Vulcan Bids On Yesler Terrace Makeover
The Seattle Housing Authority is preparing to redevelop Yesler Terrace, a 30-acre site that houses 1,200 low-income residents near the city’s downtown. Vulcan Real Estate is one of two private companies competing to become the lead development partner. The Seattle Housing Authority Board is scheduled to choose the winning bidder today.
Yesler Terrace is the oldest public housing development in the city. Built in 1941, its 70-year-old units are showing their age.
The Seattle Housing Authority wants to replace those homes and completely transform the site. The plan is to rebuild the 561 units that currently exist, along with more than 1,000 new units of affordable housing. The Housing Authority also wants to build shops, offices, space for social services and parks, and more than 3,000 market-rate housing units.
The Housing Authority has never attempted a development of this scale according to Executive Director Andrew Lofton.
“The scale of this one and the complexity of this one, we think, deserves some careful thought about how this is going to be done," Lofton said.
The Housing Authority wants to find a private partner with extensive experience in mixed-use developments. "I think (it) is a wise course of action for us,” Lofton said.
Two companies are competing to become the lead developer at Yesler Terrace.
One is Forest City Enterprises, Inc., based in Cleveland. The company has 220 properties across the US. It has overseen a number of what it calls large, transformational developments, including a 4,000-acre site at a former airport in Denver.
The other bidder is Vulcan, owned by Microsoft Corp. co-founder Paul Allen. It’s a much smaller company that operates almost exclusively in Seattle. In its proposal to the Housing Authority, Vulcan said it would approach the Yesler Terrance development in much the same way it helped transform Seattle's South Lake Union. Vulcan is the largest property owner there.
Both companies declined to comment on the details of their proposals for this story.
The details of the deal are not yet worked out, but the developer could ultimately control a huge chunk of prime real estate in Seattle. The Yesler Terrace site is worth an estimated $175 million. The Housing Authority plans to sell off about half of the land to private developers. Lofton says it's not clear whether the development partner for Yesler Terrace would buy the land or just facilitate the sale.
It is designed to be a long partnership, since the entire project may take up to 15 years. The first phase of construction on Yesler Terrace is scheduled to begin next month.
Lofton says while some don’t like the idea of selling off such a large portion of the Housing Authority's property, it's the only way to pay for new low-income housing there.
"If there were other fund sources that we could do this without selling the land, we would gladly jump to it," he said. "But the fact is, there isn’t. The federal government is going through a retrenchment, and to just suggest that there are other ways to do this is not being realistic."