Affordable housing with a potential hospital for West Seattle discussed at WSTP Board meeting; Decision now likely coming in October
According to the most recently released meeting minutes of the West Seattle Trusteed Properties Board on April 30 the question of what to do about a $14,490,000 offer to buy the parking lot land in the West Seattle Junction was a hot topic. The question boils down to whether or not to favor affordable housing with a potential for a non-profit hospital for West Seattle (marking the return of an actual medical center here in well over 30 years) or to allow another developer to pursue housing development.
As WestsideSeattle.com was first to report on April 30 the parking lot properties around the West Seattle Junction were originally purchased and set aside to provide free parking for local businesses in 1954. That came to an end in January when paid parking was imposed to help offset the nearly $200,000 tax bill that King County requires. Those taxes went up incrementally in the last few years as the land value increased.
The City of Seattle through its partner Community Root Housing (CRH) made an offer to the WSTP board in March, with the understanding that the land is currently encumbered by a 17 year lease, held by the West Seattle Junction Association. That lease means the value of the land is lower at unless that lease were to be nullified either through a sale agreement or default.
The offer from CRH is roughly $4,500,000 less than the assessed value pre-covid, and made prior to the closure of the West Seattle Bridge (set to reopen roughly a year from now). Dave Gowey of the WSTP Board said the prior assessed value was $18,842,000.
Board Vice President Charlie Conner (owner of Conner Homes) said he has had contact with outside developers and "that have a successful track record with in-City development that have expressed interest in West Seattle in different possible roles and suggested that we look at what is likely to come in."
The decision on a path forward will come down to a shareholder's vote. There have been no official shareholders meetings for 2 years (during which an elections of officers could take place) largely due to the pandemic, but now the next meeting has been delayed until October according to a cover letter that accompanied the meeting minutes.
WSTP Secretary Tyler M. Johnson wrote, "The Board anticipates meeting again July 22nd and will be retaining professional guidance to assist WSTP in analyzing and studying issues, including taxes and otherwise, relating to offers to purchase asset or entity interests of WSTP. Additionally, the Board is looking at October as a viable time frame for setting a Shareholder meeting at which Director elections might safely be scheduled to occur as well as an opportunity update and present to Shareholders on issues pertaining to WSTP ownership and any recommended course the WSTP might wish to pursue. A more firm date for a Shareholder meeting will likely be set at the next Board meeting."
Regarding that path forward, CRH would not have to submit to design reviews (they are funded by the City of Seattle Office of Housing) but would have to do extensive community outreach to incorporate the views of nearby residents. Private developers, if the land is sold to them could develop the property largely any way they choose, as long as they comply with city land use code.
CRH said regarding the parking situation, "Over the past year CRH has been in community and stakeholder discussions about the property owned by the Trustee, including the West Seattle Junction Association (Junction). Based on these discussions we believe our plans to redevelop the property long term combined with continuing to lease it to the Junction for public parking meet with the community’s goals and desires. CRH is supported by the Junction who would continue to operate the lots for public parking and CRH would purchase the property with assignment of the existing lease."
WSTP President Joe Erickson according to the meeting minutes that he saw, "the benefit of a transaction with another Developer that might deliver back the developed parking to retain parking for the area and the WSTP would continue to own might be an additional consideration that would be wise for WSTP."
CRH would seek to develop the land, creating both affordable housing (residents would need a minimum income of $60,000, and additional retail in the form of Co-Op units the lease holders could buy.
Lora Radford, the Executive Director of WSJA adds “As the lease now stands, the parking lots are encumbered allowing for additional parking, period. WSJA has already agreed as the tenant to amend the lease to allow for affordable housing or a community hospital if the deal is inked with Community Roots Housing. Other than that agreement with CRH, there has been no discussion to allow the parcels to be sold to for-profit developers”.
Here are the minutes of the West Seattle Trusteed Properties April 29, 2021 board meeting:
MINUTES OF BOARD MEETING
WEST SEATTLE TRUSTEED PROPERTIES INC.
APRil 29, 2021 AT 9:30 AM via Zoom
Attending virtually by Zoom Conference:
Dave Gowey, Leon Capelouto Jeff Vann, Joe Erickson, Tyler Johnson, Mark Swanson, Charlie Conner (Joined the Conference about 15 minutes into the conference)
Owing to ongoing Covid-19 conditions the Board met via Zoom conference. Joe convened the meeting at 9:31 am via ZOOM Conference on April 29, 2021.
Approval of March 11, 2021 Board Meeting Minutes: Prior to the meeting, Tyler circulated draft minutes to all Board members. Leon moved for approval of the Minutes; Mark seconded. The Minutes were unanimously approved.
Overview of Meeting: Joe suggested that Dave provide a brief recap of how the Paid Parking agreement is functioning before turning to the Board's discussion regarding an Offer made to WSTP Inc regarding its Parking Lots.
Paid Parking Recap: Dave recalled that at the last meeting in March, WSTP had limited information in about the revenue from the Paid Parking Agreement but since then Dave detailed that the revenue to WSTP (WSTP's share) began to increase significantly following January as follows:
For February 2021: Approx. $3,900
For March 2021: Approx. $7,100
Dave reviewed the details of the certain thresholds in the agreement which results in a larger percentage of revenues after the revenue exceeds $15K and then another increase after the revenues exceed $25K. Ownership retains 60% up to $15K, then 75% over $15K, then 85% over $25K. In March, total revenues exceeded the $15K trigger for the first time.
Dave also mentioned that we now have Diamond Parking set up to ACH or electronically deposit the share directly into the WSTP account.
The Board all agreed that Dave and Joe really did a good job helping finalize that Paid Parking Agreement.
Offer from Community Roots Housing:
Joe confirmed that all Board members had received the Offer document made on behalf of Community Roots Housing for its Offer in the amount of $14,490,000.
Leon provided a little background concerning the Offer based on a community meeting that he attended. At the meeting were also a number of other WSTP shareholders such as Jerry Cohen, Jack Menashe and Jack Miller and quite a few others including representatives from the City who were seeking the community support for this offering group. Also there were representatives of the WSJA. There was much discussion at that meeting regarding Affordable Housing. Also, there was strong sentiment to involve including a Non-Profit Hospital as part of a redevelopment project. Also, the redevelopment of the prospective buyer would include space for an office for the BIA. Additionally, mentioned that the Developer would get a very favorable loan at a 1% rate from the City.
Leon recounted concerns about undertaking Development risk generally and highlighted the difficulties in getting permits relating anecdotes of his experiences on his own project(s) as well as Jack Miller's experiences. He also indicated that Apartments are becoming far less profitable and other concerns such as Capital Gains taxes etc.
Dave expressed that it was important for the Board to be aware of the current Assessed value for the WSTP lots which he indicated is $18,842,000. This is a pre-Covid and pre-Bridge troubles figure.
Tyler said WSTP Board should not be in any rush and is obligated to survey all options and to survey the pros and cons of possible options. Notably, the Offer comes in at a significant discount to Assessed value when the West Seattle Bridge still has not been repaired. Further, the prospect of other interest as well as developing a thorough evaluation of all options support holding off on a response to the Offer at this time.
Multiple Board members expressed an interest in seeing the Appraisal purportedly relied on by the Offeror which may consider condition of the West Seattle Bridge as well as the Covid economy.
Charlie advised that he has had communications with a few Developers that have a successful track record with in-City development that have expressed interest in West Seattle in different possible roles and suggested that we look at what is likely to come in.
Jeff advised that he was at the meeting with Jerry Cohen and believes that a number of the WSTP shareholders would like to look at a sale. "What do we (WSTP) want? Some shareholders would probably like a sale".
Also, Jeff mentioned that he visited some "Low Income" housing projects on the Eastside which were "very nice" projects so suggested that WSTP keep an open mind about such development.
Leon advised that the City won't pay more than the "appraised value".
Joe observed the benefit of a transaction with another Developer that might deliver back the developed parking to retain parking for the area and the WSTP would continue to own might be an additional consideration that would be wise for WSTP.
Numerous Board members (Jeff, Leon and Joe) all observed the potential positive of a future development that might involve a community hospital. Tyler asked whether we know what community hospital organizations might be interested in being over in West Seattle; it is likely that numerous development plans might include such a component in a development.
Tyler commented that the Board has an obligation to investigate all options.
Joe indicated that he may communicate back to thank them for the submission of the offer and to invite the submission of additional information (e.g. the Appraisal etc.), but that it is likely that WSTP shareholders may have a spectrum of options for the Board and Shareholders to more fully consider.
Jeff mentioned it would be good to have options for those who wish to sell and those who wish to hold.
Then there was a discussion about advising shareholders that an offer was received. Tyler indicated that he can reference it in the cover email when he circulates the Approved Minutes. Board unanimously approved sharing this additional information with the Shareholders in that fashion.
Joe moved to adjourn. Tyler seconded. Some further discussion about date for next meeting; after agreement for next meeting of June 3rd, the meeting was adjourned at 10:35 am.
Tyler M. Johnson, WSTP Secretary