On August 7th, Mayor Jenny Durkan finally unveiled the winner of the contest for the most coveted real estate parcel in town: the 2.8-acre publicly-owned Mercer Megablock site in South Lake Union. Turns out the Mayor selected a $143.5 million bid from Alexandria Real Estate, a publicly-traded real estate investment trust (REIT) specializing in biomedical campuses. The Mayor has not yet released the details of the other proposals, which included one from the Low Income Housing Institute (LIHI) and some offers built on ground leases rather than sales. (Update: Erica C. Barnett did publish the proposals on her website–with some redactions.)
A ground lease would pay dividends in the future, advocates argued, by keeping the valuable land in public hands. The Mayor ultimately decided to sell off the property to maximize the payoff. Some of that payoff is immediate since Alexandria agreed to pay $5 million of the sale price now so that the City could make an immediate boost to homelessness funding–although the City has yet to disclose exactly how that money will be used. The rest of the cash will be at closing, which is expected in early 2020.
“This is a generational opportunity for Seattle,” Mayor Durkan said in a statement. “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.”
The Mercer Megablock Coalition, which had pressed the City to build primarily affordable housing on the site–a site that is large enough and zoned dense enough to accommodate nearly 1,400 homes in towers up to 27 stories tall. Among those advocates is Cary Moon, who ran against Mayor Durkan and lost in the general election. (The Urbanist endorsed Moon and the Mercer Megablock Coalition effort.) Given their differing visions for public land, it appears the fate of the Mercer Megablock was sealed in the 2017 mayoral election.
“A city shouldn’t sell off publicly owned land for a quick hit of cash to backfill programs, no matter how good those programs are,” Cary Moon said in an email. “Participating in the hot real estate market in this way, instead of building permanently affordable housing to dampen hotness and provide residents relief from it, only exacerbates the problem of wealthy people (Alexandria REIT shareholders) making bank and local regular people getting pushed out. This is an example of the city as capitalist, the mayor as gentrifier-in-chief.”
Alexandria envisions the three acres becoming a “fully integrated, mixed-use life science campus,” a senior executive said–the office towers are expected to be about 16 stories tall. The proposal also includes 30,000-square-foot public community center, protected bike lane extensions, and 175 affordable-housing units. Additionally, Alexandria purchased the neighboring privately-owned half-acre Copiers Northwest site (for $28.5 million) to build housing and expand the campus. The community center will be operated by Seattle Parks and Recreation and pay no rent for 40 years.
Though it didn’t go the way the coalition wanted, the Mercer Megablock going on the market did raise awareness of the issue of underutilized public land and the need to put more land, not less in public ownership. In fact, responding to advocates, the City Council passed a new public land disposition policy last summer that made it easier for the City to give publicly-owned land to nonprofit developers, with Councilmember Teresa Mosqueda leading the way.
“Last fall, the Seattle City Council passed a resolution stating that when possible, city-owned property should be used to build affordable housing,” Josh Cohen recounted in Crosscut. “Advocates argued that using the Mercer Megablock to build thousands of units of affordable housing in the heart of the city would be a logical step in the face of Seattle’s ongoing affordable housing shortage. But Budget Director Noble said the private sale has facilitated far more housing and other public benefit at a lower cost to the city.”
“We would’ve forgone way too many things,” Noble said. “For one, we would’ve had to find revenue for building the housing, which, as we know, we have a shortage of.”
For Moon tackling the larger revenue issue is the point.