LSI 2010 Real Estate Joint Ventures conference materials.pdf

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John W. Hanley, Jr. of Davis Wright Tremaine LLP Tom Tierney of Seattle Housing Authority Gary A. Young of Polygon Northwest Company Hal Ferris of Spectrum Development Solutions LLC Large-scale Residential Development in Public-Private Partnership Page 6 of 8 Speaker 13: 6 Speaker 14: 6 Speaker 15: 6 Speaker 16: 6 Private Sector Goals The large-scale redevelopment of SHA property provides the private home builder with some advantages that are nearly unique in Seattle, where in-fill small-scale development predominates. Instead of in-fill, the private developer can production-build scores of homes at a time, mobilizing for efficiencies that may elude them in smaller in-city sites. Against that advantage, however, the private builder faces large risks: First, can I expect to be able to sell homes in a neighborhood that has been “branded” for decades as isolated, segregated, high-crime enclaves of public housing? Will the Housing Authority deliver the infrastructure in a timely manner, and will that infrastructure perform as promised? Will the agency and its other private partners create a neighborhood in which my homes will sell? Will the joint neighborhood marketing efforts prove effective, or would I be better off marketing my own product alone? What is the basis for “profit-sharing,” when I will need and deserve maximum returns for taking all this risk? Both the Housing Authority and the private home builder seek to achieve what they need – a balanced distribution of risks and rewards – through a contract that effects a purchase and sale, but also directs the two parties’ relationships on the variety of “goals” described above. At the February 8 LSI session, Tom Tierney, the Housing Authority’s Executive Director, and Gary Young, the Sr. Vice President and co-owner of Polygon Northwest Company will describe how these two parties approached the creation of a partnership. YESLER TERRACE Yesler Terrace is currently a 28-acre publicly-subsidized housing community, owned and operated by Seattle Housing Authority. With 561 housing units, it houses about 1,200 residents. The new Yesler Terrace neighborhood is envisioned as a dynamic and welcoming urban, mixed-use neighborhood with convenient connections to neighboring communities. It will be a great place to live and work, and will increase the number of units of affordable and workforce housing near the urban core. The neighborhood will include a mix of market-rate housing, office and retail uses, as well as parks and open space, enhanced landscaping, improved streets and a system of pedestrian and bike trails. Yesler Terrace is conceived as a model community—safe, healthy and sustainable— incorporating green design practices, enhanced transportation alternatives and economic opportunity for its residents. Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA 6
John W. Hanley, Jr. of Davis Wright Tremaine LLP Tom Tierney of Seattle Housing Authority Gary A. Young of Polygon Northwest Company Hal Ferris of Spectrum Development Solutions LLC Large-scale Residential Development in Public-Private Partnership Page 7 of 8 Speaker 13: 7 Speaker 14: 7 Speaker 15: 7 Speaker 16: 7 Presuming economic recovery and a return to “normal” real estate markets, the new community is being planned as significantly larger than today's Yesler community. Preliminary planning concepts suggest the following: • 3,000 to 5,000 residential units • 800,000 to 1.5 million square feet of medical office or institutional space • 25,000 to 100,000 square feet of retail space • 5 to 8 acres of parks and open space This dynamic mix allows Seattle Housing to reduce the demand for external funding for the project and to use proceeds from the sale of market-rate housing and commercial properties to fund additional low-income, workforce and affordable housing—not just at Yesler Terrace, but also elsewhere throughout Seattle. Yesler Terrace sits on the southern slope of First Hill, adjacent to downtown, Harborview Medical Center, the International District and Seattle University. Built in 1939, it is among the most diverse and one of the most economically challenged neighborhoods in Seattle. Many of its residents are families with children, seniors, people with disabilities, and immigrants who speak scores of different languages and come from a rich array of cultural experiences. Yesler Terrace residents earn less than 30 percent of the city's median income. Today, the deteriorating structures at Yesler Terrace and its underlying infrastructure are more than 70 years old, and need to be replaced. Yesler Terrace is envisioned as a connected community, linked to adjacent communities and downtown Seattle. As the economy rebounds and the markets return to “normal” levels over the next 10 to 15 years, Seattle will see a rebirth of Yesler Terrace as a place where people from across society can come together to enjoy cultural diversity, high quality homes and access to nearby parks, shops and offices. As it is completed, the new Yesler Terrace will provide opportunities for new life and prosperity for the neighborhood. The goals of a partnership at Yesler Terrace Although the Housing Authority has developed land for an aggregate of well over 4,000 apartments and for-sale homes in its several large neighborhood redevelopments over the past 15 years, the agency recognizes the creation of a new urban neighborhood of 3,000- 5,000 residential units on 30 acres adjacent to downtown offers risks and rewards that are significantly different from the earlier developments, for both the public and private sectors. Confounding the balance of risks and rewards right now are the current economic and market climates whose rebounds are a prerequisite for any successful Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA 7
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L A W S E M I N A R S I N T E R N A
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Monday, February 08, 2010 Real Esta
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Table of Contents Topic Speaker # L
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Faculty for Real Estate Joint Ventu
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John W. Hanley, Jr. of Davis Wright
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Steven L. Wood of Century Pacific,
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John Orehek of Security Properties
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