The Seattle Waterfront Project is a step closer in its plans for redevelopment, or at least a step closer in estimating a piece of its funding. Earlier this month, the City of Seattle received a feasibility study revealing estimates of the range of special benefit totals related to the project’s Local Improvement District, or LID.
An LID is a financial tool used by municipalities to generate revenue for a local project by assessing properties that “specially benefit” from the project. Special benefit is defined as the difference in market value before (without the project) and after (with the project assumed complete) as of the same date. Schwabe addressed early implications to the project’s funding years ago. Now, we gain a bit more clarity in terms of estimated funding and figures.
Project Areas & Elements
According to the study, the estimated special benefit totals could range from $300 million to $420 million across five main study areas. In all, the study areas covered approximately 1,330 commercial properties, 8,280 condominium units, and various civic centers. The major improvements within the LID include seven core project elements: the Promenade, the Overlook Walk, Pioneer Square Street Improvements, Union Street Pedestrian Connection, Pike/Pine Streetscape Improvements, Waterfront Park, and Bell Street Park Extension.
The study provides that the main factors impacting market value increases due to LID improvements are changes in location, which include enhanced pedestrian access connections, and increased market aesthetic appeal. Tourism is expected to improve with resulting increased retail and hotel revenues. The office market also shows improvement, but to a slightly lesser degree than retail and hotel uses.
More Details Needed in Future Studies
The study explains that many properties in the study areas feature mixed uses (office/retail, retail/condominium or retail/apartment/condominium/hotel), making extrapolation of special benefit more difficult. A more detailed special benefit study (parcel by parcel) would be needed to estimate proportionate special benefit to individual properties.
The study admits that the initial analysis is not as precise as future studies will be. Future studies should incorporate clear distinctions between “special” and “general” benefits. For example, development of a waterfront park could conceivably be considered a broader benefit to the general public, which would arguably fall out of the scope of a special benefit assessment. Nonetheless, the information from the study is a critical phase in the process.
Next Steps
Moving forward, the City will conduct a special benefit study to determine the LID boundary and the “before” and “after” values for each property in the area. Following the completion of that special benefit study in mid-2018, the Seattle City Council will vote to form the exact LID. The formation process is expected to begin in mid-2018 and assessments are expected to begin in late 2019.
Property owners, tenants, and building managers north to south of Denny Way to Pioneer Square and east to west of I-5 to the waterfront now have a general estimate of potential assessments related to the Seattle Waterfront Project. While this initial study is limited in offering exact figures that may affect property values within the LID, it is an important step to stay ahead of the curve to ensure that any LID assessments accurately reflect the scope and benefits of the redevelopment.
