Mayor Durkan Applauds Council Committee’s Passage of Her Plan for Transformational Investments in the Sale of the Mercer Mega Block City-Owned Surplus Properties

Seattle (September 6, 2019) – Mayor Jenny A. Durkan applauded of City Council’s Sustainability & Transportation Committee for passing her legislation – a plan for transformational investment in housing, homelessness, and family-wage jobs, a new community center and transportation and pedestrian improvements in South Lake Union, at the under-utilized Mercer Mega Block properties.

“We are taking a generational leap forward by using the proceeds from this sale to invest in job creation, great transportation and pedestrian benefits, affordable housing and homeownership models, and public spaces,” said Mayor Durkan. “In the coming years, we’ll be able to say that we took a once in a lifetime opportunity to advance affordability, using the sale of surplus properties to invest in mixed income housing choices, throughout Seattle.”

Mayor Durkan transmitted legislation to the City Council in August to move ahead on an agreement to sell the property, to Alexandria Real Estate Equities, Inc. and her negotiated plan includes $143,500,000 in cash proceeds and a total of nearly $300 million in public benefits which 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.

The cash proceeds from the sale of the mega block properties will be used to make a surge of investments in her Seattle Housing Now, program. Mayor Durkan’s proposal for investing the cash proceeds from the sale will be included in her budget:

  • $78.2 million in housing uses, including:
    • $57,200,000 to provide affordable housing and address the pressures of displacement 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.
  • $16.7 million to support new and planned transportation projects to improve safety and increase options for getting around Seattle.
  • $9 million to address shortfalls in other revenues dedicated to transportation purposes. The City’s commercial parking tax revenues have fallen short of projections and additional funding is needed to support the projects that would have otherwise relied on these revenues.
  • $5.3 million to pay for transaction costs.
  • In addition, 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).

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 $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.

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