7-16-2024 11:38am

Shoreline to help struggling apartment developer; again

Oliver Moffat Sr. Editor

With 3,010 units coming soon, Shoreline has more new apartments under construction than any other King County suburb. Yet, amid a housing affordability crisis, more than nine vacant lots and blocks of derelict homes blight Shoreline neighborhoods as high interest rates cause some developers to struggle to get the construction loans needed to start building. The council will hold a public hearing on July 22 on whether to extend permit deadlines for the eighth time to help developers get more time to secure construction financing.

Projects must complete a costly and time consuming permit application process after which the developer has six months to start work. The city can issue a one-time, six month permit extension “due to circumstances beyond the control of the applicant” but after that, the permit will expire - forcing the developer to go back through the application process again.

Because of pandemic stay-at-home orders, the city granted temporary permit extensions to developers in May of 2020, July of 2020, January of 2021, June of 2021, and again in November of 2021.

As previously reported, starting in the fall of 2022, the city said developers were asking for permit extensions because they had been unable to get construction loans. So in 2023, and again earlier this year, the city granted more extensions. On July 22, the Shoreline city council will hold yet another public hearing on a proposed ordinance to extend permit deadlines for struggling developers again.

Under state law, the city must hold a public hearing to wave permit deadlines but the city did not release information about which developments were asking for help prior to any of the previous hearings. The city also removes architectural plans and contact information for permit applications after six months from its website, making it difficult for residents to look up information for themselves.

More than nine vacant lots and blocks of derelict homes are visible in the North City, Ridgecrest, Parkwood and Richmond Highlands neighborhoods: The Leeway (MXU23-3073) at 104 NE 147th St by Evergreen Point, the Ion 149th at 345 NE 149th Street by AAA Management, Paramount 2 at 305 NE 152nd St by WZL Enterprises LLC, Shoreline Peak at 14540 5TH AVE NE by Grand Peaks, Burl at 14802 5TH AVE NE by Spectrum, MSR Communities (MFR24-1397) at 15124 5th Ave NE, and derelict homes on 155TH at 15455 4TH AVE NE by TERRENE, Brea at 18005 Aurora Ave N formerly Highland Ice Arena, and Trent at 18910 8TH AVE NE the former site of North City Little Free Pantry.

A map shows the locations of vacant lots and blocks of derelict homes near the 145th Light Rail station: The Leeway (MXU23-3073) at 104 NE 147th St by Evergreen Point, the Ion 149th at 345 NE 149th Street by AAA Management, Paramount 2 at 305 NE 152nd St by WZL Enterprises LLC, Shoreline Peak at 14540 5TH AVE NE by Grand Peaks, Burl at 14802 5TH AVE NE by Spectrum, MSR Communities (MFR24-1397) at 15124 5th Ave NE, and derelict homes on 155TH at 15455 4TH AVE NE by TERRENE.

The city has not said whether or not those projects are delayed because of the high cost of construction financing and the city has been inconsistent about which developers have asked for the permit extensions. At the public hearing in August of 2023, the city said “there are more than one and they are in both of the station areas” but then in January of 2024, the city said, “there is one applicant who has taken advantage of the extension.”

In an emailed response to a request for clarification, the city said AAA Management Company (a San Diego based Real Estate Investment company) is the only company to take advantage of the extensions because their financing fell through. AAA previously built the Ion Town Center and the Geo on Midvale and 180th and in 2021 they purchased a block of homes north of the 148th Light Rail Station at 345 NE 149th Street which is now vacant. In 2022, CBRE helped AAA get a $85.5 million construction loan for the project, but that loan fell through.

In an interview, Rosalie Merks VP of Real Estate Development at AAA Management, said rising construction costs from a concrete strike and the war in Ukraine plus rising interests rates caused lenders to pull out of the project. In addition, construction by Sound Transit caused a “pressurized aquifer” under the site which cost $2 million to de-water and an additional $250,000 redesign. Merks said despite the setbacks, she is working to get started as soon as possible. “We are $9 million in on this project. We are not limping along. We are fully committed,” she said.

Merks said the building will meet LEED platinum standards, the highest level of sustainability practices, and its location steps from the transit station will reduce car dependence of residents. Unlike the homes it will replace, the entire building will be electric and the building will have space for ground floor retail.

In response to local activists who criticize tree removal in the neighborhood Merks said, “where are you going to put 254 units? I think I save more trees by making one building than if I built 250 single family units… Do they care about whether their kids or grandkids can find a home nearby?”

The city council is scheduled to hold a public hearing on the proposed permit extension ordinance on July 22, 2024 at Shoreline city hall.