Durkan proposes Mercer Mega Block sale to fund housing, streetcar, more
Aug 7, 2019, 12:57 PM | Updated: 1:00 pm
The Mercer Mega Block is three properties on Mercer Street and Dexter Avenue. It spans three blocks, and sits on 2.86 acres for just over 124,000 square feet of space. (City of Seattle)
(City of Seattle)
Seattle Mayor Jenny Durkan wants to sell three city properties in the heart of South Lake Union, known as the Mercer Mega Block. The money from the sales would be slated for some of the city’s most critical issues, such as affordable housing.
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“This was a generational opportunity to take an underutilized city-owned property, and to make a real, transformational investment to create jobs, create more affordable and mixed income housing, and to build more safe transportation connections,” Durkan said Friday during an early briefing on the proposal.
She publicly announced the proposed sale Wednesday.
The Mercer Mega Block is three properties on Mercer Street and Dexter Avenue. It spans three blocks, and sits on 2.86 acres for just over 124,000 square feet of space.
Durkan says that space can be put to better use, and proceeds from the sale will allow the city to invest in vital city needs that meet certain criteria.
“These investments made with the proceeds have to be rooted in race and social justice,” Durkan said. “We know as this city has become more expensive the people who have suffered the most and [been] pushed out the quickest are communities of color, so we really want to be able to use these resources to remedy and address displacement in a way that the city’s not had the resources to do before.”
Maximizing the public benefits that come with the Mercer Mega Block sale is also a priority.
“We want to use our public lands to both maximize not just the cash return, but also the public value for all of Seattle,” Durkan said.
The city put out a request for proposals in July of 2018, looking for specific models from a buyer. It got six offers it liked, and asked for best and final offers, suggesting improvements. Three came back with stepped-up proposals, including Alexandria Real Estate Equities, which the city says upped its price 40 percent to secure the deal.
Alexandria’s offer includes the $138.5 million purchase price, as well as a one-time $5 million payment that will be used to support city strategies to address homelessness.
The overall public benefit from the deal is expected to be somewhere between $275 million and $305 million.
That includes the purchase price and one time homeless money, as well as the building 175 affordable housing units on the Dexter property, which won’t require any public subsidies.
Those are units for people with household incomes at or below 60 percent of area median income. The developer will also build a 30,000 square foot community center on the site that will be run by the city, and comes with a 40-year, no-rent lease.
The public benefit also includes transportation and mobility improvements, including the extension of the Mercer Street protected bike lane, and 8th Avenue improvements.
The developer will also make MHA payments on their housing and commercial projects on the property, and are agreeing to be solely responsible for environmental remediation, as well as providing a project labor agreement.
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The city has been in final negotiations with the company for several months to secure a memorandum of understanding that will be transmitted to Seattle City Council for approval.
The money from the sale of the properties would be used for several investments, as well as repaying prior commitments from inter-departmental — or inter-fund — linked to the property the city previously took out.
That includes paying back money borrowed for the Mercer West project, as well as loans for operating the South Lake Union Streetcar, and repayment of a loan that allowed SDOT to continue planning and design work for the Center City Connector Streetcar project through 2020.
The free and clear proceeds from the sale will be invested in multiple areas, including close to $17 million on new and planned projects to expand transportation options, and increase safety. Six million dollars will be used to develop a pilot program for low to moderate income homeowners to build ADUs. They would have to come with below market rent for 10 years.
