Seattle (September 16, 2019) – Mayor Jenny A. Durkan celebrated City Council’s passage of her legislation making transformational investments in housing, homelessness, and family-wage jobs, adding a new community center and transportation and pedestrian improvements, at the under-utilized city-owned Mercer Mega Block properties, in South Lake Union. More than half of the proceeds from this sale will be used to address the City’s housing crisis, through Mayor Durkan’s Housing Seattle Now program, launched in July.
“It’s a rare occasion when we have the opportunity to make truly transformational changes that will benefit residents and visitors of our city for generations to come. With this investment, we are creating family-wage jobs, affordable housing, great transportation and pedestrian benefits, and beautiful new public spaces right in the heart of our City. We are also building on the innovation happening in our City in life sciences to help create the research, cures and treatments of tomorrow,” said Mayor Durkan. “Thank you, Councilmember O’Brien for moving this legislation and to the full Council for using this once in a lifetime opportunity to further advance equity, affordability, and housing choices throughout Seattle.”
In August, Mayor Durkan transmitted legislation to the City Council requesting authorization to move forward on an agreement to sell the property, to Alexandria Real Estate Equities, Inc. Mayor Durkan’s negotiated plan includes $143,500,000 in cash proceeds and a total of nearly $300 million in public benefits including:
- $143,500,000 cash at closing, with 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 revenue from the sale of the Mercer properties is a key funding component of the Housing Seattle 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.