State buys land for work on viaduct project

The state has bought a chunk of prime and controversial property near Seattle's waterfront for work on the Alaskan Way Viaduct replacement project.

The state Department of Transportation paid $29 million, in a deal that closed Monday, to buy roughly half of a seven-acre strip just northwest of Safeco Field. The property is owned by developer Greg Smith.

The state, which acquired 3.75 acres on the west side of the undeveloped lot, will lease the other half of Smith's property for at least four years, also for work related to replacing the earthquake-damaged viaduct. The lease calls for the state to pay Smith $1.94 million in the first year. The state may extend the lease for up to 15 years.

City and state officials haven't decided how to replace the viaduct near the central waterfront. But they want to move ahead with work on the south and north ends of the viaduct that is needed no matter what replacement option is selected.

"This is a piece of property we needed to get. It's critical for the south end. The first project out of the chute next year is electrical-utility relocation and we couldn't do it without this parcel," said Ron Paananen, the state's viaduct-project director.

Some of the land the state bought will be used for a new, wider Highway 99, which will be at street level in the area. The rest of the land will be used to stage construction and relocate utilities, Paananen said.

Smith has planned to build office and residential towers of up to 15 stories on the lot if he could get city officials to allow taller buildings on his property. Current rules cap heights at 65 feet and prohibit housing. Smith said he still plans to develop the eastern half of the lot when the state is done leasing it.

The special government authority that runs Safeco Field is fiercely opposed to taller buildings on Smith's property, arguing they would block some ballpark views of Elliott Bay and the downtown skyline.

The city's planning department is considering sweeping changes to building heights in the South Downtown and Chinatown International District to encourage more housing and dense urban development.

Mayor Greg Nickels has not yet made a recommendation on heights. The City Council would have the final say on any zoning changes.

The possible zoning changes -- which could increase the land's value -- were a small factor in the state's appraisal of the property, but did not result in the state overpaying for it, Paananen said. He said the purchase went through "exhaustive" review by appraisers and the Attorney General's Office.

At a price of $175 per square foot, Matthew Gardner, a Seattle real-estate economist, said the state did not overpay for the land based on comparable sales in the area. Starbucks bought a nearby parcel last year for $179 per square foot, and land for the new Silver Cloud Hotel across the street from Smith's property sold for $158 per square foot two years ago, said Gardner, who did not work on the state deal.

Smith paid $15 million to buy the property. He acquired most of it in 1999 and added a small piece to it in 2003.

Paananen said the state needs more land for the viaduct project, but nothing as large as the Smith parcel. "This is by far the single biggest parcel. We need little pieces here and there. But if they total two acres all told, that's pushing it."

Bob Young: 206-464-2174 or byoung@seattletimes.com

Information in this article, originally published April 19, 2007, was later corrected. A previous version of this story incorrectly said the state's purchase and lease of land on the Seattle waterfront calls for the state to pay $1.94 million the first year. The time period was omitted due to an editing error.