Shortlisted firms vying to buy and develop four parcels of land above the future Capitol Hill light rail station are raising concerns that Sound Transit’s asking price for the properties is far too high, possibly even double what it’s worth. Sound Transit officials say it’s fair market value for some of the most prized property in the city.
The parcel most in question is the Broadway-facing Site A, where a large portion of the site must be reserved for a semi-public plaza to accommodate events like the Broadway Farmers Market, as stipulated in the project’s community forged Development Agreement.
At a Monday meeting with Sound Transit officials inside King Street Station, several developers said a potential $18.7 million price tag for Site A should be cut in half since only half of the parcel can be developed for residential and retail uses.
“There will be a real challenge to get the numbers to pencil out,” said David Dologite, director of real estate at Capitol Hill Housing. CHH is partnering with Jonathan Rose Co. as one of five bid teams seeking to develop Site A — a site that would include at least 132 units and some ground floor retail.
Sound Transit’s Request for Proposals appraises Site A at $403 per square foot, comparable to other properties sold in the area, including the Broadway Post Office. Back of the envelope-style — which we doubt is how this will play out, exactly — CHS puts the base value of all the sites around $34 million.
Sound Transit’s Sarah Lovell said updated property appraisals would be released in the coming weeks, but she said the price for Site A would likely stay the same. “We are pushing (the developers) … but it’s fair market value,” she said.
While Site A’s price per apartment unit may be higher than others in the area, Lovell said the plaza and transit centered site make the property a unique buy.
Property appraisals are frequently contested by buyers, especially in developments as large as the Capitol Hill TOD site. Several developers said they would wait until the new appraisals were released to decide their next course of action. All proposals must be submitted by October 13th. Sound Transit expects to announce the bid winners in November.
Some community members have raised concerns about the plaza becoming just a large expanse of concrete for homeless campers if developers have to cutback on design to pay for the parcel. Lovell said the developer scoring mechanism gives heavy weight to a strong plaza proposal, including how a future developer would accommodate the Broadway Farmers Market.
During the Monday meeting, developers raised other concerns about the bidding process. Most firms are seeking to develop all four properties as a master developer, but it’s possible that Sound Transit could select individual firms for each site. Some developers said they were concerned that if they would have to scale back their plan if they were selected for one site when they were bidding for all four. Lovell said Sound Transit expects that to happen, but only to a limited degree.
The $1.8 billion light rail extension connecting downtown to the University of Washington under Capitol Hill is expected to open for service in early 2016. Sound Transit forecasts that by 2030, there will be 14,000 boardings a day at Capitol Hill Station. The transit oriented development around the station on Broadway could add as many as 400 apartments to the site. More than a third will be built as affordable housing. Thousands of square feet of retail and the semi-public plaza are also part of the plans.