Why aren’t developers incentivized to save entire Pike/Pine buildings?

Only the best of Capitol Hill's old buildings can survive what the market demands (Image: Terry Dolan via Flickr)

Only the best of Capitol Hill’s old buildings can survive what the market demands (Image: Terry Dolan via Flickr)

Here is the murky proof in the murky pudding of Pike/Pine’s preservation incentive program: Developers in the 12 participating projects so far in the history of the conservation district are slated to build a few hundred prime-location apartment units in exchange for saving 19 “character structures,” mostly one-story brick facades. Towering above and behind those character structures will be a total of 1,363 apartments and 192,000 square feet of new retail and office space in Pike/Pine.

While the city doesn’t track how many apartment units directly result from extra-floor allowances under the Pike/Pine Conservation Overlay District, it’s clear that the incentives framed as a preservation program for the neighborhood’s architectural character are, first-and-foremost, incentivizing bigger buildings. On Tuesday the City Council will be reviewing updates to the overlay district rules that, like it or not, won’t do much to change the program’s course.

“The area is zoned to provide for substantial development,” said Dennis Meier of Seattle’s Department of Planning and Development. “The desire was to make new developments fit in a little bit better.”

CHS recently reported on a study showing that old, small buildings surrounding new development correlate strongly with the most dynamic urban cores in at least three cities, including Seattle. The authors of that report were highly skeptical that preservation projects, like those created with Pike/Pine’s incentive program, could deliver the same results as true adaptive reuse projects.

So why aren’t Pike/Pine developers actually incentivized to save old buildings? .

Back in 2009, preservation incentives for Pike/Pine developers were drafted as a compromise, something in between creating a frozen-in-time historic district and allowing for the unfettered redevelopment of the entire neighborhood. The compromise in the overlay district relied heavily on offering developers extra height and building size in return for incorporating old character structures and facades into their developments.

What wasn’t part of the compromise was actually saving old buildings in their entirety while incentivizing a new apartment tower on the same parcel. A similar concept exists in residential zones where old houses don’t count against density or total floor area allowed on a parcel (i.e. backyard condo building).

There doesn’t appear to be any inherent barriers to such development in Pike/Pine, said Meier. What prevents developers from building such projects is the need to maximize the development potential on their parcel. That’s harder to do if you keep a one-story building only one-story tall.

“The idea was to not freeze the neighborhood time, but not have growth in an uncontrolled way,” said John Feit of the Pike/Pine Urban Neighborhood Coalition, the group that helped draft the original preservation rules. “If buildings meet landmark status, they can be preserved.”

That’s not to say the cumbersome landmarks process is the only way to save an entire auto-row building. Developers will preserve small, old buildings, but only the smallest and best, and they won’t be saved because of the Pike/Pine incentives, they’ll be saved because developers like Hunters Capital and Liz Dunn make it part of their mission and have found a strong market for their projects.

The forthcoming upgrades to the Pike/Pine preservation incentives could nudge some more developers towards saving entire buildings, but it seems unlikely. One feature of the proposed updates would allow developers to build bigger in Pike/Pine by preserving an entire building on a nearby parcel. It’s called transfer development rights, and while the zoning incentive has basically been available on Capitol Hill since 2012, its gone largely unused.

Over the years, council members Tom Rasmussen and Sally Clark have been tweaking the preservation incentives as development in Pike/Pine has boomed. After a year and a half, they’re ready to roll out their latest round of updates. Broadly, the new preservation rules would require developers to retain more character structures to get an extra floor of apartments or more retail space. But still, nothing in the new proposal specifically incentivizes saving entire buildings.

The council’s transportation committee is slated to hold a public hearing on the proposed changes Tuesday at 9:30 AM. If you really want to get into the weeds, here’s the 43-page ordinance (PDF). If not, here are the bullets of what the upgrades seek to accomplish:

  • Require that all character structures on a lot be retained, either partially or fully, if zoning incentives are used. The Design Review Board would be able to grant departures from this requirement, with guidance from criteria in the code;
  • Reduce the bulk of new buildings on larger lots by further limiting the amount of floor area allowed on upper level floors;
  • Remove the current 2.0 floor area ratio (FAR) limit on commercial structures, if all character structures are retained as defined in the Code;
  • Remove regulatory barriers that make it difficult to retain character structures;
  • Provide clearer standards for retaining character structures and for the limited circumstances in which the Design Review Board may allow demolition of a character structure if an zoning incentive is used; and
  • Make technical corrections and clarifications.

The preservation program has been loudly criticized by some as the preserved structures seem reduced to bits of facade stapled to the new development (although developments like the recently opened Sunset Electric have shown how the character of a preserved facade can seep into a building’s interior).

“If it wasn’t for the overlay, all those buildings would’ve been torn down,” Feit tells CHS, adding that mandating preservation would have spelled trouble as well. “It’s not perfect, but we’re not fighting with lawyers.”

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16 thoughts on “Why aren’t developers incentivized to save entire Pike/Pine buildings?

  1. Why aren’t developers encouraged to build more condos and houses instead of apartments! As fewer people who live here actually own the land here, the higher rents will go and the less stake residents have in preserving the local culture and landmarks. I really think that’s the real cause of Capitol Hill’s gentrification.

    • We’ll probably see many of these new apartment buildings convert to apartments after their tax threshold passes. I predict a flood of apartment conversions a few years from now.

      We need more condo options but those conversions will likely keep rents high.

    • Wes:

      From a developer’s perspective, Condos are still a tough building type to take on. This is mostly attributed to all the lawsuits and litigation that inevitably happen after construction is completed. Because of how ownership is structured within condo contract, there will always be some type of litigation from the HOA brought against the developers surrounding the construction. This can vary widely, depending on how much the developer wants to invest in hiring out lots of consultants and sub consultants to verify and document every single last detail. Needless to say, this kind of work can get really expensive, really quickly.

      A good example of this is the Mosler Lofts down in Belltown, which just reached a settlement after 6 YEARS in litigation. (http://seattle.curbed.com/archives/2013/06/mosler-lofts-settlement.php). Also an issue is no one can buy or sell if the property is tied up in this kind of lawsuit.

      At the end of the day, based upon how expensive land is in Capitol Hill, apartments are much less of a headache for someone to make it pencil, and have less of these added risks.

      That being said, I totally agree in the emphasis placed more on ownership, and would think that in the next few years, once condos become a more demanded property type, you’ll see more of them pop up in the greater Pike-Pine core

      • Legal issues aside, I think apartments are simply more profitable. I see rents going up much faster from these guys than say condo owners who are renting or a comparable mortgage payments. The only thing keeping apartment rents from skyrocketing is competition from the buyer market and individual owners who rent out. You have Pacific Crest building Hawthorne, Terravita, and Bellevue Terrace all with in a block. You have the Lyric and Jewel. Soon the BMW building, B&O Expresso, Bills off Broadway all being replaced with “luxury apartments” where you can cram as many people in and get a high rent per sq ft. Its an attempt by large development companies and ultimately foreign investors to milk profit out of the growth of companies like Amazon in the city.

        Who’s going to be making the zoning rules and development decisions when the area is nearly entirely owned by people who don’t live here?

  2. The Sunset Electric building is a great success and a model to be followed.

    If we were to just preserve the old buildings they would still have all the old infrastructure issues unless very expensively renovated.

    Moreover if we have to lower the height somewhere to preserve it we must increase it proportionally somewhere else. E.g. In a lot zoned for 6 floors if we preserve half of the block at 3 floors the other half would have to go to 9 floors. Is that desirable? If not let’s just get rid of the old unsafe parts of a building and preserve only the character.

  3. Edited version of the article:

    Towering. Extra-floor allowances. Incentivizing bigger buildings. Provide for substantial development. Unfettered redevelopment of the entire neighborhood. Offering developers extra height and building size. Need to maximize the development potential on their parcel. Allow developers to build bigger. Development in Pike/Pine has boomed. Get an extra floor of apartments or more retail space. Nothing in the new proposal specifically incentivizes saving entire buildings. Won’t do much to change the program’s course.

    • I have a great idea! Lets gut/demolish/facade-ize our entire historic neighborhood to build expensive temporary housing for rich young techies!

      Oh wait…………………….

      • The facade that remains of the old bill’s space is a joke. When I drove by last weekend all I could think was, “why bother?”

      • I have a better idea. Let’s lock our city up in history and turn into a museum. And when the few apartments we allow to exist are rented out, let’s tell everybody else “we came here first”.

        Seattle is so much more progressive than that. We’ll keep the good part of history (facades, lobbies), recycle the bad parts (moldy building interiors, unsafe wooden structures) and end up with a modern yet historic city that inspires everyone. Don’t forget that the mix of old and new is often some of the most photographed material in any city – because it’s an example of organic growth, not historic preservation for the sake of it.

        Also check this out:

      • Anton:

        We’ll keep the good part of history, you say? A line of bricks at the front of the building that doesn’t fit in with anything behind it. That’s ridiculous. If what you are suggesting was actually happening I would agree with you but, developers are making a little extra work for themselves by propping up a skeletal wall of bricks that remain from the previous building to take advantage of increased heights and other perks allotted them for doing so.

        There are a few (very few) examples of mixing old architecture and new to create a feel for the original neighborhood while increasing density. There are even fewer examples of new architecture that is in harmony with what is currently surrounding it. The situation you are suggesting, however, is not what is currently happening on Capitol Hill.

        There are many of us who see what *is* happening (shoddy workmanship, saving strips of facade that and are laughable, building for profit and not out of concern for the character or spirit of the neighborhood, etc.) and we are calling attention to it, as it is our duty, as long time residents of the neighborhood, to do so.

      • Well, I am not happy that you don’t like the results, but I personally am extremely pleased. I am just being realistic here – there are examples of just tearing everything down, there are examples of preserving entire buildings but not keeping them up and obviously severely limiting supply. Also speaking of facades – personally if there is one thing that pisses me off that would be corrugated metal – I am sure that somewhere there is a temporary settlement built out of shipping containers that looks like some of our buildings. How could the DRB not cry when they saw that?

        But, on the grand scale of things we are doing really well. Is it perfect? No – but there are no perfect cities anywhere.

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