There has been a giant hole in the ground across the street from Seattle City Hall for more than a decade. Now, it looks like that hole will be filled, but not without a debate about whether Seattle is giving a luxury developer a "sweetheart deal."
To recap: In 2005, the city tore down its old public safety building. Two years later, then-Mayor Greg Nickels struck a deal with a development firm: the city would give them the land for free; they'd build a mixed-use development and give the city a $25 million public plaza in exchange. Then, the economy went to hell. The development company Triad could never secure the financing it needed. Apparently intent on fucking up the situation even more, one of Triad's executives allegedly tried to shake down city council candidate Jon Grant in 2015 and the city promised to cut ties with the development company. But that proved harder than the mayor thought and the lot has been in limbo ever since.
Today, the Seattle City Council approved a deal to sell the lot to a different development company, Bosa Development, for $16 million plus $5.7 million in fees to fund affordable housing.
The British Columbia-based development company has built a luxury condo building in Belltown and is in the process of building another one in Bellevue. On the downtown Seattle lot, Bosa plans to build a residential tower with retail on the ground floor and a plaza that will be open to the public.
In a committee meeting last month, Council Member Kshama Sawant raised concerns that the city may be selling the land for less than it's worth, leaving cash on the table at a time when the city is constantly seeking new revenue for social services and affordable housing.
Sawant asked the city's Finance and Administrative Services department, which answers to the mayor, whether the city had done an appraisal to determine the value of the building before deciding to sell it for $16 million. Yes, the city had hired a firm to do an appraisal, but "it wasn't completed," said FAS Director Fred Podesta. Sawant argued the city shouldn't sell a property, particularly one in downtown Seattle's red-hot real estate market, without an appraisal. She also wondered whether upzoning the lot and doing away with the public plaza could increase its value and make the city more money. (Public spaces owned by private entities, Sawant argues, rarely actually feel public.)
Today, Sawant voted against the sale, calling it "corporate welfare" and a "sweetheart deal." She was the only "no" vote.
"Outrageously, we do not even know how much we are losing in this deal," Sawant said, referring to the lack of an appraisal.
But, after Sawant's comments and just before the vote today, Council Member Tim Burgess revealed that there had in fact been an appraisal of the land and it's worth between $45 million and $55 million—three times as much as the city's sale price.
"The city chose not to publish that appraisal because doing so would have made that document available to public disclosure and we did not want to signal the price the city was attempting to achieve," Burgess said.
FAS spokesperson Julie Moore told The Stranger appraisal work on the lot was done in mid-2016 “but was not finalized.” The amount Burgess cited was “verbally communicated,” Moore said.
Burgess and FAS staff argue the city is getting more out of the deal than just $16 million. Bosa will accept responsibility for maintaining the empty lot and the fencing around it, which is currently costing the city money. More importantly, the company will absorb legal responsibility. Because the city's contract with Triad is still in place, Bosa will now pay Triad an undisclosed amount of money to take over the rights to the lot. Bosa will also assume liability for the project, freeing the city of the threat of a lawsuit for the implosion of the original deal with Triad. Mayor Ed Murray has said the city could face a lawsuit if it sold the land to a developer other than Triad. His administration has not provided more details about the legal risks.
Between that liability, maintenance costs for the site, the $16 million sale price, and the $5.7 million for affordable housing, Burgess said the deal is worth about $50 million, right in the range of the appraisal. (Including the affordable housing money is a bit misleading, considering that all new private downtown development—not just this deal—will require affordable housing fees. However, if the city had stuck with Triad for its original planned development, the city would not have received affordable housing fees.)
"This is a reasonable deal," Burgess said. "It's prudent."
The developer is expected to break ground in early 2019.
This story has been updated to clarify that the city would not have received affordable housing fees from Triad's original deal. Also: Tim Burgess is a member of the city council, no longer the president of the council.