When he gazes out at the massive parking lot separating Queen Anne from Magnolia, Dan Bartlett sees opportunity. A past president of the...

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When he gazes out at the massive parking lot separating Queen Anne from Magnolia, Dan Bartlett sees opportunity.

A past president of the Magnolia Chamber of Commerce, Bartlett recently told Port of Seattle commissioners that the chamber backs Port efforts to build an office and industrial park there, generating jobs and revenue.

“We need this to take place now,” he said. “The longer we wait, the more jobs are going to other places in this country, in addition to going offshore.”

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Lise Kenworthy, past president of the Seattle Marine Business Coalition, also gazes out at the mostly vacant lot, known as North Bay.

But she sees big buildings and traffic snarls.

“This sort of massive development, with 65- to 110-foot buildings, is going to very heavily burden” 15th Avenue West, she said.

As more people become aware of the size and scope of the proposed North Bay development, she predicted, “more residents will voice their concern about the height and density.”

Decision time: A vote on the North Bay proposal is scheduled Tuesday at the Port of Seattle Commission’s regular meeting, which begins at 1 p.m. at Pier 69.

Commissioners are due to decide Tuesday how to proceed with North Bay, the largest Port real-estate venture of its kind.

New buildings envisioned by the Port’s plan would comprise 3.75 million square feet, more than twice the space of Seattle’s largest skyscraper, Columbia Tower.

Built over 20-25 years, the buildings would transform a wasteland of asphalt between two wealthy enclaves into an “urban industrial campus” with factories, offices, research labs and retail stores.

The Port says North Bay could create 10,000 new jobs and would generate much-needed income to help shore up Port finances. It expects to spend $25 million preparing the property for leasing to developers.

To proceed with its master plan, however, the Port needs changes in city development rules.

And the city appears to have a different vision. North Bay could compete with the city’s hopes for a biotech campus at South Lake Union.

The North Bay land, covering more than 50 football fields, is the largest industrial tract in the city that’s up for redevelopment, said Diane Sugimura, director of the city’s planning office.

Preserving industrial land for industry, rather than converting it to stores and offices, is something the city considers vital for family-wage jobs — particularly when the property has sea and rail access, as North Bay does.

“The city is concerned about not losing more of this land,” she said. “Because once you lose it, you can’t get it back.”

Maximizing returns

The Port acquired much of the North Bay land from the Navy in the 1970s. For years, apple shipments poured through two adjacent piers, 90 and 91, along with thousands of Nissans imported from Japan.

The Port attracted other business to the piers. A fleet of factory fishing trawlers moved there in the early 1990s. Later, fuel-oil barges began using the space to wash out their holds.

In 2000 the Port lost Nissan’s business. Apples moved out a year later. That’s when a key study known as the Harbor Development Strategy urged the Port to find new uses “to maximize the financial value and financial return” of the vast paved inland section where thousands of Nissans once parked.

Making money is crucial to what the Port calls its “triple bottom line,” which says projects should create jobs, improve the environment and bring in some revenue. The last factor is especially important, as the Port’s seaport and cruise businesses are losing money, when construction costs are counted. And amid a $4.2 billion expansion of the airport, the Port has raised the tax levy and sunk more deeply into debt.

What’s more, the fishing and fuel-oil businesses that now occupy part of the North Bay tract fail even to cover the cost of building and keeping up the piers. A $100 million overhaul of the two half-mile-long docks, including 200,000 square feet of new warehouse space, will bring the Port revenue of just $1 million a year.

“In terms of return, we don’t do very well,” said Mark Knudson, managing director of seaport operations.

So, the Port spent four years and budgeted $7.3 million to study how to transform North Bay in a way that “advances the region’s vitality and generates new net revenue.”

It has considered a range of alternatives, from doing nothing to amassing 142 acres of land and erecting nearly 7 million square feet of space — including lucrative but controversial private housing.

Housing out the window

Last month, the City Council said it won’t bend zoning regulations to allow housing on North Bay’s industrial land.

Despite the council vote, Port staff members put 700,000 square feet of housing in their recommended plan, on pieces of North Bay outside the formal industrial district. The staffers said the Port should allow 4.3 million square feet of development there — nearly three Columbia Towers.

“Housing improves the returns,” said Mark Griffin, manager of the Port’s real-estate-development group overseeing North Bay. “There’s less risk, because the uses are more diversified.”

Projections show North Bay would pay back $86 million over 50 years with housing, compared with $77 million without. Housing also would help ease an expected rise in commuter traffic on nearby roads from 10,000 potential new workers.

But the Port commission, taking note of concerns from industry and the city, on June 9 asked for the removal of housing from the plan, and cut back the overall size to 3.75 million square feet.

The commissioners steered a middle path, but the proposal, if adopted, still needs the city to change the zoning and other conditions to allow:

• Buildings up to eight or nine stories (110 feet). In some scenarios they would block bay views from surrounding neighborhoods and the Magnolia bridge.

• Larger retail stores. Current zoning limits them to 30,000 square feet, about the size of an old-style neighborhood grocery.

• More office space and larger office buildings. Current zoning limits offices to 50,000 square feet per business, the size of a small office building of two or three stories.

Threat or opportunity?

Photo simulations show the valley between Magnolia and Queen Anne filled with large white buildings tall enough to block views from some locations. Artist renderings show tree-lined streets with stores at street level. The views appear more impaired from Queen Anne than from Magnolia.

It’s unclear how far the city will go in allowing these changes.

“Are they thinking there might actually be a big office building?” said Sugimura, the city planning director. “If that’s the case, that’s not consistent with what we’re looking for in that area.”

The city also is concerned about how many stores and offices the Port wants built there. Because those businesses typically can afford to pay higher rent, they could drive up land costs for the industrial users and drive them out, Sugimura said.

Yet, higher-paying retail and office tenants are what the Port needs for North Bay to generate income, Port officials said.

Sugimura also said the Port hasn’t studied what could be built under existing zoning. In its draft environmental-impact statement, the Port assumed nothing would be built if the land is left as is.

But the city disagrees. “There is quite a bit that could be built there,” Sugimura said. “Smaller retail, smaller offices. Theoretically you could get quite a bit of that development on the site.”

Some question why the Port is investing in North Bay at all — and whether it is taking on more than it can handle.

The Port could, after all, generate revenue simply by selling the land. That option wouldn’t require environmental-impact statements, zoning-code changes or investment. But it also wouldn’t generate the revenue the Port is seeking.

The Port has built big projects before, of course: sprawling docks with hulking cargo cranes, Seattle-Tacoma International Airport, marinas where fishing boats and yachts tie up.

But those projects, while often large in scale, were narrower in scope. North Bay represents a range of land uses the Port hasn’t handled together before.

Money-makers needed

Past projects, in general, have not been money-makers. The Port’s previous mixed-use development was the central waterfront, a $140 million project that included a cruise-ship terminal, the World Trade Center office building, the Port’s headquarters, a Marriott hotel. While it is difficult to break out all the financial returns of the project, the cruise terminal never recovers its costs.

North Bay is four times larger than the central waterfront. And unlike that project, where the Port developed and owned some of the properties, North Bay is speculative.

The Port is investing on the premise that if it builds roads and utilities, developers will come, lease the land and erect buildings to lure high-tech tenants.

A survey of developers and brokers completed in February showed many are interested in the land. But none has made a firm commitment. And all of them said housing would be a good idea. Most developers thought the Port’s decision to lease the land to developers “would make financing more difficult.”

The Port maintains it needs the zoning changes to make the land most productive. “We’re not going to be able to fill 57 acres with just industrial-maritime uses,” Knudson, of seaport operations, said. “We’ll have a challenge filling 200,000 square feet on Pier 91.”

North Bay also faces competition from the city’s other high-tech belt, South Lake Union. Paul Allen’s development company has amassed 60 acres there, roughly the same size as North Bay.

North Bay will cost the Port about $25 million, a modest sum compared to the airport expansion. And it is roughly half the $47.5 million cost of the 1.3-mile streetcar proposed for South Lake Union.

The Port’s money will pay for roads and utilities work, making the land more attractive to developers.

But South Lake Union has another advantage: Most of that land already is zoned for housing and offices. Development there can go ahead. North Bay still needs City Council approval.

Alwyn Scott: 206-464-3329 or ascott@seattletimes.com

Land

57 acres between Magnolia and Queen Anne.

Cost

The Port of Seattle would spend $25 million to prepare the site. Developers would lease land and over 20-25 years are expected to spend $2 to $3 billion to erect 3.75 million square feet of commercial space.

Uses

2.2 million square feet for research-and-development and manufacturing space aimed at health care, biotech and other emerging industries

1.1 million square feet for offices

350,000 square feet for maritime and industrial companies

100,000 square feet for retail stores to support on-site businesses

No housing allowed in the development.

Parks, open spaces, bike and pedestrian paths would be improved.