Monday, 12th August 2019 16:40

Seattle Sells $138 Million Property to Private Developers

Development Will Include 175 Affordable Housing Units


On August 7, Seattle mayor Jenny Durkan announced that the city, in its largest real estate transaction in history, was selling a nearly 3-acre parcel of land on Mercer Street known as the Mercer Mega Block. It is selling it to a private real estate developer called Alexandria Real Estate Equities Inc. for more than $138 million. The company, in turn, plans to develop the land into a pair of office buildings, a community center and an apartment building that will provide about 175 affordable homes.

For some time now, the property has been a source of controversy because of the rising costs of housing in the city due to the flourishing high-tech industry there. Last year, city activists called on Durkan to use the entire property for affordable public housing. But the mayor instead decided to sell the land to the developer, insisting that Seattle would benefit more from doing so.

Durkan said that, by selling the land, the city would further generate not only tax revenue but jobs as well. She added that the deal was what she called a "generational opportunity" that is allowing the city to turn an underused city property into an investment that will help transform the city for the better.

The property was mostly assembled from land that remained after the reconfiguration of Mercer Street. It has long been considered a valuable piece of real estate. In fact, the city had already borrowed around $30 million against it, which was subsequently used to pay for things such as homeless services and public transit. Part of the proceeds from property sale will go to pay off this debt, leaving in excess of $100 million for other government uses.

Not everyone, though, has been in favor of selling the land. Cary Moon, who ran against Mayor Durkan back in 2017, has said in the past that she thought that the whole process of deciding the parcel's fate should have been more public. She has also said that selling the parcel to a private developer would be a big mistake and that the city could build 1,300 affordable housing units on the property. She did, however, note that the city would have to come up with a significant amount of money to make this happen. But she thought it was doable.

But Durkan says that she plans on using much of the sale's proceeds on affordable housing. Some of this will be in the form of land purchases, where below-market housing units will be built. The city will also use part of the money to invest in programs that will help low- and middle-income families buy homes and build backyard cottages.

Government officials have further touted the fact that the 175 affordable housing units will be developed without any subsidies from the city. Only those making less than 60% of the median city income will be allowed to rent these units. For a family of four, this means an annual income of $66,400 or less. It also possible that another 200 units will be built on the site, and many of them will have rent restrictions as well.

As part of the deal, Alexandria promised to contribute an addition $5 million to help the city pay for homeless services.

Alexandria is a real estate investment trust that has been developing properties in the city for companies such as Adaptive Biotechnologies Corp. and Juno Therapeutics Inc. On the same day that it made a deal with the city, the company announced that Adaptive would lease another property it owns for its future corporate headquarters. Joel Marcus, who is the chairman of Alexandria, said that the deal is part of the company's strategy to double the amount of property it owns in the area. He further called the site an instance of "the future of urban development."