Seattle City Council Land Use Committee 12/4/2024

Good afternoon, everyone.

The December 4, 2024 Land Use Committee will come to order.

It is 2 p.m.

I'm Tammy Morales, chair of the committee.

Will the clerk please call the roll?

Council Member Moore.

Present.

Council Member Rivera.

Present.

Council Member Strauss.

Present.

And Chair Morales.

Here.

For present.

Thank you.

Council Member Rink is excused until she is able to make it.

She's a couple steps behind me.

Great.

We will acknowledge her when she gets here.

Okay.

Colleagues, we have two agenda items today.

One is the resolution 32156 for briefing discussion and possible...

declaring the intent to establish a new sales and use tax deferral for the conversion of commercial buildings to residential.

And Council Bill 120833 for briefing discussion and possible vote on the living building amendment.

And I want to acknowledge Council Member Rink has joined us.

If there's no objection, today's agenda will be adopted.

Hearing no objection, today's agenda is adopted.

We'll now open the hybrid public comment period.

Public comment should relate to items on today's agenda and within the purview of this committee.

Amelia, how many speakers do we have signed up?

Two remote and six in person.

Okay, so we will give everyone seven in person.

We'll give everyone two minutes to speak and we'll start, let's start with in person first and I'll hand it off to you for the

Each speaker will have two minutes.

The speakers will be called in order in which they registered.

We will start with in-person speakers and then alternate to the remote speakers.

Speakers will hear a chime when 10 seconds are left of their time.

Speakers' mics will be muted if they do not end their comments within the allotted time to allow us to call the next speaker.

The public comment period is now open.

We'll begin with the first speaker on the list.

And the first one is Mari.

And just give me a quick second.

Oh, yes, thank you.

We've also been joined by Council Member Kettle, who is joining remotely.

Thank you.

Welcome, Council Member Kettle.

Okay.

Hi, Council Members.

Thank you for...

I'm going to ask you to get real close to the mic.

Yeah.

Is it on?

There we go.

Okay, good.

Much better.

My name is Maureen Moore-Schuler.

I'm the president of the Lake Union Liveaboard Association, representing little houseboats on Lake Union.

And I'm here only to remind you that there are many residences like ours on the water throughout the city.

in our case, still little affordable houseboats.

So will your actions today on conversion of commercial buildings be applied also to buildings that are on, near, or over the water to convert those to housing as well?

Because it could represent some more affordable housing units within the city of Seattle.

We are also looking forward to this committee's looking into the SSMP in the new year, and we're looking forward to working with the council during that process.

That's it.

Thank you.

Thank you.

William is our next speaker.

Good afternoon.

My name is Bill Ledum.

I work at Urban Renaissance Group.

I come before you today to voice my support for Resolution 3215 and urge its speedy adoption by the Council, as authorized by the Washington State Legislature, Senate Bill 6175. Manager and developer of over 10 million square feet in the Seattle area, many of URG's assets are older office buildings in the Seattle CBD, including the building I work out of called the Joshua Green Building on the corner of 4th and Pike.

Today, URG estimates that the Joshua Green Building's value as an office building is down 75% to 85% from peak pricing.

There's very little demand for office suites in the building, with May staying vacant for years.

Since the pandemic, conversion to multifamily has been too costly to contemplate at older assets.

The resolution before you will improve the feasibility of turning the 120 year old Joshua Green building and others into badly needed affordable housing.

As an example, a converted Joshua Green building could bring as many as 85 to 95 units to an important corner of the CBD and help activate the area around the building with new residents and retail.

For little to no cost, the council can adopt this resolution, which will build upon some of the recent successes URG has witnessed downtown due to the council and mayor's leadership on CBD revitalization.

I again urge you to support resolution 3215. Thanks for your time and support.

Our next speaker is Patrick Foley, then followed by Tom Graff.

Hi, good afternoon.

Patrick Foley.

I'm with Lake Union Partners.

I'm a co-founder and managing partner of the company, Seattle-based, and we do a lot of urban infill, multifamily, mixed income development, but we've also done a lot of historic preservation.

And I'm here to speak in support of this office to housing bill for sales tax.

And I think it's specifically important because I have a particular interest in historic preservation in Pioneer Square and other neighborhoods.

I think these buildings are really ideal for office to housing conversion.

Many of them in Pioneer Square are empty right now, not empty, but very, very vacant.

And the cost to renovate those buildings is significantly more than new construction.

So this bill will really help move these projects along and make them more feasible.

And I think it also plays a role in the URM issue that we have with a lot of these buildings that need to be upgraded.

So I would encourage you to adopt this.

Thank you.

We next have Tom, followed by Tom will be Steve Robustella.

Good morning or good afternoon.

I'm Tom Graf.

I have lived and worked in Belltown for 35 years.

And I came to speak about the amendment or council bill 120833. But before I do that, I do want to speak about this office to housing PREFERENCE THAT YOU'RE LOOKING AT DOING.

I WORK IN REAL ESTATE AND THIS CONVERSION SOUNDS GREAT ON PAPER, IT DOES NOT WORK UNDER OUR EXISTING ECONOMICS FOR ALMOST EVERY BUILDING.

AND I SEE THE OFFICE MARKET CONTINUING TO BE VERY DIFFICULT IN DOWNTOWN AND I KNOW THE VALUE OF RESIDENTIAL UNITS in the heart of the city.

So I highly encourage you to do this incentive to help with the conversion.

It's not going to solve it, but it's going to help.

On the Council Bill 120833, I encourage you to also pass that amendment.

The Department of Construction and Inspections have already assumed this works.

They instruct people working with the zoning that it works, and there is some amendment that needs to be done to correct this.

And I encourage you to do it.

Not only the fact that the city already said it would work, but secondly, we need family housing in Belltown.

I know it's news to everybody, but people with kids, some of them want to live in downtown.

And you cannot grow a three-bedroom unit in these towers without incentives.

It does not work.

I have this beautiful couple on my floor.

He works for Amazon.

They came from New York.

They have two kids.

They're going to have to move unless they can find a three-bedroom.

And they don't exist without incentives.

So I encourage you to make this correction.

And followed by Steve will be Mark.

There has to be some happiness spread as well.

Empty buildings, are we in a capitalist society or not?

I guess not.

I suspect that if you're going to give incentives, how about incentives for people to make, say, less than $70,000 a year, less than $100,000 a year?

Your incentives have been more for people who make far more than that in Seattle.

We're seeing the working class disappear and you're helping to subsidize it by taking away their environment.

You encourage the knockdown of older buildings to build bigger buildings and raise the rents.

And the outcome of that is we have fewer people in Seattle of what I would call normal income.

You also have to remember that the middle class has been coming down and they're going not up, Many of them are going to the working class.

So it might be smart to put some restrictions on your value giveaways to the developers.

Because if they have empty buildings, there is a certain incentive to do something with that property which will bring income.

And when you give away tax giveaways, that means others, us tweeners, I'm not poor enough to get a program to help me and I'm not rich enough to live wherever I want and do whatever I want.

So us tweeners are a little unhappy with your giveaways.

You are very kind to the very top.

You give a little bit to the people on the bottom.

and you take it from us.

So I would put the charity at the bottom, not at the top, and protect against all these tax giveaways to people who really want it badly but don't need it.

We now have Mark, and the following Mark will be Colin.

Thank you for the opportunity to address you today.

My name is Mark Angelillo and I've been a resident of Seattle for 32 years.

I'm the managing member of Stream Real Estate.

We're a small local real estate development investment company based in Seattle.

I'm commenting in support of proposed resolution 32156 concerning office to residential conversion, affordable housing incentive.

As many of you are aware, we are proposing to convert a long vacant 1980s vintage office building to much needed residential and affordable residential units.

The bill proposed under Resolution 32156 will be the trigger to make our project and many others feasible so that we can move forward from discussions about converting underutilized commercial spaces to actually starting construction.

In our case, we will be using both the MFTE program and this program to make almost one third of our project affordable units.

THIS IS A GREAT BENEFIT TO THE CITY AND THE COMMUNITY.

I WOULD LIKE TO EMPHASIZE THE NEED TO MOVE THIS BILL ALONG AS QUICKLY AS POSSIBLE AS WE ARE CURRENTLY IN THE PERMITTING PROCESS IN ANTICIPATION OF IT PASSING AND WILL BE READY TO START CONSTRUCTION VERY SOON AFTER THE NEW YEAR BUT CANNOT START UNTIL THIS BILL PASSES AND WE ARE CONFIRMED AS APPROVED BY BOTH THE CITY AND THE STATE WHICH IS A LONG, TEVIOUS PROCESS.

EVERY DELAY PUTS OUR AND MANY OTHER PROJECTS AT INCREASING RISK.

I'M HAPPY TO ANSWER ANY QUESTIONS.

And then we'll have one last in-person speaker after that.

No, you're fine.

Good afternoon, council members.

My name is Colin Gray.

I work with Saratoga Capital.

We're the developer of the Western Seeders building in Belltown, and I'm here to ask you to approve the amendment before you this afternoon to allow us to continue with the living building, three-bedroom design we've incorporated.

We've worked very hard to create an incredible building for the city, taking advantage of environmental incentives and and applying housing for families and MHA fees or potentially performance on site.

Not only does this open the door for us to complete our development, but it also opens the door for others to pursue bringing new residents to Belltown and continuing to do great growth and bring families into downtown and support the return to business here.

So thank you for your time.

We have Jesse.

Thank you.

Good afternoon.

My name is Jesse Scott Kendall.

I'm with the Carpenters Union and International Council of Piledrivers.

I'm here to speak in favor of this amendment to convert commercial buildings to residential buildings.

Yes, we need more houses, but we also need labor standards.

We want to make sure that the people building these facilities, these houses, can live in these houses.

We're seeing a lot more people being pushed out of the community We're seeing a lot more underground economy.

What is underground economy?

Underground economy is basically labor brokers, people being taken advantage of, people not paying the Seattle minimum wage.

We're seeing this on every construction job.

We just walked a construction job in the city of Seattle where the guy was making not even 19 bucks an hour building a building in seattle so we need to make sure that we have labor standards when we we are building these projects and that's what we are asking for from you guys thank you we'll now move into our remote public comment speakers our first one is david excuse me it's um nadine toll please press star six

Hi, this is Nadine Tull, Belltown resident, and I'm here to present comment on CB120833.

Thank you, members of the committee.

This bill was written very intentionally to seem like a no-brainer at first glance, but there are significant red flags.

The cumulative impacts of incentives have been overlooked.

The project in question, 3036043, In the DCI proposal does not cap at 175 feet as stated.

It's actually nearly 200 feet tall with neighboring buildings of 125 feet.

Yet there has been no analysis of the full implications of this.

The LBPP goals can be achieved under current zoning and they have been with a successful project completed at battery.

Yet this bill is framed as the only path forward.

It also does not address affordable housing in any way as this is a proposed luxury rental.

The DMR zoning is unique to other zoning here in Seattle.

Lot size isn't just a guideline, it's a critical element ensuring dense areas like Belltown remain livable.

This bill does not acknowledge the unique zoning criteria and this will potentially impact multiple lots in Belltown and yet it was written with a...

project in mind, and yet it's being presented as an administrative adjustment with minimal impact and a non-project action.

Supporting details have been shared in email, but I urge you to not move forward with this bill without fully scrutinizing the facts versus what was presented.

There's too much at stake to take this bill at face value.

Thank you.

Our next speaker is David Haynes.

Following David will be James Mattson.

Hi, thank you, David Ames.

We need to have an amendment where the incentive to build housing comes with the requirement that you put two shifts on the job sites so we can expedite some housing build-outs and conversions.

And we need a noble use of land with an emphasis of 21st century, first world quality housing floor plans and commercial building build-outs that don't get overwhelmed by the road, the bus, the train, the plane, or all the unsafe, say unsavory characters roaming around the neighborhood in areas where you really don't want to live.

And it's a concern that the executive is trying to trick people into believing that it's safer in larger numbers of innocent people who are being tricked into coming to downtown where they're still exempt in drug closures and haven't addressed the public safety issues.

But I'm wondering, Where are the land use plans for all the capacity needed for the proper winter shelter and the amenities within that?

And where are the plans to use the land where the unsafe sex trafficking motel slums are that should have all of their debt written off by the banks and have that land given over to the people and have the Army Corps of Engineers cut some footers for the foundations and build up some emergency response housing.

And quite frankly, We need a 21st century housing build-out that goes higher in the levels so that you have a livable space within the building, like a rooftop view that gives you a better mental health and an enjoyable living space that's not so close to the road that you're only allowed to go three levels if you're dealing with some nonprofit that has to hire a for-profit to build a house that two entities skim off of.

Which brings me to the petition...

You all should change the law that you all changed a couple years ago where only nonprofits are allowed affordable housing monies from the MHA fees.

Our next speaker is James.

He's our last registered remote speaker.

Hi, my name is James Madsen.

I'm speaking in support of Resolution 32156. I'm with the firm Orton Development.

We're based in the Bay Area, but we've recently made a number of investments in Seattle real estate this year, including a number of distressed historic properties downtown.

One of the properties we purchased was the Vance and Sterling buildings at 3rd and Union, which is one of the most difficult intersections in the city.

We really applaud the city's efforts so far to get that area cleaned up, and there has been a noticeable improvement.

However, The passage of Resolution 32156 is really essential to the feasibility of next steps in reactivating that building.

We are looking at conversion of the office building into residential.

We would create up to 162 units of new housing, including affordable units.

We would landmark the existing historic building and protect it.

Um, and we would be reactivating, uh, that difficult corner downtown with, uh, new uses.

Now that office is no longer viable.

So we thank you for considering the resolution and we strongly support its passage.

That's the end of our speakers.

Okay, thank you very much.

Thanks everyone for calling in.

We will now move on to agenda items.

Clerk, could you please read agenda item one into the record?

Agenda item one, resolution 32156, this sells and use tax deferral for Office of Residential Conversions resolution for briefing, discussion, and possible vote.

Great, thank you very much.

We're joined by our OPCD staff and our central staff.

So we, sorry, let me get back to my notes.

So this is a resolution that establishes the city's intention to authorize a sales and use tax deferral program.

As a reminder, we did pass Council Bill 120761 in July.

and that allowed for these conversions to take place.

Without this exemption from sales tax, these projects would just be too expensive to build, as we heard from public comment today.

But we are joined by our OPCD and central staff for a briefing and review of this and to answer any questions.

So if I can ask you all to introduce yourselves, we'll get started.

Rika Kitting-Dongo, Director, Office of Planning and Community Development.

And I'm Jeff Wendland, also with the Office of Planning and Community Development.

Lish Whitson, Council Central Staff.

Okay, please go ahead.

As you mentioned, in July, your passage of the Office of Residential Legislation set the stage for what we can do as a city to begin a new investment in development, placemaking, and an increase in the number of residents in the downtown core.

That legislation has the potential of being a catalyst for our investment in re-envisioning downtown as a neighborhood and the building back of our tax base.

Rico, can you get a little closer to the mic, please?

Thank you.

Sorry about that.

That's OK.

The resolution we're discussing today is related to State Bill 6175 and addressing how the City of Seattle can provide a critical sales tax deferral to development teams seeking to make officer residential conversion projects happen.

I think it's of note that the city of Seattle has been on the front edge of this discussion.

We were part of a Brookings Institute collaboration related to reinvestment in downtowns, re-envisioning downtowns as neighborhoods and office residential conversions specifically.

I think that the opportunity to Adopt legislation that allows for these sales tax referrals will really be an important next step in ensuring that development teams and building owners can Make this critical change and get more people living in the downtown.

So I'm just really excited for the movement forward in the conversation Great

Thank you, Rico.

We have some slides here for you today, Council.

This gives you an overview of what is in the proposed resolution.

So as mentioned, we're seeking to incentivize the conversion of office space to housing and affordable housing.

This is a component of Mayor Harrell's downtown activation plan, and we're proposing to establish deferral of the sales and use taxes on the cost of construction to do the conversion.

As was mentioned, this follows Washington State Senate Bill 6175 that passed last year.

It authorizes cities to provide this sales tax deferral.

And it requires that 10% of the housing units in the conversion have to be affordable.

the 80 percent of area median income level in order to qualify for the deferral and if that affordability is maintained for 10 years the sales taxes do not have to be repaid so for a city to enact this program we have two steps the first of which we're asking you to take today which is to pass a resolution stating the city's intent to adopt A PROGRAM.

THE RESOLUTION ALSO SETS THE DATE FOR A FUTURE PUBLIC HEARING.

AND STEP TWO THEN IS TO COME BACK TO YOU WITH A PUBLIC HEARING AND WITH THE ORDINANCE TO ADOPT THE REGULATIONS INTO CODE EARLY NEXT YEAR.

SEATTLE WOULD BE THE FIRST OR THE SECOND CITY STATEWIDE TO IMPLEMENT THIS AFTER SPOKANE DID IN SEPTEMBER.

Um, so other speakers have alluded to the goals of this action.

Uh, this addresses affordable housing.

Um, we're estimating that, uh, this would produce one to 2000 units, um, over a seven year timeframe.

Uh, this supports downtown recovery as has been mentioned, and it also promotes environmental sustainability.

Uh, it's always sustainable to reuse, um, structures, um, rather than have to, uh, rebuild.

So there is an affordable housing requirement, as I mentioned.

10% of the housing units that are created in the conversion have to be provided as affordable at the 80% AMI level.

So rents would be capped at that level that you see highlighted in yellow on this slide.

And again, the developer would have to maintain those as affordable for 10 years in order to keep the exemption from the sales tax.

You might ask, what is the sales and use tax amount?

So this is just a refresher for you.

In Seattle, the total sales tax percentage is 10.35%.

And the graphic on screen shows you the breakdown of where that sales tax goes.

A large portion of it goes to Washington State.

Seattle directly receives only 1% of the over 10% sales tax.

As has been mentioned by commenters, conversions are very expensive.

We've talked with you about this before earlier this year.

They're so expensive that they often exceed the cost of new construction.

And when you're thinking of real estate as an investment, something that someone has to finance, if a conversion is more expensive than A NEW CONSTRUCTION PROJECT, YOU JUST WON'T SEE THAT HAPPEN.

SO WE BELIEVE THAT PUBLIC SUPPORT MAKES A CONVERSION FEASIBLE, AND THAT'S ONE OF THE THINGS YOU'RE DOING TODAY BY PROVIDING THE DEFERRAL IS TO BRING DOWN THAT COST SO IT'S ON PAR WITH NEW CONSTRUCTION.

TO GIVE YOU A SENSE OF THE AMOUNT OF INCENTIVE THAT WOULD BE PROVIDED, THIS IS AN EXAMPLE FOR YOU.

a 200 housing unit conversion of a 1920s era office building.

The deferral would reduce the overall project cost by about 7.1%, or in this example, $10 million.

So it would reduce the total project cost from approximately $140 million to $130 million.

FINANCIAL IMPACTS.

FIRST OF ALL, OUR OFFICE OF PLANNING AND COMMUNITY DEVELOPMENT IS PROPOSING TO ADMINISTER THIS PROGRAM WITH EXISTING STAFF.

SO THERE REALLY ISN'T MUCH OF AN ADMINISTRATIVE COST TO THE CITY.

I DO WANT TO NOTE, TOO, THAT IF THE CONVERSION CEASES TO QUALIFY, SAY, BECAUSE THE UNITS ARE NO LONGER AFFORDABLE, ALL THE BACK SALES AND USE TAXES WOULD BE DUE PLUS INTEREST IMMEDIATELY.

THAT'S IMPORTANT TO NOTE.

THERE ARE POSITIVE FINANCIAL IMPACTS, WE BELIEVE.

SO ADDING RESIDENTS TO DOWNTOWN CAN SUPPORT BUSINESSES AND RECOVERY.

AND IF WE SEE A HEALTHY NUMBER OF CONVERSIONS, IT CAN HELP TO STABILIZE DECLINING PROPERTY VALUATIONS IN DOWNTOWN THAT WE'RE SEEING IN THE OFFICE MARKET.

We believe there are little to no direct costs or loss of revenue because, as has been mentioned, we really don't think there will be any or many conversions without incentives like this.

So you're not really losing these sales taxes because that construction wouldn't be happening without the incentive.

And just wrapping up here with a few images, these are potential conversion examples that our office is aware of that builders are researching or exploring.

On the left, we have the Coleman building on First Avenue.

In the middle, we have the Vance building, which is at Third and Union.

And on the right, we have the 201 Queen Anne Avenue building.

All of these are IN THE EXPLORATORY STAGE FOR CONVERSION TO RESIDENTIAL.

AND THAT'S THE END OF OUR SLIDES TODAY.

THANK YOU VERY MUCH FOR CONSIDERING MOVING THIS FORWARD.

THANK YOU, JEFF.

AND DIRECTOR, IS THERE ANYTHING YOU WANTED TO ADD?

JUST TO MENTION THAT THIS RESOLUTION JUST SETS A PUBLIC HEARING DATE.

ADDITIONAL LEGISLATION IS REQUIRED IN ORDINANCE TO IMPLEMENT THE PROGRAM.

that would be adopted after that public hearing occurs.

And the date of the public hearing is January 30th in the resolution.

Okay, thank you.

Okay, so colleagues, I'll go ahead and open it up to questions.

I did wanna start with just one question to clarify.

Developers are allowed to stack incentives here.

Can you talk a little bit about that, please?

Yeah, the state law explicitly allowed for this to be combined with the multifamily tax exemption.

So in the multifamily tax exemption, a developer is required to provide 20% of the units as affordable in order to qualify.

This would, what's before you would provide another 10% of units to qualify for the sales tax deferral.

So that brings it up to a total of 30%.

As mentioned in public comment, roughly a third of a building could very well be affordable with both incentives.

Thank you.

And I guess I just want to go back to the point you made about there may not really be an opportunity cost to allowing the exemption because without it, few buildings might be built anyway.

It seems to me, though, that there could be an opportunity cost for not allowing this, which is that we potentially have vacant office buildings that will just continue to sit there, given the, there was an article just earlier this week about the office vacancy rate of over 30%, I think.

And so, as you said, there may not be many buildings that would participate in this program or be able to take advantage of it, but if even four or five could take advantage of it, we're not only creating more housing we would also be addressing vacant buildings that are downtown, which I know is something that we're all interested in.

Okay, Council Member Moore and Council Member Strauss, did you have a question?

Okay, Council Member Moore, please go ahead.

Thank you, Chair.

I have a couple of questions relating to, I'm just curious about, so you say if the affordability is maintained for 10 years, that the sales and use tax is permanently waived.

Is that correct?

Correct.

So that's different than MFTE, correct?

That's right.

Yeah, under MFTE, the developer doesn't have to pay property taxes for a set duration of time, 12 years typically, but then after that they would.

Okay, so that's a permanent.

And then I'm also curious about, you know, under MFTE, you've got 20% units, but here if they don't combine, you only have 10%.

Is there a reason why we have a lower number here?

Because I'm not sure every project is going to MFTE to get to a 30% level.

The 10%?

is what the state legislature authorized.

So that's essentially where that number comes from.

Okay.

And I'm unfamiliar with the state legislation.

So did they also cap it at a 10-year affordability and then it's a permanent tax exemption?

Or do we have the ability to increase the amount of time in which affordability has to be maintained?

I do believe that the council could elect to have deeper additional affordability than what the state requires as a minimum.

So I do believe that's an option.

We're proposing to do what the state legislature called for.

Okay, thank you.

One last question.

So under, again, I haven't read all of this, but under MFTE, the units, the affordable units have to be of the same quality and have the same amenities.

Is that also the case for this bill?

I don't see it specifically mentioned.

It's not specifically regulated in that way, no.

Okay.

Thank you, Chair.

Lish or Director Carandago, did you want to add anything?

Happy to explore those questions further before the ordinance comes back to committee.

Thank you.

Yeah, and just as a reminder, this is about setting the hearing date, and we will have an actual ordinance before us next year.

Okay, any other questions?

Council Member Rivera, please go ahead.

Thank you, Chair Morales.

I do have a question on the 10-year, this permanently waived after the 10 years.

So after the 10 years is met, then we've waived it and they don't have to maintain that 10% as affordable or 80% AMI.

That's correct.

Correct.

And we have the ability, Lish, to make some adjustments on that based on what the state is allowing?

I think so, and I will work with you, and Asha Venkatraman, who's going to be staffing this, will work with your offices.

Thank you, Lish.

And did this state set the 80% AMI level?

Thank you.

Thank you, Chair.

I do think it's important to note that, as Council Member Moore suggested, like the adding an explicit statement about the minimum quality of unit is a good example of something that could be amended for the City of Seattle version of compliance.

Okay.

Okay.

Any other, Council Member Moore, is that a new hand?

Okay.

Sorry, I meant to bring it down.

Okay.

Council Member?

That was an old hand.

Thank you, Chair.

Make sure I know who's, okay.

Well, if there are no other comments or questions, I move that the committee recommend adoption of Resolution 32156 and that the resolution be sent to the December 17th City Council meeting.

Is there a second?

Second.

It's been moved and seconded to recommend adoption with the December 17th City Council meeting date.

If there are no further comments, will the clerk .

Council Member Moore.

Aye.

Council Member Rink.

Aye.

Council Member Rivera.

Aye.

Council Member Strauss.

Yes.

And Chair .

Yes.

Five in favor.

Thank you.

The motion carries and the resolution will be sent to the December 17th City Council meeting for a final vote.

Thank you everyone.

Okay, Emilio, will you please read item two into the record?

Agenda item two, council bill 120833, living building pilot for briefing discussion, possible vote.

Thank you very much.

Okay, we have Lish here and Travis Saunders with SDCI is also here to discuss the living building pilot program.

As a reminder, this is intended to promote public interest by encouraging the development of innovative living buildings.

In other words, buildings that can reduce environmental impacts, that can test new technologies and really serve as a model for development throughout the region.

As a reminder, we were briefed on this legislation on September 18th before the budget started.

But we have asked STCI to join us again to review the legislation and what it aims to achieve before we take a vote on the bill.

So I'll ask you to please introduce yourself.

Good afternoon.

My name is Travis Saunders.

I'm with the Department of Construction Inspections.

Still Lischwitzen.

Okay.

Thank you very much.

Please go ahead, Travis.

Thank you.

Okay.

Bear with me here while I get this set up.

Okay, we're all set.

So, hi, good afternoon again.

Travis Saunders with Department of Construction Inspections regarding the Living Building Pilot Program legislation that you're looking at today.

Just here's a roadmap for a presentation.

I'll do an introduction followed by a case study that has come up against a challenge in code, and then go over the proposed amendments, objectives, and then some time for questions

Travis, I'll ask you to get a little closer to the mic.

Yeah, you can pull the whole thing towards you.

Okay.

So introduction, the Living Building Pilot Program in Seattle is an incentive initiative to advance sustainable building practices.

The goal is to encourage innovative and sustainable design options with development incentives such as increased height and additional floor to area ratio.

The goal is to test and pilot sustainability measures such as water reuse, solar power, high efficiency systems that normally would be difficult to justify in the market to be able to build something like that.

The program is through 2030 or 20 projects, whichever comes first.

Currently there are four projects left available in the pilot program.

The code amendment is to basically correct a gap in the current code and making it clear that additional height may be granted in the program regardless of the lot size.

The current code basically says if you have a lot that is less than 19,000 square feet, you're capped at 145 feet.

And correcting this language would make it clear that the original policy would be to incentivize development, not just lots of a certain size.

This amendment also includes a provision that would allow it to apply to existing vested projects.

So this particular case example that I'll go over would qualify to take advantage of this.

We do have a project at 2016 Western Avenue that has bumped up against this code language, project number 3036043-LU.

It has been reviewed by the Design Review Board and approved by SDCI, which granted the additional height under the building pilot program.

SDCI has interpreted that the pilot projects can receive departures for height consistent with similar provisions in the code.

SDCI has also interpreted that in the code, height bonuses may be added together, in this case, additional height for three bedroom units.

So you could stack your incentives for additional heights, for providing three bedroom units for the living building pilot program and any other incentives that are available.

This project and interpretation was appealed to the hearing examiner and it alleged that the subject lot was not eligible for an additional height under the living building program and for a three bedroom family size units because of this height limitation in the municipal code that basically says 19,000 square feet lot or less you're capped at 145 feet So the objective of the amendment is Twofold number one is to clarify that City Council intends to allow height bonuses in the DMR zone under the living building pilot program regardless of lot size and And then secondly, it clarifies and reaffirms the code interpretation that height bonuses available in the code may be combined, stacked, through the living building pilot program.

And just as some information on the proposed project, it does provide $2.4 million in housing and affordability payments, so MHA fees are being collected.

These are market rate units, but will be offset by providing the MHA payment.

And then also, to give you kind of an idea of scope of this project, it provides 182 dwelling units.

118 of those are one-bedroom units.

12 of those are two-bedroom units.

42 two-bedroom units.

And then importantly, it's providing so much needed three-bedroom units, and this is how it's also able to gain that additional height.

There's incentives in code to be able to do that.

That's the end of my presentation.

I'm available for any questions you might have, or if I can clarify any further, I'm happy to do so.

Thank you very much.

Lish, is there anything you wanted to add?

Okay, great.

Well, you just answered the two questions I have, which was to clarify the amount that would be going into MHA.

You said 2.4 million.

Given our dire need in the city for more three bedrooms, I appreciate knowing that there will be 10 more families that will be able to find three bedroom units in the city.

As I said, we were briefed on this in September, so I don't have any other questions, but I'm happy to open it up to my colleagues if there are things folks want to discuss.

Council Member Moore.

Thank you, Chair.

So I know that there's been a fair amount of public opposition from residents in Belltown to this, and that the hearing examiner had ruled against this height.

So my question is, what has been the public process beyond the public hearing here on September 4th for engagement with the residents of Belltown?

On this it follows the the typical legislation pathway with with public notice and then going through council Related to the project itself Which is a separate thing that went through design review process so there was specific to that project, not the legislation, an opportunity to comment on that proposal.

As I had mentioned, too, this particular project was appealed to the hearing examiner, and at that stop, The hearing examiner found that SDCI's interpretation disagreed with the interpretation that development could extend beyond 145 feet with providing living building pilot and three bedroom.

From there, the hearing examiner also found that SEPA, they dismissed the SEPA appeal on that because with new state legislature, SEPA now exempts projects with housing units.

And so being that this project has housing units, hearing examiner acknowledged that and said the SEPA appeal is dismissed.

This particular project is going forward at Superior Court APPEALING THAT UNDER THE LAND USE PETITION ACT.

SO THERE ARE POINTS IN EACH STEP TO THOSE PROCESS FOR PUBLIC INPUT, BUT RELATED TO THIS LEGISLATION, THE TYPICAL COMMENT PERIOD WAS PROVIDED THROUGH NOTICE IN THE BULLETIN, LAND USE BULLETIN, AND THEN OPPORTUNITY HERE AT LAND USE COMMITTEE, AND THEN OBVIOUSLY AGAIN AT CITY COUNCIL.

Okay, and so do we know how many three bedrooms would be included and what the cost of those three bedrooms would be?

What is the cost of a three bedroom?

Yeah, I don't have any information on what the market rate would be for such units.

But I do know that they have provided 10 to take advantage of that incentive in the code.

Why are we vesting for other projects that haven't made any application?

I'm sorry, once again?

Well, you say an applicant may elect to use this exemption even if the application vested before the effective date.

Why are we vesting?

Yeah, so any project that had come in before this ordinance and had vested would be able to reach forward and utilize this change in code.

So in the case example that I gave is one such project that did vest, and so it would be able to reach forward, it would be able to reach forward, sorry about that, in the new code.

I don't know of any other projects in that scenario.

So basically there's only one project that this applies to at the moment?

That I'm aware of, yes.

Okay, so why are we vesting for additional projects?

That language is necessary for...

Yeah, we can't hear you, Liz.

Sorry.

That language is necessary for that project to be able to use this code provision.

Okay, thank you.

And then this program expires in 2030, is that correct?

Yes, the living building pilot program expires in 2030 or 20 projects, whichever comes first.

Okay.

And I understand there are 15 now, so.

Right.

So this project, so the pilot, though, could be made permanent after 2030, which then would mean we've made a change, a permanent zoning code change for the height?

True.

Yeah.

Okay.

All right.

Thank you.

Council Member Kettle, did I see your hand up?

Yes, it is.

Thank you.

First, thank you for the meeting.

Obviously both topics today on the agenda are very D7 centric, so I appreciate the opportunity as I don't sit on the Land Use Committee, and so I recognize it came up before, but I didn't.

Obviously I've been hearing from community, but I did not have the background as it came before committee earlier.

It's an interesting piece.

I just have some basic questions.

One is, you know, one of the points that are made often is that Belltown is unique and has the small lot size feature.

And I was just curious, where did the 145 feet come from as that was established in the first place?

Was that some arbitrary number or was that created for a specific reason?

Yeah, so the 145 feet is the standard height maximum in the zone.

And so the living building pilot or any other incentive for that matter would allow normally for that additional height to go over that maximum.

So it's a DMR 145, meaning the maximum height being at 145.

And to provide a little bit more history, the 145 feet dates back to implementation of the mandatory housing affordability requirements.

Prior to that, the height limit was 125 feet, and that height limit dates back to the 1980s when downtown zoning was created.

Okay.

Well, as always, Liz, thank you.

Dave Kuntz, or that background and I appreciate it, I was just curious if there was something driving like particularly related to belltown and the idea of the small lot development, if that was something unique to belltown as opposed to other areas.

So thank you for that.

One question that often comes up too is the adding on of the benefit, the options.

Is there a limit?

Like I understand now that it would be allowed, but is there a limit?

Like how many additional height increases can be, is there a limit in terms of the number of times that is done?

No, not necessarily.

SDCI, in other matters, looks at the code as stacking incentives to gain additional height.

So if you can grab 10 feet of additional height under a certain provision and 15 feet under another, if you provide both of those, you can get both of those incentives and stack them.

But that's two stacking incentives.

Is there a limit of three, four, five, six?

I mean, there may not be that many, but is there any general kind of limit in terms of the number of stacking incentives?

The cut doesn't specify that, and we have interpreted it that way.

you can stack those incentives.

So this legislation would also help to reaffirm that policy that you can stack these incentives.

Okay, thank you.

And I guess my last question too is, and I recognize this could go to some type of arbitration or the hearing examiner, but the When there's a dispute in terms of like you stack these heights and you know they're saying that for this project, the height is at this level.

But if the Community comes back and says well actually because of different things you know, maybe it's related to rooftop that which I guess would be another kind of incentive.

they're actually higher than that.

I'm sure you've heard from community that we're seeing one number, but they're seeing a different number.

How is that adjudicated, SDCI, to ensure that we're all working from the same baseline?

Yeah, so in code, there are allowances for rooftop features, for example, penthouses, parapets, mechanical units things of that nature so the you know depending upon the zone a certain standard is given for the height and those we look at as above the standard base height right so let's say the zone allowed a height of 145 the code also then talks about rooftop features and allowances.

Those would be stacked on top of 145. Does that help to answer your question?

Basically, you'd have an absolute height of your structure, but some of those features would be rooftop features above that base height.

I think you may be asking about when Can community members appeal SDCI decision?

Is that correct?

Kind of.

And I appreciate that answer.

And I recognize because there's tons of projects and you see the rooftop features, particularly with the mechanical that you were mentioning and so forth, or get like a rooftop kind of view deck kind of option.

And I appreciate that.

But yeah.

kind of to your list to your question but it's also it's like if the developer is saying it's this height and then the community is saying it no it's actually this height based on what how we view it um does sdci can we i might i might ask sdci to you know say what is your understanding of the height of this project particularly this one in belltown

Yeah.

And so code is very specific on height measurement techniques.

So we look at those standards to assure setting what the base line is and how we measure to that maximum height.

Then once we get that, you can fold in other allowances such as rooftop features, incentives.

So the code's very clear about establishing what that base height measurement is.

And so that's what we rely on.

Yes, and I understand that, particularly with the slopes.

There's those kinds of features or considerations.

But at the same time, we get differing opinions on what the project actually is, and so it would be good to get a definitive call, if you will.

So I can follow up offline on this one, that last question.

I guess with the disagreement, too, you asked, with the disagreement there, obviously with projects there is an appeal process.

So if somebody disagreed with that, there's opportunity to challenge that through the appeal process.

Well, I appreciate that because, you know, this BeltZone project has had a lot of attention and a lot of attention.

input let's say so I appreciate that and again thank you chair given that this agenda plus the previous one very helpful for the district 7 representative thank you thank you councilmember Rivera thank you chair can you tell me what factors go are considered when height allowances are set particularly maximums like the things existing infrastructure or lack thereof and things of that nature go into it or what factors are considered in general?

Yeah, so generally it's just an adherence to measurement standards, right?

So again, setting that base.

That baseline for the project, if it's on a slope, there's methodologies on how to arrive at that number.

And who's setting those standards?

I guess that's part of my question, too.

Yeah, so the municipal code sets those standards.

So they are written into the development code as standards, and then there are measurement methodologies written in code on how to measure that.

And...

More broadly, for example, the 145 foot height limit, it's set by council through adopting the land use code and is driven in part by policies contained in the city's comprehensive plan.

I'll follow up with you because I guess what I'm asking is that that seems a little arbitrary to me.

I mean, council are not experts, and so what we can say, something can be a certain height, but it doesn't mean that the infrastructure and everything else is in place to allow for that.

So I guess I'm asking more in the weeds, and we can take it offline, but I'm trying to understand better rather than something that sounds arbitrary.

Okay.

And then there are 15 buildings.

Where are these 15 buildings located?

Are they throughout the city or?

Yeah, so the living building pilot program is citywide.

So yeah, dispersed across the city.

Are they mainly in one area or are they really truly across the city?

You know, I don't have the dispersal chart, but, you know, there are certainly ones, you know, Capitol Hill and downtown and the like.

So, yeah, I don't know.

I can get that precisely.

And then after the pilot, would council have to take action to make it permanent or to extend the pilot or does it automatically?

Yeah, the pilot automatically ends the program in 2030 or 20 projects being built.

And then we'd have to do something.

Council would have to take action to make it permanent.

Thank you.

Thank you, Chair.

Okay.

Are there any other comments or discussion?

That is a new hand.

Council Member Moore.

So two follow-up questions to Council Member Rivera's question.

So the other, the buildings, the living buildings that are in other parts of the city, they would also now be eligible, if this were to pass, they would now be eligible for that additional height, correct?

So those projects would have been completed, and for ones that hadn't been completed, if they're currently under construction, may be able to do that, maybe through a revision of their active permit.

But this code amendment is only for the downtown mixed residential zone, so it's only for portions of Belltown that have that zoning.

It's maybe 20 block, 30 block area.

Okay, so it's limited to the downtime.

Okay, and then I think to Councilmember Kettle's question, with all of the various additional ways to stack, is there a maximum height cap that we can set?

Let's say you can have all these other additional, you know, roof top, extra height, et cetera, but with all of that, you cannot go above X amount of feet.

Yeah, there's nothing in code that sets kind of a stacking limit, per se.

There would be one control, maybe in the downtown, we're in a flight zone, so there is a maximum related to that.

You couldn't bump up beyond that point.

But as far as the code setting, a standard saying you can only stack three different things and then you're complete.

But we would have the authority to do that.

Sure.

Okay, thank you.

Yeah, I think to that point, Council Member Moore, that is a great conversation for the comp plan, for example, and for next year to talk about what are the menu of incentives that we have and what are the impact on development, on pricing, on density.

I will say, you know, as a downtown neighborhood, knowing that families do have an interest in coming downtown, a project like this that would allow us to actually create three bedrooms in a neighborhood that people are interested in seems like a good way to go.

I think there is, as we've talked about earlier today, a lot of interest in getting, making it easier for families to come downtown.

And more than just families, if there are studios, ones and twos in this particular project as well, I can imagine that the Belltown neighborhood would become even more vibrant and really create the kind of neighborhood where we can really increase the number of people who could purchase at local restaurants, local businesses, support a grocery store, support more childcare downtown.

So I see this as a real opportunity for us to begin to create the kind of downtown neighborhoods that the mayor's talking about and that we, No, given the vacancy rates that we have, it's just kind of one more tool for being able to create the vibrancy we're looking for downtown.

Do I see any other hands?

I don't.

No.

Okay.

I don't see any further discussion.

So I'm going to recommend, I'm going to move that the committee recommend passage of Council Bill 120833. Is there a second?

Second.

Thank you, it's been moved and seconded.

If there is no further discussion, I don't see any more hands.

Okay, will the clerk please call the roll on the passage of Council Bill 120833.

Council Member Moore.

Abstain.

Council Member Rink.

Aye.

Council Member Rivera.

Aye.

Council Member Strauss.

Yes.

And Chair Morales.

Yes.

Four in favor, none opposed, and one abstention.

Thank you.

The motion carries and the bill will be sent to the December 10th, 2024 city council meeting for a final vote.

Okay.

That is the end of our agenda.

Unless there is any good of the order.

Oh, council member Shouse.

Chair, as you know, I was excused from this meeting, but I chose to come today as your last meeting and use meeting.

And I just wanted to take a moment to thank you for your service to our city.

You and I were both elected in 2020, eight weeks before the pandemic.

For colleagues, your first year here, I mean, you were here in a different role, but being an elected official is a different space.

And in our first six months together, Council Member Morales, we faced a pandemic, a recession, a civil rights reckoning, and civil unrest.

And I'm sorry that these last 11 months have been worse than that.

I was really excited to get underway with our comp plan work together.

And as your vice chair, I stand ready to be here for a smooth transition.

Sorry, I had some notes and I totally went off script.

But really the point I'm making here is I just want to thank you for your service.

We have gone through some really tough times together.

We don't always agree, and that's okay.

And I just want to say thanks.

I know that I'm looking forward to see what your next chapter has, and I just want to say thank you.

Thank you, Council Member Strauss.

I appreciate that.

Okay.

I think we are adjourned.

Thank you very much.

The next Land Use Committee meeting will be a special meeting on Thursday, January 30th at 2 p.m.

Thanks for being here, everyone.

We are adjourned.