Sound Transit clears surplus property for transit-oriented development

The Sound Transit Board of Directors approved a resolution Thursday declaring surplus property in First Hill suitable for housing development. 

Staff will now begin the process of determining how to ease the burden of creating affordable housing on the site for nonprofit developers.

The ST3 plan anticipates raising $54 billion for 62 new miles of light rail. Its passage also set new goals for transit-oriented development in and around light rail stations. A new requirement is that 80 percent of a surplus property goes toward affordable housing development.

Sound Transit acquired the 21,600-square-foot parcel at 1400 Madison — which includes the Money Tree — back in 2001, with the intent of using it for light rail development. Sound Transit ended up scrapping plans for a U Link station there.

Sound Transit and the First Hill Improvement Association held an open house in early June to solicit community feedback.

FHIA is advocating for the 1400 Madison site to be 100 percent affordable. Sound Transit believes up to 260 housing units could be developed there. Qualified entities — nonprofit developers, housing authorities and local governments — will be the first to be offered the option for development.

Affordable housing developers Plymouth Housing Group and Bellwether are teaming up to make a joint proposal for a 100-percent affordable development.

Resident Paul Feldman said the neighborhood is supporting the proposal, which would include 100 units for homeless seniors and 150-200 units for low-wage workers and families.

“First Hill is a neighborhood abundant with YIMBYs, and we’re proud of it,” he said.

Feldman said he also believes Sound Transit should offer the 1400 Madison property at no cost, or just at the acquisition cost.

“Let’s give our community partners the best possible deal to ensure their success,” he said.

Sarah Lovell, Sound Transit’s transit-oriented development program manager, said a recent appraisal found the property to be valued at $8.6 million.

Since the property was not acquired using federal funding, the agency is not restricted in how it handles the selling of the property.

“So you do have quite a bit of flexibility in terms of valuing it eventually in a transition. It is also zoned for greater density than was the case for Roosevelt (transit-oriented development),” said Ric Ilgenfritz, executive director of planning, environmental and project and development at Sound Transit.

FHIA executive director Alex Hudson told the board on Thursday that the average rent in First Hill is $1,800 per month. Of the 10,000 residents in the neighborhood, she said, 18.3 percent are living at or below the federal poverty line. Twenty-two percent live in affordable housing units.

“We are facing rapid redevelopment in our community, with 22 projects planned or underway,” Hudson said, “bringing 4,500 new units and a 68 percent population increase in the next four years.”

Only 7 percent of those new units will be priced at affordable levels, she said.

“The extraordinarily high cost of land in First Hill makes it prohibitive for nonprofit developers to be building the kind of units that we need to see,” Hudson said, again expressing FHIA’s request that the transit board consider a zero-cost option for the surplus property.

The 1400 Madison property is in a zone that would make it the first transit-oriented high-rise development in Seattle. Lovell said that type of construction is more expensive than more standard wood and concrete developments. With upzoning expected to allow for an additional floor height allowance in the neighborhood, the transit-oriented development could end up providing more than 260 units, Lovell said.

Rather than setting a price for the property and testing it in the market, Sound Transit will soon issue a Request for Proposals, asking qualified applicants to weigh in on what they would need to meet the agency’s development goals, said Brooke Bellman, Sound Transit’s director of land use planning and development. Staff will then return to the transit board to report its findings, including what level of subsidy the project would require.

Bellman said the plan is to return to the board with the highest-ranked proposer selected, and also a recommendation as to how the site should be valued.

“Pilot projects are great, but they may end up backing us into policy so we never make those mistakes again,” said Seattle Mayor Ed Murray, who also sits on the transit board.

Seattle voters approved doubling the city’s housing levy to $290 in 2016. Murray said Seattle will have $28 million available in both 2017 and 2018. 

Not counting land costs, Murray said, the Roosevelt site could amount to  $25 million in subsidies, and $30 million for First Hill. The mayor said Seattle has 19 other housing projects to consider, including surplus sites in Mt. Baker and Rainier Beach. His concern is about only funding projects near Sound Transit facilities, and not having funding for other projects, Murray said.

The mayor said the obligations on local jurisdictions from ST3 are “greater than we all realized.”