for years to come. Owners and investors with property near these blocks should be paying attention now, not once a staging plan is finalized. 

For more on Snohomish County commercial real estate, please reach out to us at Scott@weitzcommercial.com or Nathan@weitzcommercial.com.

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This post is for general informational purposes and is not legal or investment advice. Annexation scenarios, boundaries, and financial projections are subject to change as the City Council's review continues. Confirm current details with the City of Mill Creek before making decisions about a specific property.

Scott Weitz President | Broker Weitz Commercial 2716 Colby Ave Everett, WA 98201  206.306.4034 scott@weitzcommercial.com

Trusted Advisors. Local Knowledge. Lasting Relationships.
Weitz Commercial is a full-service commercial real estate firm focused on helping clients navigate opportunities and solve problems.

Everett Unenforced Masonry Overview

Weitz Commercial | Market Insight

The Rules Nobody's Enforcing: Unreinforced Masonry in Everett

What commercial and multifamily owners in Snohomish County should know about brick buildings, earthquake risk, and a regulatory gap that hasn't closed yet.

Walk down Colby Avenue, Hewitt, or Rucker in downtown Everett and you're surrounded by the city's most character-rich buildings century-old brick storefronts and mixed-use blocks that give the core its identity. Many of those same buildings are also classified as unreinforced masonry (URM): load-bearing brick or block walls built without the steel reinforcement and wall-to-floor/roof connections that modern code requires to keep a building standing in an earthquake.

Here's the part most owners don't realize: in Everett, and across most of Washington outside Seattle, retrofitting those buildings is not mandatory. The rules exist on paper. They're rarely triggered in practice.

What counts as a URM building

A typical URM is a brick, hollow clay tile, or unreinforced concrete-block building, generally constructed before the 1940s, with at least one load-bearing wall that lacks steel reinforcement. Without retrofitting, these walls, and especially unbraced parapets, are prone to cracking, partial collapse, or falling debris during ground shaking. Given the Pacific Northwest's Cascadia earthquake exposure, that's not a theoretical risk.

Everett has already counted the buildings

This isn't a guess. In 2023, the Washington Emergency Management Division, the Department of Archaeology & Historic Preservation (DAHP), and the Downtown Everett Association trained volunteers to conduct a sidewalk survey of the city's building stock. The pilot project identified more than 120 buildings in Everett showing URM characteristics, a notable inventory for a single pilot effort. The intent behind the survey was to eventually prioritize retrofit funding and risk mitigation, and DAHP has since received federal disaster-mitigation grant funding to build out a statewide URM data portal.

In other words: the city and state know where the risk sits. Knowing isn't the same as requiring anything be done about it.

Why the requirements go unenforced

Washington's Existing Building Code includes an appendix (Appendix A) with detailed seismic retrofit standards specifically for unreinforced masonry bearing-wall buildings, bracing parapets, strengthening roof and floor connections to walls, and repairing deteriorated mortar joints. It's a real, detailed technical standard. The catch is how it gets applied:

• It's largely permit-triggered, not proactive. A URM retrofit typically only becomes a requirement when an owner pulls a permit for a "substantial alteration" — a major remodel, change of occupancy, or similar. Left alone, a building can sit unretrofitted indefinitely.
• There's no Everett-specific mandatory ordinance. Seattle is the notable exception in the state, it has spent several years building toward a mandatory URM retrofit ordinance (with compliance currently voluntary while the city develops supportive funding and code recognition for completed retrofits). No comparable mandatory ordinance exists in Everett.
• Local code enforcement is complaint-driven. Everett's Code Enforcement Unit responds to reported violations, nuisance, zoning, dangerous-building complaints, rather than conducting proactive structural sweeps of older masonry stock. Absent a complaint or a permit application, a URM building's status simply doesn't come up.

Why this matters for owners and investors

For anyone holding, buying, or lending against older brick buildings in Everett's core (commercial or multifamily), this gap cuts both ways:

• No immediate compliance deadline means no forced capital expense today, which keeps basis and returns intact for buildings that would otherwise carry heavy retrofit costs.
• But the risk doesn't disappear: it shifts to insurance underwriting, tenant safety liability, and disclosure obligations at sale. Lenders and insurers are increasingly asking about seismic risk directly, URM ordinance or not.
• Seattle's trajectory is a preview. Cities that survey their URM stock tend to eventually regulate it. If Everett follows that same path, buildings identified today become tomorrow's mandatory retrofit list and early movers who retrofit voluntarily may have more flexibility on cost, timeline, and financing than owners who wait for a deadline.
• Due diligence should assume the code is silent. Don't rely on the absence of a violation notice as evidence a masonry building is structurally sound. A pre-purchase structural assessment from a licensed engineer is the only way to actually know what you're buying.

Scott's take

We're seeing more capital interested in downtown Everett's older brick buildings — adaptive reuse is one of the categories we flagged as improving in this month's Opportunity Index. That's a good thing for the core. But "no mandatory retrofit ordinance" isn't the same as "no risk." Owners of URM buildings should treat a structural evaluation the same way they'd treat a Phase I environmental report: a standard piece of diligence, not an optional one. The regulatory gap will close eventually. Buildings that get ahead of it will be worth more when it does. For more information on Snohomish County Commercial Real Estate, please email us at Scott@Weitzcommercial or Nathan@weitzcommercial.com.

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This post is for general informational purposes and is not legal, engineering, or compliance advice. Building code requirements change and can vary by permit type and project scope. Before making decisions about a specific property, confirm current requirements with the City of Everett Permit Services and consult a licensed structural engineer.

Scott Weitz President | Broker Weitz Commercial 206.306.4034 scott@weitzcommercial.com

Trusted Advisors. Local Knowledge. Lasting Relationships.
Weitz Commercial is a full-service commercial real estate firm focused on helping clients navigate opportunities and solve problems.
WEITZCOMMERCIAL.COM  |  © 2026 Weitz Commercial Real Estate Services, LLC.