Vulcan's cost for building higher

By City Councilman Peter Steinbrueck's calculations, Vulcan would be getting a big sweetheart deal from the mayor's office on a proposed zoning change in South Lake Union.

The mayor's office argues Paul Allen's development company is getting no advantage, because it would pay the same fees for affordable housing as developers building nearby in downtown.

Depending on what perspective you start from, both could be right.

Steinbrueck hopes to convince the council before his term ends later this month that Vulcan should pay an additional $2.6 million toward affordable housing if it wants to build taller.

Some residents also are concerned that Vulcan may be allowed to move forward with 12-story buildings before a neighborhoodwide discussion about taller buildings, view protection and urban design occurs.

"Since we're here, we'd like to have something that doesn't look really ugly and oppressive," said Lloyd Douglas, president of the Cascade Neighborhood Council. "That's the stuff we're supposed to start talking about in January, and here we are getting stuck with this beforehand."

Vulcan has asked to build three taller buildings in a new office complex that would span six blocks. It's widely expected to include space for Amazon.com, and would bring at least 4,000 jobs to the neighborhood.

To meet the tenant's timetable, Vulcan needs to start designing the buildings early next year, said Lyn Tangen, Vulcan government and community affairs manager.

City officials say that's well before a planned rezoning of South Lake Union is scheduled to happen, but fits with the neighborhood's vision.

"It seems smart for the city to take advantage of the timing and wanting to grab all these jobs right now and move them into South Lake Union rather than having this large commercial user start looking in suburban locations," Deputy Mayor Tim Ceis said.

But a disagreement between some council members and the mayor's office hinges on how much Vulcan ought to pay for affordable housing and other community benefits.

"It's a unique formula that doesn't fit either of our models, and I'm asking why is it being treated differently and is it sufficient in terms of an equitable trade in terms of a public benefit," Steinbrueck said.

He wants to require Vulcan to pay $7.6 million in fees for affordable housing, for instance, compared with $5 million from the mayor's proposal.

Under the current zoning, Vulcan could build shorter buildings with a floor/area ratio of 3, a measure of how large an overall building can be. It's the equivalent of building three stories from lot line to lot line.

The proposed zoning change would more than double the development capacity -- and Vulcan's potential profit -- on those sites.

Under the mayor's proposal, Vulcan would be required to pay affordable housing fees only above a floor ratio area of 5, essentially getting some lucrative building capacity for free, Steinbrueck argues.

Ceis said the mayor wanted to create a precedent in South Lake Union that would be identical to downtown, where developers don't start paying affordable housing fees until they reach a floor area ratio just above 5.

Because office rents and land and construction costs are virtually the same for the two areas, Ceis said, the city wanted to create a level playing field for future development.

Because Vulcan was starting from a more restrictive industrial zoning, the city imposed additional requirements, Ceis said. Those include meeting environmentally friendly building standards, using green landscaping and a commitment that 60 percent of the new office workers would commute by bus, bike or car pool.

The city didn't calculate how the costs of those particular benefits compare with the profit Vulcan could realize from the additional height. It's difficult to do that accurately without knowing a project's specifics, Ceis said.

"A strict mathematical formula isn't always going to nail it down for you, so you have to use some judgment," he said.

Steinbrueck also wants Vulcan to meet more stringent green building standards, put all parking underground and agree to a cap on the number of spaces.

Whether the council will embrace his plan remains to be seen. Councilman Richard Conlin said he didn't have major problems with the rezoning proposal.

But he does disagree with the mayor's argument that the public benefits are equitable compared with downtown. "I don't think it's consistent, and my main concern is it's being pushed through without addressing that," he said.

Vulcan's Tangen said the $5 million figure is more than what the company would pay for affordable housing if it were building the same buildings in the Denny Triangle.

As it is, the company could build all the office space it needs without asking for a zoning change. That would result in squat, suburban-style office buildings that would sprawl into areas where housing is allowed.

It also would result in zero money for affordable housing, she said.

"We believe in good design, we believe in growth-management policies, we support the community's planning vision and we want a diverse neighborhood," Tangen said. "We believe (the zoning change) will let us build a better project for the long-term benefit of the community."

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Housing market decline called likely to continue

The typical house that sold in King County last month fetched nearly 10 percent less than the typical sale in July, according to statistics released Thursday.

Meanwhile, Washington's rate of troubled mortgages rose in the third quarter, but was increasingly better than the country as a whole, which saw record-high foreclosures and a mortgage delinquency rate that was the highest since 1986.

The median price for houses and condos that sold last month was $405,000 in Seattle and $385,990 for all of King County -- down from a year ago and from recent highs this summer, according to the Northwest Multiple Listing Service.

Some of this is from the influence of condominiums, which have been making up more of home sales and generally cost less. But the median single-family Seattle house price dropped 6 percent from August through November, mirroring the decline of nearly 10 percent countywide from July.

November continued a long trend of many more homes on the market than in 2006, with dropping sales.

Geoff Pfander put his Wedgwood house on the market in September for $535,000 and sold it last month for $505,000.

"We never reset our price, but the offer was lowball and we accepted it," he said. "We were so glad to be done, because the market was getting scary."

Andrew Gledhill, an associate economist with Moody's Economy.com, said the Seattle area's housing market has cooled because job growth has slowed a bit, while high prices and tighter credit have made it harder for many people to buy a home and sellers may have finally started giving up on unrealistic asking prices.

"I think you've had people that were trying to sell at certain prices because they thought the market was still hot," he said. "When it catches up, it catches up pretty quickly."

Moody's Economy.com expects Seattle-area prices to drop 6 percent to 7 percent from mid-2007 through next summer, get back to 2007 levels by about 2010 and be up about 10 percent from 2007 levels by 2012.

The homes that are selling now have to be well staged, marketed aggressively and priced below the competition, said Brigitte Pascutoi, the broker at John L. Scott Real Estate's Bellevue North office. Patrick Lashinsky, president and chief executive of Zip Realty, said many sellers haven't adjusted to the slowing market.

"There's still definitely a mind shift that has to take place," he said. "(Seattle) was by far the last market we saw in any part of the country to go through any sort of correction."

Lashinsky is not expecting Seattle prices to fall as dramatically as those in other parts of the country because they never rose as fast, and the area has a strong economy and a limited land supply.

"If you can get a good deal, buy it," he said.

Pascutoi said prices may drop some more, but it is the time to buy, assuming people are not expecting a quick profit.

"If they're buying it now, I think they should expect to stay in it for two to three years," she said.

Brent and Kaela Koepke have been "leisurely" looking at homes for two years.

"We're not in a rush, especially now that the market seems to be flattening out or even going down a little bit," Brent Koepke said while looking through a Ballard townhouse on Sunday.

They said they expect townhouse prices to fall and had planned to hold off on buying for another year, but felt cramped in their condo and just got preapproved for a mortgage.

"The more you look the more you want to buy," Kaela Koepke said.

Rob Cockerill and Michele Meyers bought a Broadview house at list price last month and weren't worried about prices dropping.

"We're thinking it's not going to get any better than this," Cockerill said. "We're San Francisco II up here."

According to numbers the Mortgage Bankers Association released Thursday, Washington delinquencies and foreclosures are continuing to rise but are going up more slowly and remain substantially lower than those of the nation as a whole. Washington ranked 47th among states in delinquencies and 49th in foreclosures in the third quarter. Moody's Economy.com statistics show Seattle's delinquency rate about 24 percent lower than the state's.

Subprime loans -- which generally serve people with poor credit and have been responsible for much of the turmoil in the mortgage industry -- made up 10 percent of Washington mortgages in the third quarter, compared with 13 percent nationwide, according to the mortgage bankers.

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Painful price to remodel is still worth it

Fixing up an old Seattle kitchen tends to pay off when a home sells.

Adding a sunroom? Not so much.

Those are two of the findings from the newly released 2007 Remodeling Cost vs. Value Report from the National Association of Realtors and Hanley Wood, a business media company based in Washington, D.C.

Nationally, none of the 29 projects in this year's report pay for themselves. Returns on investment range from 57 percent for a home office remodel to 88 percent for adding fiber-cement siding.

But, in Seattle, 13 projects more than recouped their cost, led by minor kitchen remodels, which brought a 126 percent return. Sunrooms were Seattle's least cost-effective project, recouping just less than 73 percent of their cost.

Why does remodeling pay off so much better in Seattle than in other places?

The city's relatively strong housing market helps, said Mike Flynn, an agent with John L. Scott's University Place office and regional vice president for the National Association of Realtors. In places where the real estate slowdown is more pronounced, projects might do more to bring offers in than add to the price, he said.

The report blames declining nationwide remodeling returns on the housing slowdown and rising remodeling costs. In 2005, all of the 22 projects covered in the report returned at least 70 cents on the dollar in resale value nationwide, compared with 23 of 26 projects in 2006 and 16 of 29 projects this year. Before empty-nesters Stan Wiczulis and Joyce Boewe sold their Phinney Ridge home last year so they could downsize, they replaced the mid-1980s Formica countertops with granite and updated sink fixtures.

"When we were walking through (the house) with our agent, she said: 'Here's a couple things that would really bump up the appeal of the kitchen, and you're going to get it back on the sale of the house,' " Wiczulis recalled.

The house sold within a week, although, given the still-frenzied market of the time, it's hard to say how much the granite had to do with the quick sale or the ultimate price.

The Realtors' nationwide report emphasized the value of exterior renovations -- including siding, wood decks and window replacement. These also were among the projects with the best return in Seattle.

"It's just like a job interview," Flynn said. "You've got one shot at a good first impression."

But replacing decent wood siding with fiber-cement siding doesn't make sense in the way it can to tear out Formica countertops to make way for granite, local Realtors and contractors said.

"If you're going to fix the house up to sell it, get a good paint job and be done with it," Denny Conner, who owns Conner Remodeling and Design in Seattle.

Local contractors say the most popular projects involve upgrading small, old Seattle houses for modern tastes and lifestyles.

"A lot of people love living in the city," said Leif Jackson, who owns Seattle's Jackson Remodeling with his brother, Erik.

"We're noticing a lot of people are finishing basements to get that extra square footage, converting attics to master suites," he said. "A lot of people are updating kitchens that haven't been remodeled since the '60s."

Lori and John Roeller's old Seattle house was big enough for them, at first.

"We bought the house not expecting that we were going to have children," Lori Roeller said. But they ended up with two children, and then John Roeller got a job that involved working from home.

They thought about expanding their second floor, but contractors told them they'd get more for their money by finishing their basement. Lori Roeller said they considered resale value in their remodel, but it did not cause them to cut anything out of the project.

Return on investment actually isn't a big factor for most homeowners, Jackson said. "They're doing this to make the house suit their needs for the next 10 or more years."

Which projects to do and how to do them also depends on how long people plan to stay in their home, contractors said.

"My stock answer for 30 years has been 50 percent of what you spend on your project will pay off immediately," said Gary Potter, who owns Potter Construction in Seattle. "The other 50 percent will pay back in five years."

Adding a bathroom to an old house or finishing a basement will pay off a lot faster than erecting a second floor, Potter added. Conner said people planning to sell within five years should focus on projects with better potential returns, using materials and layouts with a broad appeal, while those planning to stay put for a while can look more at what they want.

Which brings this story back to Wiczulis and Boewe and their new 1949 home, in Meadowbrook.

They knew they'd have to do something about the tiny, "Barbie pink" bathroom and small, galley-style kitchen. And Wiczulis, a self-described foodie, wanted something more personalized out of this kitchen remodel.

"What I really wanted to have was something that fit not just spatially, but really fit my needs as a guy in the kitchen," he said. "I wanted my knives to be in a certain place. I wanted my oil, my spices to be in a certain place."

Resale was not a concern, Wiczulis said. "This house is going to be our final stop."

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Vulcan gets city OK for taller development

Citing a desire to keep thousands of jobs in Seattle, a City Council panel on Wednesday approved several taller buildings in South Lake Union in what's widely expected to be a new headquarters for Amazon.com.

The panel also reached a compromise on how much Paul Allen's real estate development company will pay for affordable housing, child care and other public benefits in exchange for the lucrative zoning change.

Vulcan will contribute more than $6 million for affordable housing, build environmentally friendly buildings, include green landscaping and strive to persuade 60 percent of the new employees to get to work by bus, bicycle or car pool.

"It's not everything I asked for, but I do wish to commend Vulcan," said Councilman Peter Steinbrueck, who had pushed for more than $7 million.

The project is "without question the single largest potential development plan short of the stadiums that we've seen in recent times" and warranted exceptional consideration, he said.

Vulcan has asked to build three taller, 12-story buildings in a larger six-block development project along Terry and Boren avenues north. It would bring at least 4,000 jobs to the neighborhood, officials say.

Mayor Greg Nickels, who initially proposed a formula that would have generated $5 million for affordable housing, agreed to the higher amount as a compromise, spokesman Marty McOmber said.

Councilman Nick Licata, the only dissenter in a 5-1 vote, argued that the city was giving away too much additional height -- and profit -- for nothing in return.

If the city doesn't push developers more aggressively to create housing for people such as maintenance workers, secretaries and security guards, it won't ever meet its goals to create communities for all income levels, he said.

"For me at least, (it's) not sufficient," he said. "Look at the value of this project, which is probably half a billion dollars."

Some neighborhood residents are dismayed that the city is allowing taller buildings before a neighborhoodwide discussion take place next year about building heights, view protection and design.

But several business leaders, at a public hearing this week, cited troubling national economic trends to argue that it is vital to move now to keep a company such as Amazon in Seattle.

"This is a homegrown employer that any city would do cartwheels to get," Kate Joncas, executive director of the Downtown Seattle Association, said.

Under the current zoning, Vulcan could accommodate Amazon in five- to six-story buildings in a more sprawling, suburban-style campus.

At the public hearing, advocates for pedestrian issues, farmland preservation and reducing greenhouse gases all said the taller buildings would be a better use of scarce urban land.

Others, such as Ron Sandahl, artistic director of the Open Circle Theater, said zoning changes were overdue.

"South Lake Union isn't the redheaded stepchild anymore. It's not warehouses and broken trolley lines going nowhere," he said. "It's beautiful, and it seems like changing the rules in light of that ... seems like common sense."

Vulcan supporters -- from partners in a construction-apprenticeship program to homeless workers who store belongings in a free locker facility on one of the company's properties -- told the council that the company was contributing enough.

But others argued that the proposed public benefits Vulcan has agreed to contribute pale in comparison with the hundreds of millions of dollars the city has appropriated for South Lake Union, the new streetcar and the Mercer corridor.

"Developers like to talk about things penciling out, but I would remind the council that your job is to make sure that things pencil out for the city," resident Dennis Saxman said. "Let them go and threaten some other city with the departure of vast jobs, because I think it's just a bluff."

Lyn Tangen, Vulcan's director of community and government affairs, said the developer had no problem with striving to meet the city's green building and transportation goals.

Tangen didn't agree that the increased affordable housing contribution was reasonable, but said that at some point it's more important to move the project forward.

"This is something that we care a lot about, and we want to get it done because we need to start designing the buildings," she said. "So the bottom line is that we will probably do it."

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Council votes to limit retail, offices on industrial lands

Historically industrial areas in Seattle will be protected from retail, office and other development under a measure approved by the Seattle City Council on Wednesday.

The controversial package was approved by an unusually divided council vote of 6 to 3 during a marathon meeting of the Urban Development and Planning Committee.

"I acknowledge that we don't have all the answers today," said Committee Chairman Peter Steinbrueck, who sponsored a revised version of what Mayor Greg Nickels had previously proposed. Still, "I believe there is a need for immediate controls by the very fact that that we've opened the book on land use. ... We need to establish a baseline of which everyone can agree to."

The ordinance would limit office and retail buildings to 10,000 square feet in core industrial neighborhoods, and to 25,000 square feet in some other industrial areas -- a fraction of what is now allowed. Bars, restaurants and other businesses would be further restricted. Office space utilized by allowed industrial businesses and marine retail sales and services would be exempt.

Steinbrueck also successfully pushed through a companion measure that directs the city planning department to explore numerous issues about the future of industrial lands, and to provide a report at the end of next year.

Nickels' office released a statement applauding the measures as protections of family-wage jobs in Seattle.

Industrial interests and labor unions had pushed for the legislation. They said increasing pressure for land from real estate speculators and non-industrial businesses threatened to make property in Sodo, Ballard and other areas unaffordable to true industry.

"What we're talking about now is whether you believe in a Seattle that's for everyone or you think we should whittle away what we've got left in the industrial sector," David Freiboth, of King County Labor Council, testified at the meeting.

But opponents countered the legislation was being pushed through too quickly. It was initially proposed only several months ago, and not seriously considered by council members until recent weeks, they said.

"What we're doing right now is making a hasty decision rather than the right decision," said Councilman Richard Conlin, who unsuccessfully sought amendments to exempt large swaths of the 5,100 affected acres. Conlin might try that again during Monday's council meeting.

"I don't believe that this is going to be legislation that is going to stand the test of time," he said.

Property owners and some in the high-technology industry said they were being unfairly squeezed out -- at the expense of expanding industries of the future. Some have also argued the heavy industry of Seattle's past is no longer viable in portions of the lands in question.

"We just don't believe that there's a crisis that requires this level of down-zone and hope you continue to study this for a while," Lewis McMurran, vice president of Government and External Affairs of WSA, a statewide technology trade association, told the committee.

The industrial land package goes to the full council on Monday. The final vote is likely to be similar to the committee vote, because all members of the council attended the committee meeting and voted on the measure. Steinbrueck is leaving the council at the end of the year. Tuesday marked the final meeting of his committee.

Council members also approved the sale of a block of land across from City Hall to a private developer. Triad Development plans to build 600,000 square feet of office space, 155 condos, an underground parking garage, 20,000 square feet of city-owned retail space and a public square at the site at Fourth Avenue and Cherry Street. The city plans to lease the retail space back to Triad for at least a decade. Officials predict the deal could also bring in revenues of about $750,000 a year.

The block represents the last piece of an overhaul begun in 1999 of the city's downtown office campus, including already completed projects to construct a new City Hall and the Justice Center and to purchase the former Key Tower, now called the Seattle Metropolitan Tower.

The committee also authorized a study into creating a rental housing inspection program, which had been opposed by some landlords and real estate interests as an invasion of privacy and unduly burdensome on property owners.

"It is about assuring minimum living standards," Steinbrueck countered.

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source: seattlepi.com