The Seattle Housing Authority's $290 million vision for a dense, vertical, mixed-income neighborhood at Yesler Terrace is unprecedented in scale and "untested anywhere in the United States," according to Matthew Gardner, a land-use consultant hired by the city of Seattle

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To rebuild its World War II-era subsidized apartments at Yesler Terrace, Seattle Housing Authority (SHA) has come up with a bold plan.

The authority would sell prime parts of Yesler’s 30 acres on First Hill to private developers and use the money to reconstruct as well as expand its low-income housing there. Private developers would build about 3,000 market-rate apartments and condos on the property, as well as office towers.

The $290 million vision for a dense, vertical, mixed-income neighborhood is unprecedented in scale and “untested anywhere in the United States,” according to Matthew Gardner, a land-use consultant hired by the city. It overstates demand for housing and office space at Yesler, in Gardner’s opinion, which calls into question the authority’s ability to complete the dramatic makeover in 20 years as proposed.

Housing activists also have questions about the authority’s request for $30 million in city funds, including millions from Seattle’s voter-approved affordable-housing levy. The levy should be dedicated to adding new units for the poor, not replacing existing ones, says Sharon Lee, executive director of the Low-Income Housing Institute.

“I’m in the camp of ‘great vision, let me see how it works,’ ” said Nick Licata, chairman of the City Council’s housing committee. The council begins months of reviewing the Yesler plan on Monday, starting with a briefing on its financial model.

Housing Authority head Tom Tierney stands by the plan. The authority’s economic consultants, Heartland Capital Advisors, maintain their financial model is solid.

Gardner is skeptical that Yesler can capture 10 to 15 percent of new residential development citywide, which he says the plan calls for. But Heartland points out that Belltown grabbed 22 percent of the city’s new housing in the 1990s.

What’s more, Tierney said, city officials have continued to move forward on the plan despite Gardner’s report earlier this year, recognizing “we’re not going to get unanimous views from economists.”

Tierney says Yesler is as deserving of levy funds as any affordable-housing project. “We are building housing for future generations of extremely low-income people just the same as when a nonprofit builds housing,” he said. “It’s all replacing something else ultimately.”

Licata says his chief concern raised by Gardner’s report is the prospect that some of Yesler’s 1,200 residents who will be moved off-site during phased construction won’t get back for several years.

“The first goal is to determine the risk of that happening,” Licata said. “It could be that the council and mayor say that’s OK. I don’t feel so but a majority may.”

He also wants to look closer at the authority’s request for at least $7.5 million from the seven-year $145 million levy approved in 2009.

The issue, according to Licata, is that “levy funds were supposed to be providing new units, not replacing old units.”

Harry Hoffman, head of the Housing Development Consortium, said he’s heard “a lot of concerns” about the levy from the nonprofit developers his group represents. “We would like to identify another source of funds for SHA,” Hoffman said. “We don’t have that solution yet, but we’re working on it.”

The council intends to spend the summer reviewing the Yesler project. In addition to city funds, the Housing Authority is seeking zoning changes that would allow 13 towers.

“The underlying assumption for this project is that the market forces will play outright for SHA,” Licata said. “If we’ve learned anything in the last four years, it’s that no one can predict market forces.”

Bob Young: 206-464-2174 or