In a surprise move, the Port of Seattle Commission yesterday rejected the idea of allowing apartments and condos alongside an office-industrial...

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In a surprise move, the Port of Seattle Commission yesterday rejected the idea of allowing apartments and condos alongside an office-industrial park it plans to develop between the Magnolia and Queen Anne Hill neighborhoods.

Port staff yesterday proposed up to 700,000 square feet of housing on 15 acres at the southwest edge of the site, near Elliott Bay and outside a formal industrial zone.

But commissioners asked the staff to remove housing from the plan, saying it would be a mistake to build homes so close to bustling Piers 90 and 91, where fishing trawlers and oil barges tie up, and near fish-processing plants and refrigerated warehouses.

“The housing they proposed was looking on the two marine terminals and the industrial activity already there,” said Commissioner Patricia Davis. “Historically, people who own valuable homes get tired of noise and lights all day and all night.”

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The Seattle City Council last month voted against housing on most of the Port-owned site.

The Port will hold a public hearing on the revised plan — excluding housing — at its regular meeting Tuesday. It is expected to vote on the plan in July.

Yesterday’s move, approved by the four commissioners present, likely would cut the Port’s potential profit from the 57-acre wedge of industrial land, and increase the risk of the real-estate project.

The Port plans to spend $22 million to prepare the site. It hopes income from leasing the land to developers will shore up its finances, create jobs and improve the environment, lifting its so-called “triple bottom line.”

Housing has the best return and lowest risk among the uses proposed, which also include maritime industry, light manufacturing, office space, research facilities and retail, said Mark Griffin, manager of the Port’s real-estate investment group, who presented the proposal yesterday.

Davis said eliminating housing “does lower the revenue stream right off the bat, apparently.”

However, the commission’s move appears in line with City Council views.

The council voted last month against any housing on land that is part of the Ballard Interbay Northend Manufacturing and Industrial Center, a specially designated industrial zone that overlays most of the site.

Yesterday’s staff proposal skirted the city’s objections by placing the housing on land just outside of the zone but still on Port property. “We have not ignored the action that the city took last month,” Griffin said.

“There was a lot more housing in here before,” added Craig Kinzer, a consultant who helped formulate the proposal. Indeed, under earlier drafts, the Port could have sought to add up to 2.1 million square feet of housing.

The so-called North Bay plan has divided residents and business interests. Wealthy neighborhoods near the site would like to see housing but want to avoid heavy traffic, bright lighting and 24-hour noise from manufacturing, said Victor Barry, president of the Magnolia Community Club.

“If we get 110-foot buildings and add lots of density, we would have to change the name from North Bay to North Los Angeles,” he said. “That would create too much density and gridlock.”

There is only one arterial road through the area, 15th Avenue West.

The Port has assured Barry’s group it wouldn’t allow big-box retail stores in the area.

But the commission’s move should appease business interests that don’t want apartments and condos crowding into the city’s remaining industrial zones.

“Anybody from the industrial sector ought to be concerned about the loss of industrial property to housing,” said Warren Aakervik, owner of Ballard Oil and president of the Ballard District Council.

“That’s the only location where you can go from a rail line to the water without crossing a city street.”

On a broader level, Aakervik said, the Port shouldn’t help non-industrial developers, even if that shores up its weak finances.

“Is the Port’s bottom line the amount of money they generate financially or is the bottom line really the importance for the city?” he asked.

He said businesses are interested in moving to North Bay, but the Port charges too much rent. “You don’t need to spend $22 million to attract businesses there,” Aakervik said. “You just need to put a realistic price on it. If the idea is to maximize your dollar, I don’t know if it will ever fill up.”

But Mark Knudsen, deputy managing director of the seaport, said the Port charges monthly rates ranging from 8.5 cents a square foot for bare land up to 50 cents a square foot for space in Port-owned buildings.

“If you looked around,” he said, “those rates are on the verge of being too competitive.”

Alwyn Scott: 206-464-3329 or