Seattle is in negotiations with a developer to sell a string of properties in South Lake Union known as the Mercer Mega Block for $143.5 million, Mayor Jenny Durkan said Wednesday.
Alexandria Real Estate Equities, a firm known for developing life-science and technology campuses, submitted the leading offer for the property and has negotiated a memorandum of understanding for development of the property, officials said.
The 2.86-acre Mercer Mega Block consists of three parcels partly left over from the city’s reconfiguration of Mercer Street and has for years sat vacant as the city looked for a buyer. The land is steps away from Amazon’s headquarters in one of the nation’s hottest neighborhoods.
The much anticipated sale would be the highest-value sale of city property within Seattle, the mayor’s office said.
Alexandria said it envisions the property becoming a mixed-use health-science campus. The site is also set to include a 30,000-square-foot public community center, protected bike lane extensions and 175 affordable-housing units, officials said.
Affordable housing in particular has been a flashpoint in debates over how the city will leverage the properties. Durkan said $5 million of the sale would go to homelessness programs.
Alexandria is looking at an additional 190 market-rate units, officials said. The Mega Block can accommodate more than 1,300 apartments or 1 million square feet of commercial space.
“This is one of the most consequential property deals the city of Seattle has ever done, certainly in my lifetime,” Durkan said at a press briefing last week.
The mayor’s office said it plans to use $78.2 million of the sale for housing purposes, such as acquiring property for affordable development and providing loans for the construction of accessory dwelling units, such as backyard cottages and mother-in-law apartments.
Meanwhile, the office said $25.9 million will go toward transportation projects and $29.1 million will help repay loans borrowed from different city departments for such projects as the Mercer Corridor and South Lake Union streetcar.
The Human Services Department will use the onetime contribution of $5 million to invest in homeless services, while the remaining $5.3 million in proceeds will cover transaction costs like escrow expenses and title reports, the city says.
Alexandria will also make a Mandatory Housing Affordability payment for the development.
Laura Loe, founder of activist group Share The Cities, said the city could have been more transparent during negotiations, but that the deal is still something for Seattle to be proud of.
“Overall, it’s a win,” Loe said. “It’s a win for Seattle and it’s a win in terms of acknowledging the complexity of our housing crisis … None of the money is enough, but designating that the pots of money should be spent [this] way … teaches people that all of these are ways to solve the housing crisis.”
Alexandria has historically focused on real-estate projects involving life science, health, technology and agriculture, including a series of projects around Eastlake. Tenants there include the Celgene Corporation, Gilead Sciences and the University of Washington, according to Alexandria’s website.
After a process that narrowed down seven initial proposals for the Mercer site, Alexandria made a best and final offer that “pretty much moved their (initial) price up about 40 percent,” said Steven Shain, with the city’s budget office. “We selected them and we entered into an exclusive negotiating agreement … in February.”
Per the city’s timeline, a vote by the City Council’s Sustainability and Transportation Committee is expected in early September and a full council vote is expected Sept. 16 before the mayor would potentially sign the legislation later that month.
If everything passes, the city expects the transaction could close next year and construction could begin later that year or in 2021.