Nearly $300 Million in Public Benefits from Agreement with Buyer Would Include 175 Affordable Homes on Site, Family-Wage Jobs on Site, New 30,000 Square-Foot Community Center on Site
Cash Proceeds Would Be Reinvested in Housing in Communities across Seattle and Transportation Safety Projects
Mayor Durkan Has Transmitted Legislation to City Council to Move Ahead on Agreement with Buyer Alexandria Real Estate Equities, Inc., First and Longest-Tenured Owner, Operator, and Developer of Life Sciences Campuses in Key Urban Innovation Clusters
Seattle (August 7, 2019) – Standing with community members in the heart of South Lake Union, Seattle Mayor Jenny A. Durkan today announced her plan for transformational investments in housing, homelessness, family-wage jobs, a new community center, and transportation safety through the sale of underutilized City-owned properties along Mercer Street.
Under the agreement for the proposed sale of the properties, Seattle taxpayers would receive nearly $300 million in public benefits, including: 175 affordable homes on site; $5 million to combat homelessness; a new, 30,000 square-foot community center on site operated by Seattle Parks & Recreation; $78 million of the proceeds will invest in housing in communities across Seattle; and $16.7 million of the proceeds will support new and planned transportation projects to improve safety and increase options for getting around Seattle.
“This is a generational opportunity for Seattle,” said Mayor Durkan. “Cities our size rarely get the chance to take an underused property we own and make bold investments to create jobs, create more affordable and mixed income housing throughout the city, and build more safe transportation connections. I believe that years from now, people will look back at this chance and say we seized an incredible opportunity to make our City better by reinvesting the proceeds directly in housing across Seattle. I look forward to working with the City Council in the coming weeks to deliver these investments in housing, jobs, great public spaces, and transportation projects across Seattle.”
With new affordable housing in South Lake Union, new initiatives to combat displacement and the creation of new housing opportunities, the announcement is a key component of Mayor Durkan’s “Housing Seattle Now” initiative announced on July 24.
Mayor Durkan has transmitted legislation to the City Council to move ahead on the agreement with potential buyer Alexandria Real Estate Equities, Inc., the first and longest-tenured which owner, operator, and developer of collaborative life sciences campuses in key urban innovation clusters. Alexandria has supported the Seattle life science cluster for more than 20 years with a number of notable office/laboratory properties, including the Lake Union Steam Plant at 1201 Eastlake Avenue East, the Juno Building at 400 Dexter Avenue North, and its most recently completed development at 188 East Blaine Street.
The nearly $300 million in public benefits that the City of Seattle would receive from Alexandria include:
- $143,500,000 cash at closing, including a $5 million contribution to support strategies that address homelessness in Seattle;
- 175 units of affordable housing on site that are affordable for families earning up to 60 percent of the area median income ($66,400/family of four) and will remain affordable for 50 years without any public subsidy;
- A new 30,000 square-foot community center located on site that will be operated by Seattle Parks & Recreation with rent waived for up to 40 years;
- Transportation improvements including the extension of 8th Avenue as a pedestrian right-of-way through the site between Mercer and Roy, and the extension of the two-way protected bike lane on the north side of Mercer Street between 9th Avenue and Dexter.
Of the $143,500,000 in cash proceeds the City would receive from the sale, Mayor Durkan is proposing to:
- Invest $78 million in housing uses, including:
- $57,200,000 to address displacement and create opportunities for equitable transit-oriented development through a strategic property acquisition fund and revolving Equitable Development Initiative (EDI) acquisition loan fund;
- $15,000,000 to increase investments in permanently affordable homeownership; and,
- $6,000,000 for a new financing tool to create more affordable accessory dwelling units like backyard cottages and in-law apartments for low- and middle-income homeowners.
- Invest $16.7 million to support new and planned transportation projectsto improve safety and increase options for getting around Seattle.
Other negotiated benefits of the potential sale would include:
- A Project Labor Agreement (PLA) to govern wages and working conditions on the initial construction;
- Alexandria must meet or exceed the LEED Gold standard for building sustainability;
- Labor harmony agreement requirements;
- Alexandria will carry the responsibility of any environmental remediation, estimated to be at least $10 to $15 million; and,
- Alexandria will make a Mandatory Housing Affordability payment to the Seattle Office of Housing, in an amount equal to the applicable code requirements for residential and commercial projects at the time of development.
Because a portion of the Mercer Properties was purchased with revenues from the commercial parking tax and gas tax, a portion of the proceeds is restricted for transportation uses only. The sale also delivers the resources needed to meet $29,100,000 in prior funding commitments by the City Council with funds to repay Interfund Loans for transportation ($24.8M) and homeless services ($4.3M).
“The sale of the Mercer Mega Block will help more people who work in Seattle achieve their dream of living in Seattle, too,” said Councilmember Mike O’Brien. “Seattle is experiencing growth that is almost unheard of elsewhere in the country right now. As a result, Seattle also needs more workforce housing. Today’s announcement builds on a body of work my colleagues and I began in 2013, long before so many investors were interested in this property. I want to thank Mayor Durkan for brokering a deal that strengthens our City now and continues developing a South Lake Union that helps everyone in Seattle prosper from this opportunity. I look forward to Council’s consideration of this proposal that offers millions of dollars we can invest in transportation, housing and homelessness priorities.”
“The South Lake Union neighborhood has been an incubator for inventors, artists, educators, engineers, writers, scientists and countless others (think: Paul Allen, PATH, Fred Hutch, Pearl Jam, Seattle Times, Amazon, Cornish, Seattle Children’s),” said Councilmember Sally Bagshaw. “Through this transaction we will add hundreds of affordable housing units to this neighborhood– plus public amenities like a long desired community center. The addition of more homes to this neighborhood, as well as improved connections to Seattle Center and Downtown, will make space for our kids and grandkids to live near where they work. This is urban livability at its finest.”
“I’m excited that Mayor Durkan is investing strategically to promote permanently affordable homeownership in the Rainier Valley,” said Tony To, Director Emeritus and Othello Square Project Director at HomeSight. “These sites will help residents stay and thrive in neighborhoods that they have grown and grown up in and will continue to provide homeownership opportunities for generations to come.”
“This is truly a once-in-a-generation opportunity, and we are grateful to see much-needed resources for transportation connections included in the vision of this project,” said Alex Hudson, Executive Director of the Transportation Choices Coalition. “In addition to the projects improving safe routes for walking and biking included as some of the on-site benefits, we are thrilled to see Mayor Durkan include over $16 million from the sale of this property for multi-modal transportation projects.”
“We see every day what we see and celebrate today: Big solutions, big wins made possible through innovative partnerships that address our critical needs and create game changing opportunities for all residents of the city,” said Thatcher Bailey, President and CEO of the Seattle Parks Foundation. “As Seattle continues to grow successful partnerships like this will serve as touchstones, reminding us how much we can deliver to our communities when we work together.”
The properties include three parcels comprising of 2.86 acres of land in the South Lake Union neighborhood. Since 2014, the City has been in discussions on how to best utilize the properties to benefit all of Seattle.
In July of 2018, the City issued a RFP seeking a purchaser who could provide a proposal that met the City’s vision and criteria for the future of the properties.