Building on nearly 70 years of history, Safeco yesterday announced plans to keep and expand its headquarters in Seattle's University District...

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Building on nearly 70 years of history, Safeco yesterday announced plans to keep and expand its headquarters in Seattle’s University District, moving more than 1,300 employees across Lake Washington from the company’s Redmond campus.

The news, delivered by Safeco Chief Executive Mike McGavick at the company’s 22-story University District tower, was greeted with cheers and applause from Seattle elected leaders, University of Washington officials and hundreds of employees.

For the past few months, the insurance company had been considering whether to consolidate its operations in Redmond or Seattle, prompted by the sale of its life insurance and investment group last year. That group, renamed Symetra Financial, occupies a third of Safeco’s Redmond campus and plans to move to Bellevue this summer.

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While Redmond “is on somewhat of a roll” and would survive without Safeco, McGavick said, the University District has struggled. Safeco’s departure, he said, would have left a “gaping hole.”

“The University District of Seattle has been Safeco’s home since 1936, and we look forward to it being our home for many years to come,” said McGavick, who grew up in Seattle and still lives in the city.

The company’s decision, unanimously approved by Safeco’s board Monday, is contingent on help from the city.

Safeco wants to build a 125-foot-tall office tower across Brooklyn Avenue Northeast, connected by a tunnel or skybridge to its current 310-foot headquarters, which was built in 1971.

The new building would be taller than the current 65-foot height limit allows and would require a rezone.

The company also wants to knock down an adjacent International House of Pancakes for more office space and expand its underground parking garage. Safeco also says it needs assurances from Sound Transit that future light-rail stations won’t conflict with the insurer’s expansion plans.

Good pre-election news

For Mayor Greg Nickels and four City Council members up for re-election this year, yesterday’s news could hardly have been better. Nickels praised the decision and pledged to work with Safeco to secure its place in the neighborhood.

The news also came as a relief to University District leaders, who had worried about the prospect of the company abandoning its office tower, long a dominant presence in the neighborhood.

“It’s terribly exciting. It was certainly scary to think we would be losing Safeco,” said Richard Sorenson, executive director of the University Heights Center, a nonprofit community center housed in the old University Heights school.

Mike McGavick, chairman and CEO of Safeco

Sorenson said Safeco has been a good neighbor, donating money and employee time to paint and put a new roof on the building.

Reaction from Redmond, where Safeco has had operations since 1977, was understandably less enthusiastic.

Redmond Mayor Rosemarie Ives said McGavick told her of the company’s decision yesterday morning. “Obviously we’re disappointed,” she said.

But Ives said Safeco’s offices, which border on Microsoft’s campus, would be attractive to other businesses looking to relocate.

“Sometimes the initial news like this is disappointing, but there is opportunity around the next corner,” Ives said.

As corporate requests go, Safeco’s demands were not considered terribly burdensome.

No special tax breaks

The company did not, for example, ask for special tax breaks. In Redmond, it asked permission to expand and put up a bigger sign.

Seattle City Council President Jan Drago, who is up for re-election, contrasted Safeco’s decision with that of Boeing, which blindsided the city and the region four years ago by abruptly announcing its corporate headquarters would move out of state.

“We didn’t have the opportunity to work with some other corporations to help them solve their problems,” Drago said.

If the company gets its wishes, its 1,300 Redmond employees would move to Seattle offices in about three years, McGavick said. Combined with projected employment growth of about 250 new workers, that would double Safeco’s work force in Seattle.

City Councilman Peter Steinbrueck, who chairs the council land-use panel, said the council would review the company’s requests for zoning changes in coming months.

“We have not given them any pre-approval, and would not,” he said.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com