Setbacks don’t deter big plans for Pasco’s Osprey Pointe Marketplace

Four years ago, plans to develop Osprey Pointe Marketplace were announced.

When Eaty Gourmet couldn’t deliver, JMS Construction stepped up with a goal of breaking ground in 2020.

Then Covid-19 upended the project.

Once the dust had largely settled, the opening was revised to summer 2022.

Then the 2021 Washington State Energy Strategy mandated that new and existing buildings transition to high-efficiency electric space and water heating.

Then there was proposed legislation to ban natural gas altogether as a heat source in new commercial construction and residential projects four stories and taller.

The series of setbacks posed major problems for James and Meredith Sexton, owners of JMS Construction, who have been in the process of master planning and engineering the Port of Pasco’s 55-acre parcel at Osprey Pointe.

Slow-going process

The homebuilders’ vision includes more than just a housing development.

And they’re not giving up.

They want to convert the vacant waterfront property into a mixed-use development with commercial space.

Plans call for 1,063 homes consisting of apartments, condominiums and detached condos, a 350-room hotel and the centerpiece: a 9,400-square-foot indoor marketplace, event facility and an outdoor amphitheater bigger than the Gorge in Quincy.

The snag? The Sextons had planned to heat the marketplace with four gas furnaces.

The proposed bill ended up dying, but in an unexpected move, the Washington State Building Code Council passed a similar ban in spring 2022. It goes into effect this July.

Changes to the state building code were made in the interest of reducing the state’s greenhouse gas emissions.

The change sent new construction costs skyrocketing.

“Instead of four gas-fired furnaces, we are looking at 27 heat pumps. It raised (the cost) quite a bit … we had to reevaluate and look at the loan. The energy portion of it was almost $1 million with the heat pumps,” Sexton said.

It wasn’t an easy case to make to their lender, so it was back to the drawing board.

Though the Sextons planned to heat the marketplace with natural gas, they also had integrated into their plans small-scale wind and a 150-by-65-foot solar rooftop array to generate some power for the facility.

“With the furnaces – which are 98% efficient – the solar alone was going to generate 38% of our energy, but new calculations have dropped it to 7% because that’s how much electricity the heat pumps would use,” he said.

Osprey Pointe isn’t sunk though.

The Sextons are participating in an energy audit program to help identify ways to cut costs through additional energy-efficient features.

They also have hired a Seattle-based energy consultant, as well as a solar and wind engineer who are working with the audit team to determine solutions.

“We think we can still create 70% of the power on site,” Sexton said. Their goal is for the facility to be net zero and Energy Star-certified.

Wanting to do it right

He said they have heard a lot of doubt about the project from the community.

“Yes, it’s taking too long, but I only have one chance to do this,” he said. “People don’t realize that we now have plans for where everything goes – every electrical outlet, sewer, water, wind power – all of it.”

At press time, Sexton was waiting on approval for his permit for off-site sewer and water.

“It feels like nothing’s happening, but behind the scenes there is massive amounts of stuff going on,” he said.

Soon, there will be more visible activity.

With the marketplace specs under revision, the Sextons have pivoted to two high-efficiency mixed-use apartment buildings they believe will anchor the future marketplace.

They didn’t take the easy road there either.

Each building will be four stories high, with up to six suites of commercial space on the ground floor and three stories of residential units above for a total of 18 units per building.

The units will be 1,450 square feet, featuring three bedrooms, one bathroom, laundry and a 6-by-7-foot storage unit.

Two parking spaces will be allotted for each unit underground beneath the building and fully secured by a gated entry. There also will be a mail room and exercise room on the ground floor.

Rent will be between $2,500 to $2,800. Sexton said he and his wife see the need for affordable housing in the area, so will be buying the land from the port as they develop it.

The project is projected to cost nearly $14 million.

The commercial space in one of the buildings is already leased and will be home to two restaurants, a hair salon, yoga studio and the JMS Construction office, which is currently located in another building on site.

Sexton hopes to break ground in a few weeks.

He said the city of Pasco had to rewrite its building codes to accommodate the unprecedented mixed-use development and create a new zoning classification: Waterfront District Zone.

A new waterfront vision

The buildings challenge the status quo in the Tri-Cities.

A future hotel Sexton has planned will rise eight stories above the Pasco horizon. There also will be five seven-story buildings.

Buildings four stories and above must have an elevator, per code. Eight stories require two.

“We don’t even have an elevator company in Tri-Cities,” Sexton said.

“I can design a house or building in six months … but when I have to get a fire suppression system up in eight stories of one building and make sure the city water lines are big enough to get to the top of the first building, or the second, it takes a lot of time for the engineers to go figure that out and go back and forth with the city,” he said.

In short, it’s hard to be among the first.

“At this point, we’ve got too much into it not to follow through,” Sexton said.

To finance the project, the Sextons have had to get creative and pull money from multiple sources: personal funds, the bank, hard money lenders and also an opportunity fund.

Osprey Pointe is designated as an opportunity zone – typically low-income communities and neighboring areas determined by population census records that would benefit from economic stimulus and revitalization.

Tax incentives exist for those who invest in opportunity zones, including no taxation on the appreciation of investment funds held beyond 10 years.

“When doing projects like this, you really have to think about, ‘How am I going to come up with $250 million?’ ” Sexton said.

Once the apartment complex is completed, he said they will move on to the 70 detached condos planned for the west side of the property.

The hope is to break ground on the marketplace along the way.

“Every day we get calls from prospective vendors. Our list is 350 long of interested people,” he said. The marketplace can accommodate 120.

As he wrote in the March 2022 Osprey Pointe Marketplace newsletter, “We’re completely committed to bringing this vision to life – all of it. We are both locals and we’re tired of driving out of town for concerts and adventures. Our area is full of life and growing so why can’t we have those activities here?”

It’s a question Osprey Pointe seems poised to answer.

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