Here are the six proposals for the Mercer Megablock, including the one that the city chose, by Alexandria Real Estate. Alexandria’s proposal, like several of the proposals that were not chosen, includes an option for a ground lease, which would have allowed the land to remain in public hands. Ground leases are typically for about 99 years, include a rent escalation factor so that rent goes up each year, and can sometimes be renegotiated at different points during the lease term.
Bidders that included a ground lease option included Kilroy (which did not provide details); Touchstone (which proposed an initial annual rent of $7.7 million if the project didn’t include affordable housing, and $4.675 million if it did, escalating 10 percent every five years); Tishman Speyer (which proposed a $70 million downpayment and initial rent of $4 million without affordable housing, and an initial payment of $40 million with affordable housing and initial rent of $2.75 million, both escalating annually at 2 percent) and Alexandria.
Here, in stark contrast, are the details Alexandria provided about its ground lease proposal:
The city budget office told me that I had the right to request an unredacted version of the proposal—which, to be clear, was redacted by Alexandria, not the city. However, they cautioned me that they would exercise their right under RCW 42.56.540 to inform Alexandria that I had asked for this information, at which point Alexandria could seek a court injunction to withhold the redacted records from public view. “If they chose to pursue an injunction, you will likely be named as a necessary party to the lawsuit and lengthy litigation may ensue,” a city public disclosure officer warned.
I believe these records are of interest to the public, as many advocates argued that the land should remain in public, rather than private, hands. I have asked the city for a more detailed explanation of the process for finding out what’s behind all those black bars.
Btw, I can understand why Alexandria might not want to disclose the terms of the ground lease. It might, for example, be pursuing a similar opportunity in another city and might not want its competitors to know how Alexandria thinks.
I’m not suggesting that that is a good-enough reason (to keep its proposal private) but the desire for privacy should not suggest that there is anything shady in it.
But from the public point of view, what I find intriguing is why Durkan thinks a sale is better than a long-term lease….The immediate thing I can think of is that she wants to spend the money now, immediately…and maybe that makes sense….I don’t have an opinion yet; and that’s why I hope that the Mayor will be forthcoming and candid in explaining her rationale.
I’d very much like to hear why the Mayor proposes a sale rather a long-term ground lease.
I laud your pursuing this story.
(I’m not suggesting anything untoward at all. I would simply understand the Mayor’s rationale.)