Wary Council Considers 'Affordable' Housing Development Agreement on True Value Site

Plans to erect a five-story apartment complex in Mercer Island Town Center might get a shake-up at tonight's Feb. 4 Mercer Island City Council meeting after several councilmembers expressed reservations upon hearing the proposal earlier last month.

Developer Legacy Mercer Island has proposed building a five-story, 209-unit mixed use apartment building at the northwest corner of SE 27th Street and 76th Ave. SE, the current site of True Value Hardware, The Islander and several other small businesses. But the plans, in the form of a development agreement, also call for exceptions to the current building codes on the height of the building and location of retail, which is drawing additional scrutiny from City Council.

First, Legacy requested flexibility on the definition of what defines "Affordable Housing" on Mercer Island. The agreement offers the rent of 13 units to be set at 80 percent of King County median income — instead of the city's currently required 60 percent — in exchange for a fifth floor of development. In order to build the fifth floor, the developers must offer a "significant public amenity" in return, according to the city's development code and setting aside a percentage of units for "affordable housing" meets those requirements.

Next, Legacy requested flexibility in the city's requirements for ground floor uses along SE 27th Street in the Town Center area. Currently, The Islander, R.W. Thorpe, Hands of the Hills and Pilates on Mercer are located along that block of the street, but developers want to move most of the building's retail frontage to face 76th Avenue SE, due to the steep grade of the hillside there.

The flexibility sought by the developers will be considered tonight, but the proposed agreement did not pass without mention at the Jan. 12 City Council planning meeting. Deputy Mayor Dan Grausz repeatedly mentioned the Island Square development and how the council would avoid repeating past mistakes.

"We got so burned on that last development agreement," he said, responding to City Manager Rich Conrad, who is in charge of negotiating the agreement with Legacy Mercer Island. "You need to tell us what the deal points are. You need to tell us what we're giving up."

"I am tired of finding out these things at the 11th hour," said Councilman Mike Grady. "I am not happy with what I see downtown and the public benefit that has been accrued — If they want more than what’s in the code we are going to get down into the weeds."

The developer is offering a number of additional enhancements that aren't required by the code to entice approval of the changes, including a rain garden and 5,500 square-foot terrace along 76th Ave. SE and a small "public plaza" on SE 27th Street (the full proposal is attached as a PDF to this story).

According to city regulations, the Council can make exceptions to development standards in exchange for public benefits and issue a decision on the Development Agreement prior to the city's Design Commission consideration of a design review application.

An 80-percent-of-median apartment rent would mean rents would be held at $1,232 per month for a studio unit, $1,408 per month for a one-bedroom and $1,478 for a two-bedroom unit. The current code, at 60 percent of median, calls for a studio rent at $924, $1,056 for a one-bedroom and $1,188 for a two-bedroom apartment in order to be called "affordable".

A comparison with 77 Central and The Mercer show studios renting in a range of $1,150-$1,350, one-bedrooms for $1,575-$1,959 and two-bedrooms for $2,100-$2,500.

According to Development Services Group Director Scott Greenberg, Mercer Island's affordable housing standards are a regional outlier. Legacy’s proposed affordable housing at 80% of King County median income, meets the guidelines for affordable housing at the federal, state, regional (PSRC) and county levels.

"Other cities award bonus building height and/or residential density in exchange for affordable housing at 70 percent or 80 percent of King County median income," Greenberg stated. "Bellevue, Redmond, Seattle, Renton requirement for affordable housing is at 80 percent of median income level, Kirkland is at 70% and Mercer Island, at the lowest level of these cities, is at 60%. Legacy’s proposed 80% median income level is consistent with other local cities’ requirements."

The plans also call for building 11,000 square-feet of retail space on the ground floor, and 214 to 267 subterranean parking spaces. The apartment building will hold 59 studio, 111 one-bedroom and 39 two-bedroom units.

If approved, the apartments will become the first designated affordable housing units constructed in one of the mixed-use Town Center buildings.

The Council could hold a final public hearing on the Development Agreement and approve or reject the agreement as soon as Feb. 25 or March 4.