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Panelists: Bob Mahon (SLU Panel Chair), Jan Hendrickson, Jackson Schmidt, Dinah Thoreson

City Staff: Sara Levin (P4 Coordinator), Bill Alves (Council Central Staff), Geri Beardsley (Council Central Staff), Lee Belland (City Budget Office/CM Drago’s Office), Barbara Clemons (CM Drago’s Office), John Eskelin (Dept. of Neighborhoods), Bill McGillin (City Attorney’s office), Jim Reinhardsen (Heartland, City’s real estate consultant), Mary Jean Ryan (Office of Economic Development), Nathan Torgelson (Office of Economic Development), Karen Tsao (Fleets and Facilities.), JoEllen Warner (Office of Economic Development)

Guests: Jim Brunner, Kevin Tighe, George Erb, Shirley Mesher, Estell Berteig, Dan McGrady, Kery Murakami, Dana Wise

Welcome and introductory comments (Bob Mahon)

Bob Mahon introduced himself as the new Chair of the South Lake Union P4 panel. He replaced Maria Barrientos as Chair, as she had a conflict of interest and had to step down from the panel. The open seat on the Panel has been filled by Dinah Thoreson. Greg Sundberg could not be present for this meeting, but will receive copies of the materials for review prior to the next meeting.

Panelists and guests introduced themselves.

Bob Mahon reminded the group that this is an informational briefing, and is the Panel’s third briefing on SLU. Prior briefings were held in March and September 2000, and Sara Levin made available minutes from these meetings available (which are also posted on the P4 website).

The group will have another meeting following this one (date to be determined) for a more comprehensive discussion and review of the project

Time permitting, the Panel will take public comment at the end of this session

Context-setting

MaryJean began her discussion with context-setting for the property sale. She discussed transportation projects planned for the area, the South Lake Union Park, and the development of the neighborhood plan, which passed City Council in 1999. In December 1999, Council passed Resolution 30080, which outlines a number of public objectives to be met in the property sale. (See minutes from 3-31-2000 and 9-6-2000 briefings for more detail and background information.)

Land Use Code Text Amendment

MaryJean also discussed the land use code text amendment passed by City Council in February 2001. This special exception will allow additional structure height (up to 65 feet) on three blocks located south of Lake Union. These three blocks include 4 out of the 10 parcels that were part of the RFQ. The Neighborhood Planning Committee was involved in the development of the specific criteria in the special exception. The special exception will be reviewed by DCLU at the time a developer comes forward to DCLU with a specific proposal. In order for DCLU to grant the special exception, certain conditions must be met, including 20 to 25 percent of the lot area must be publicly accessible open space and must meet streetfront use requirements.

Before Council adopted the special exception, the City’s Department of Design, Construction and Land Use (DCLU) conducted a SEPA review of the proposed land use code change and issued a Declaration of Non-Significance (DNS). A citizen’s group appealed this decision to the City’s Hearing Examiner, and in January 2001 the Hearing Examiner upheld DCLU’s decision. The City Council’s approval of the Land Use Code special exception was recently appealed to the Central Puget Sound Growth Management Hearings Board. Before closing on the purchase and sale agreement, all applicable appeal periods must have expired and/or all appeals resolved.

Approach to the Sale

The Oversight Team’s approach to the sale was briefly discussed. (This topic was discussed in more detail at the 9-6-2000 briefing). In its approach to the sale, and work to meet the public objectives outlined in Resolution 30080, the City is wearing two hats – as landowner/seller and as regulator. City staff distributed a matrix which indicates which objectives could be met through the sale and which through regulatory processes.

Highlights of the Purchase and Sale Agreement

MaryJean walked the Panel through highlights from the Purchase and Sale Agreement, copies of which were distributed to the Panel and attendees.

Eight parcels are being sold to City Investors Inc., a company wholly owned by Paul Allen, and affiliated with Vulcan Northwest. Ten parcels were put up for sale in the RFQ, but City Investors (CI) did not pursue all ten. The City will determine what to do with the two additional parcels. The selling price is $20.8 million, and matches the City appraisals. (Appraisal summaries were provided.)

The City will receive additional money (approximately $1.3 million) for right-of-way not in transportation use surrounding Parcel 11 that the City is proposing to vacate (subject to Council approval).

Closing will occur 30 days following Council approval, or following resolution of appeals to the land use code text amendment. The appraisal and PSA assume enaction of the land use code amendment.

For all parcels except 14, City Investors will assume responsibility for clean-up of any hazardous substances. A value deduct of $600,000 has been applied, and the City will receive a full indemnification.

City Investors will pay full price for Parcel 14. Substantial environmental clean-up is necessary due to a major gasoline leak on the adjacent property in 1980s. After closing, City Investors, with the City’s cooperation, may pursue a Model Toxics Control Act claim against Unocal/Tosco (adjacent landowner) for cleanup. $300,000 of the purchase price will be in a litigation reserve. City Investors will have the option to require the City to repurchase the property at the same price starting 12 months after closing and running 30 months after closing.

Cultural use: The PSA requires that City Investors will provide within 6 years of closing 20,000 square-feet of new space for a cultural use in neighborhood (approximately the footprint of the Asian Art Museum). Cultural use is defined as a non-profit facility (i.e. a museum, performing arts facility, etc.) The cultural use must be active - available to the public - not storage.

Housing: City Investors will guarantee development within 6 years of 50 new units of affordable housing (80% of median income) in the South Lake Union area for a minimum of 20 years. Units will not be in the Cascade area, and will not use City subsidy. A mix of sizes of units a mix of sizes of units will be included if the market demands. The PSA also includes a development goal of 450 market rate units in overall South Lake Union area.

Parking: The City and City Investors agree to collaborate on parking and access solutions. CI will develop a major new reservoir of parking associated with development of Parcels 14-17 and possibly adjacent private parcels. 800- 1,000 stalls are possible, and it is assumed that parking will be underground. The PSA obligates City Investors to make a majority of parking available for general public use at market rates during off-peak hours. City Investors will devote 20% of the number of parking spaces during peak hours in the 3-block development for short-term public use at market rates (no fewer than 120 spaces) on the 3 blocks or other property close to Park.

In addition, the City has the right to purchase up to 160 spaces for exclusive South Lake Union Park/Armory building use at $55,000 per stall. The City will need to exercise this option before City Investors applies for permits; no sooner than 1 year after closing.

Family wage jobs: City Investors will work with the Apprenticeship Opportunities Project on building and construction trades apprenticeships for low-income individuals. CI will also work with the Seattle Jobs Initiative or another workforce development program on permanent jobs. This area of public benefits is more difficult to achieve, as the parcel uses are still unknown.

Time of performance

According to the PSA, City Investors will need to apply for permits on Parcels 14-17 within 6 years after closing.

Use of Proceeds

The Council and Mayor will work together on a resolution that will accompany the Ordinance for the PSA, and will outline use of the proceeds from the property sales. The Mayor would like to invest the bulk of the proceeds in transportation improvements in the South Lake Union area. The Mayor will also propose investing $2 million of the proceeds in additional affordable housing in the area (approximately 50 units for 50-60% of median income). The Mayor will also propose reserving the proceeds from Parcel 14 until any litigation is resolved.

Panelist questions/comments

Jackson Schmidt asked what the neighborhood feels about the project. MaryJean replied that the entire project springs from the neighborhood plan. Through the neighborhood planning process, citizens on both sides of the Commons debate came together. Citizens from the neighborhood have been involved extensively in the City’s work to date.

Jan Hendrickson asked which parcels in the neighborhood are currently owned by Vulcan. Nathan Torgelson showed the group a map which shows current property ownership in the area.

Dinah Thoreson asked who currently owns the gas station near Parcel 14. Karen Tsao replied that the owner is Tosco.

Bob Mahon asked whether there was a purchase price reduction for the public benefit items such as low income housing. MaryJean replied that there were no price deducts – the price corresponds to the appraisal. This was a significant negotiating tool. Jim Reinhardsen added that a key factor in the selection of the negotiating partner was the ability to achieve other commitments beyond paying the full appraised price.

Wrapup, next steps

A public hearing will be held on the PSA in June. Councilmembers would like the Panel’s comments before the hearing, and for representatives from the Panel to present their report as part of the hearing.

There were no members of the public wishing to comment.

Panelists chose Thursday 5/24 8-10am as their next meeting date/time. They will read all of the materials distributed and be prepared to ask questions and form an initial recommendation at this next meeting.