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Originally published February 12, 2013 at 3:06 PM | Page modified February 12, 2013 at 10:01 PM

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Council shelves Vulcan’s ‘Block 59’ Lake Union towers plan

The Seattle City Council has quietly shelved a proposal that would let Paul Allen’s Vulcan real-estate firm build 24-story towers near Lake Union.

Seattle Times staff reporter

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The Seattle City Council has quietly shelved a proposal that would let Vulcan, Paul Allen’s real-estate firm, build a trio of 24-story towers near Lake Union if it gave the city a chunk of land to use for affordable housing and social services.

Richard Conlin, who chairs the council’s South Lake Union Committee, said the proposal known as Block 59 is not a priority for other council members and none of them wanted to advance the specific proposal made by Mayor Mike McGinn late last year.

That pitch was separate from the mayor’s less-controversial zoning plan, which would allow taller buildings, some up to 40 stories, in the fast-growing South Lake Union area.

Vulcan might still get the three 24-story towers, Conlin said, but it won’t be through the complicated deal Vulcan and nonprofit groups were lobbying for.

“I personally don’t believe it’s appropriate,” said Councilmember Tim Burgess, a mayoral candidate who pushed the council to hire a consultant to review the Block 59 deal. “As far as I’m concerned it’s dead and off the table.”

Councilmember Nick Licata called the proposal a bad deal. Councilmembers Sally Clark, Jean Godden and Tom Rasmussen all said the proposal was flawed and lacking in details.

Even Mike O’Brien, the mayor’s chief ally on the council, said last week he wanted to separate Block 59 from the larger zoning package. O’Brien said he liked much of the Block 59 deal but didn’t want it to bog down the larger discussion.

“We understand we don’t have an audience to fully study the merits of the plan,” said Lori Mason Curran, Vulcan’s director of investment strategy. “And we understand the council’s need to concentrate on the rezone.”

Mason Curran said Vulcan still thinks Block 59 is a great proposal.

Under existing city policy, developers can get additional height for buildings by paying a prescribed amount of money for public benefits such as affordable housing.

The mayor recommended a new wrinkle for Block 59. Instead of bonus payments, Vulcan would transfer to the city 37,600 square feet of land on a block bounded by Broad and Republican streets and Dexter and Aurora avenues. The city could add that chunk to a smaller piece it owns to create almost a full block available for an array of social services and housing.

The Vulcan land, with an estimated value of $10 million to $12 million, would count as a credit toward fees Vulcan would pay to erect condo or apartment towers up to 240 feet on three lakefront blocks it owns and elsewhere in the neighborhood.

Zoning now allows 65-foot buildings on the three so-called Mercer blocks. Vulcan would pay bonus fees to go from current zoning to 160-feet, or 16 stories. Then it would need to provide extraordinary additional public benefits to reach 24 stories.

The key to the Block 59 deal, according to some advocates, is that nonprofit housing developers would get land they now can’t afford to buy in the area.

Sharon Lee, executive director of the Low-Income Housing Institute, has said she’d much rather get land upfront than so-called bonus fees that Vulcan might pay, building by building, over years.

But council members had several concerns with Block 59, from the cost of developing and operating it, to whether it would preclude future councils from increasing bonus fees for Vulcan as land values in the area escalate.

Mayoral candidate Peter Steinbrueck had blasted the Block 59 proposal for “privatizing the city’s land-use code.”

McGinn, in a letter Tuesday to council members, said he put the proposal forward to start a conversation about potential public benefits. But, he wrote, “I recognize that Block 59 has added additional complexity to the proposal when the primary goal should be to set the best overall public policy for the rezoning.”

The council’s postponement — and possible rejection — of Block 59 marks one of the few times in the past decade that city government has spurned a proposal from Vulcan, the largest property owner in South Lake Union, and the catalyst for the area’s widely praised redevelopment from a sleepy warehouse district into a vertical community anchored by Amazon.com.

The city has approved many of Vulcan’s requests, including a new streetcar line, a revamped Mercer Street and a renovated Lake Union park.

No formal council vote is required to sideline Block 59 because it isn’t part of the mayor’s zoning legislation. Instead, the mayor made it a separate, less formal proposal that could be adopted through a development agreement — similar to what McGinn proposed with a new basketball arena in Sodo.

Conlin said the issue of three 24-story Vulcan towers near the lake is still in flux because a majority of the council have not staked out clear positions on the issue. A neighborhood group, the South Lake Union Community Coalition, is concerned that 24-story towers would shade Lake Union Park, and has said it would accept 16-story towers as a compromise.

Vulcan buildings could still go to 240 feet, Conlin said, provided the city receives, and the council approves, extraordinary public benefits beyond the required bonus payments.

“I think it’s up to the council to determine what an extraordinary benefit is,” said Mason Curran.

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

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