To: Contractor: Contract No: Ed Walker, Department of Assessments Overland Real Estate 6014627 Date: Project Name: June 8, 2018 Analysis of Public Property for Modular Affordable Housing I. Summary This memorandum is the Executive Summary of an analysis on how to utilize vacant, publicly-owned real estate in King County to quickly and cost-effectively create permanent affordable housing. The three primary objectives of this study are as follows: (i) Identify surplus publicly-owned sites in King County that are feasible for nearterm development of affordable housing (“the Development Sites”). (ii) Create cost-effective affordable housing design and development programming for a select group of the Development Sites (“the Development Programming”). (iii) Estimate construction cost and operating cost budgets for the Development Programs (collectively, the “Cost Budgets”). In short, our project parameters were to generate concrete, near-term solutions for the creation of affordable housing, and do so in a way that is not dilutive to, or competitive with, the efforts of the local nonprofit housing development community. Further, this analysis seeks to create housing solutions that are cost-effective, high-quality, long-lasting, and well-designed; communities that fit seamlessly into neighborhoods. To create the Development Programs, we collaborated with Blokable (www.blokable.com), a Vancouver, WA-based modular housing company that builds efficient multifamily housing at a lower cost than traditional construction methods and within a reduced timeline. For this study, Blokable designed the affordable housing and provided construction cost estimates for the Development Sites. Compass Housing Alliance, a leading local nonprofit that provides shelter, transitional housing, permanent housing, and day services created the supportive services and operating cost budgets. The following section details the process through which we: (i) Identified publicly owned Development Sites, (ii) Created cost-effective affordable housing Development Programming, and (iii) Estimated Cost Budgets to make these projects concrete, near-term housing solutions. II. Identification of Publicly-Owned Sites in King County for Affordable Housing Properties reviewed for this analysis were provided by King County Department of Assessments. The initial Assessor database included approximately 180 publicly owned sites that were identified as being vacant and or underutilized. We conducted a series of “screens” to narrow the list of Development Sites down to sites that would be suitable for near-term affordable housing development. The screens included: zoning, availability of utilities, slope, critical areas such as wetlands, size, current use, infrastructure on site, proximity to transit and amenities, and neighborhood. Based on these screens, we identified 26 publicly-owned sites that may be suitable for development of affordable modular housing (the “Development Sites”). The Development Sites were then categorized as either Priority 1, Priority 2, or Priority 3 due to site quality, access to transit and amenities, and availability of utilities. The “Priority 1” Finalist Sites are summarized in Table 1 below. Table 1. PRIORITY 1 Publicly Owned Sites Identified as Candidates for Affordable Housing Development. (Sources: King County Department of Assessments Database, City of Seattle Development Services Office) Site # Location & Site Description Parcel #s Lot SF Owner Topography Zoning Utilities Seattle: 210 Bellevue Ave. E. Slope on back (east) third of site. Flat, buildable front portion of lot. Good access to services, amenities. Seattle:Three contiguous gravel paved parcels at SWC of Edmonds & MLK. Site totals 8,303sf. Well located one block south of Alaska St. Light Rail Station. Level, trapezoidal site. 2925049055 11,640 SEATTLE CITY OF SCL Paved MR Available 1756700005 1756700010 1756700015 4,534 1,650 2,119 CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) Gravel Gravel Gravel LR2 LR2 LR2 Available Available Available 3 Seattle: Three contiguous parcels at NEC Angeline & MLK. At 5414100090 the Alaska Light Rail Station. Site totals 8,212sf, trapezoidal 5414100095 site but buildable. Minor earthwork required. Across fromo 5414100100 Site #s 4 and 5. 1,508 2,043 4,661 CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) Flat Flat Flat LR2 LR2 LR2 Available Available Available 4 Seattle: Three contiguous parcels at the NWC of Angeline & 5414100205 MLK. At the Alaska Light Rail Station. Total site area equals 5414100220 7,878sf; triangular site but buildable. Gravel paved and flat. 5414100230 Across from Site #s 3 and 5. 1,885 1,428 4,565 CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) Gravel Gravel Gravel LR2 LR2 LR2 Available Available Available 5 Seattle: Three contiguous parcels at the SEC of Angeline & 2124049002 MLK. Total site area equals 10,794sf. Very good trapezoidal 2124049282 site at the Alaksa Light Rail Station. Across from Site #s 3 and 2124049284 4. 4,278 2,959 3,557 CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) CPSRTA (SOUND TRANSIT) Gravel Gravel Gravel LR3 LR3 LR3 Available Available Available 6 Seattle: Located at NWC of MLK & S Hanford St. Narrow Site, 5058300045 may be an assemblage opportunity. Noncontiguous with CPSRTA site 5058300025. Flat gravel paved lot. One block south of Mt. Baker Light Rail Station. Easement / setback for light rail line at NEC of site required. 6,795 CPSRTA (SOUND TRANSIT) Gravel LR3 RC Available 7 Seattle: Very good site adjacent to Beacon Hill LRS. Flat, 3086003245 lightly landscaped. Pedestrian overlay in zoning code requires retail at grade. Seattle: In use as surplus paved parking for Juvenile 7949300095 detention center at 12th & Jefferson. Good site with access to amenities. Pedestrian overlay in zoning code requires retail at grade. 7,975 CPSRTA (SOUND TRANSIT) Flat NC2P-65 Available 27,280 KING COUNTY-FMD YOUTH SVCS Paved NC3P-65 Available 1 2 8 The Priority 1 Sites in Table 1 above represent sites that are likely to be good candidates for moderatescale housing development. Though the Priority 1 sites are all compelling, each has its own unique characteristics and qualities that will make development of housing more, or less, efficient. Based on a qualitative review, we selected Site numbers 1, 3, and 5 as the most likely near-term development candidates. Section III of this report details the Design and Development Programming for these three sites. 2 In addition to the Priority 1 Sites, there were approximately 18 other publicly-owned sites that were compelling and where housing was a legally permissible use, which we defined as Priority 2 and Priority 3 Sites. Table 2 below summarizes the Priority 2 and Priority 3 sites. Table 2. PRIORITY 2 & 3 Publicly Owned Sites Identified as Candidates for Affordable Housing Development. (Sources: King County Department of Assessments Database, City of Seattle Development Services Office) Site # Location & Site Description Parcel #s Lot SF Owner Topography Zoning Utilities PRIORITY 2 Seattle: SWC MLK & Holly. Flag shaped Lot. 2 blocks N of 9 6,861 CPSRTA (SOUND TRANSIT) Paved C1-40 Available 10 5,693 CPSRTA (SOUND TRANSIT) Gravel C1-40 Available 4,868 CPSRTA (SOUND TRANSIT) 3,533 CPSRTA (SOUND TRANSIT) 8,212 CPSRTA (SOUND TRANSIT) Gravel Gravel Paved C1-40 C1-40 C1-40 Available Available Available 4,009 SEATTLE CITY OF SPU-WTR Flat C1-40 Available Gravel C2-65 Available 5,100 SEATTLE CITY OF SCL Flat LR2 Available 5,147 CPSRTA (SOUND TRANSIT) Flat LR3 Available 9,180 CPSRTA (SOUND TRANSIT) Gravel LR3 Available 8,158 SEATTLE CITY OF SCL Gravel LR2 RC Available 12,238 SEATTLE HOUSING AUTHORITY Flat NC3-40 Available 13,600 KENMORE CITY OF                  Gravel DC Available 6911200255 Seattle Bridge. Near bus route 37 to CBD. Approx. 14,400sf usable, steep slope behind. Flat, grassy lot. Seattle: MLK & Horton skinny site but could be buildable 1944800005 only W/ efficiency units. Well located at MLK & Bryon, 1/4 mi S of Mt. Baker LRS. One non contiguous portion, total site area equals 6909sf. 1944800010 1944800020 Seattle: One parcel W of SWC of 65th & 14th in Ballard. Small 2767600655 Site but flat and buildable. Directly across from Ballard High School. Seattle: Very small N Capitol Hill site at Mercer & Bellevue. 6848200245 Buildable with an efficiency unit program. Seattle: Small site but goold location at 62nd and Phinney. 9523101290 Flag shaped lot with buildable area off Phinney of approx 50'x95' 4750 sf. Adjacent SFR. Seattle: Gravel Paved lot one block off MLK at Willow. 3 1662500009 blocks N of Othello LRS. Kirkland: Vacant green space adjacent to Lake WA Tech. Flat, 2826059061 buildable, two parcel site totalling 61,579sf. Lightly landscaped site - apparently in use as a park amenity for LWTC. 23,083 KING COUNTY-WASTE WATER Flat C1-40 Not Available 2,566 CPSRTA (SOUND TRANSIT) Flat LR3 Available 2,211 CPSRTA (SOUND TRANSIT) 2,132 CPSRTA (SOUND TRANSIT) 4,000 SEATTLE CITY OF SCL Flat Flat Gravel LR3 LR3 LR3 Available Available None Available 2,700 SEATTLE CITY OF SCL Gravel MR Available 6,000 SEATTLE CITY OF SCL Slope NC2P-40 Available 5,722 SEATTLE HOUSING AUTHORITY Flat NC3-65 Available 50,689 LAKE WA TECHNICAL COLLEGE Flat PLA 14 Available 2826059104 10,890 LAKE WA TECHNICAL COLLEGE PLA 14 Available 11 12 13 14 15 16 17 18 19 1662500061 Othello Light Rail Station (LRS). Partially paved with minimal slope. Seattle: Three contiguous parcels at SWC MLK & Orcas 2341300125 between Alaska and Othello LRS. Total 14,094sf. Adjacent to Katharine's Place LIHTC 26 units. Gravel paved, minimal slope. 2341300135 2341300145 Seattle: MLK N of Willow. One block N of Mercy Othello, 2 3333002640 blocks N or Othello LRS. Flat, paved fenced site not apparently in use. Seattle: Level gravel lot. 50'x80'. Small but could work for 7987400170 small scale development. At NWC Spokane & Harbor. Close to multiple W Seattle bus lines to CBD. Seattle: SWC Beacon & MLK. One block S of Rainier Beach 8072000045 LRS. Currently in use as yard storage for Sound transit. Level site, gravel & paved. Seattle: City light site at 24th & 67th in Ballard. Some mature 7518508700 landscaping but otherwise level and buildable. Seattle: Long skinny site but could be buildable with 1426300005 efficiency units. Well located at MLK & Bryon, 1/4 mi S of Mt. Baker LRS. Seattle: SWC Walden & MLK. 1/3 mile S of Mt Baker LRS. 1426300125 Gravel paved, level, fenced site. Seattle: Site at 28th & 80th in Crown Hill. Quality site but 4443800245 somewhat removed from services. Seattle: Flat, gravel paved site, across the street from Rainier 2123700369 Beach HS. Parcel owned by SHA immediately north previously surpluse and for sale. Kenmore: Vacant gravel fenced site off SR 522. Very good 7946300195 development site. Adjacent to APN 7946300196, which is also a flat gravel lot but improved with a small coffee hut. Assemblage possibility. PRIORITY 3 Seattle: W Side of Harbor Blvd S of Alki. 0.3 miles N of W 20 21 22 23 24 25 26 27,776 CPSRTA (SOUND TRANSIT) 3 While the Priority 2 and 3 sites all have potential as near-term Development Sites, their priority was reduced due to location or other complications that would likely make development incrementally more challenging or less appealing than the Priority 1 sites. Of the approximately 180 sites reviewed for this analysis, there were also several high-quality sites that would be excellent for affordable housing development, but that have current uses encumbering the properties for the next few years. For example, three high-quality sites were reviewed but not included as Development Sites for this analysis because they are currently in use by Sound Transit as construction office locations for light rail station construction and the SR 99 tunnel project. These three sites would be excellent for transit-oriented affordable housing development, but not until the Sound Transit infrastructure projects are completed and the current uses are vacated. Finally, while not the core focus of this analysis, it also bears mention that there are a number of underutilized, large, vacant buildings that are not publicly-owned, but that could likely be secured for use as interim homeless shelters. Sites such as the vacant Sam’s Club retail store at 135th & Aurora has 144,776sf of heated interior space that is currently vacant and not in use. The optimal use of this and other similar underutilized structures may warrant additional research. III. Creation of Affordable Programming Housing Design and Development As noted, Blokable out of Vancouver, WA designed specific affordable housing programs for three of the Priority 1 Sites: • Site #1: 11,640sf site at 210 Bellevue Avenue E.  31 units, 15,600gsf total. • Site #3: 8,212sf site NEC of Angeline & MLK.  22 units, 11,000gsf total. • Site #5: 10,794sf site SEC of Angeline & MLK  29 units, 14,500gsf total. The Development Programming was prepared using their modular housing “block” design, which comes in two different housing sizes (the studio apartment is approximately 10’ x 30’ and the onebedroom apartment 10’ x 40’) and can be arranged in different configurations to allow for a mix of studio, one bedroom, and two-bedroom units. Because the Blokable modules are manufactured, the construction costs per square foot tend to be lower than on site-built housing, which is the standard for the majority of multifamily housing constructed in the U.S. Importantly, the typical challenge associated with modular housing – the shipping costs – are mitigated somewhat by the fact that Blokable is located in Washington. For this Executive Summary we have included detail on the first Development Program, for Site #1, 210 Bellevue Avenue E. The images below show the design program and unit layout for this property. 4 Concept street level rendering for 210 Bellevue Avenue E. Level 1 Site Plan for 210 Bellevue Ave E. 5 The development Programming for Site numbers 3 and 5 are comparable to the images above. IV. Construction and Operating Cost Estimates Based on hard cost pricing from Blokable and market pricing for other development soft cost line items, we project the construction costs for the 210 Bellevue Avenue E. Development Program in Table 3. The costs are broken down into three main categories. The Blokable costs are the costs to design and manufacture the housing units and all other physical components of the project, such as stairs, and other accessories. The Construction Costs are the installation costs, the site prep work, and hardscape and landscaping for the project. Blokable partners with Charter Construction to do this work and install the units on site. Finally, there are Other Project Costs, which include other engineering and design fees and fees from the City. Table 3. Development Cost Summary for Site #1 210 Bellevue Avenue E. Cost Category Blokable Costs ( Units, Stairs & Accessories, A&E Fees) Construction Costs (Site prep, Installation, Landscape) Other Project Costs (Project Architecture, City Fees, etc.) TOTAL CONSTRUCTION COSTS 31 units Total Cost $ 3,600,000 $ 3,000,000 $ 276,000 $ 15,600 sf Total Cost/Unit $ 116,129 $ 96,774 $ 8,903 6,876,000 $ Total Cost/SF $ 231 $ 192 $ 18 221,806 $ 441 In addition to the construction costs to build 210 Bellevue, there are ongoing operating costs to run a multifamily housing community. Depending on the rent levels in the project, the project may operate at a breakeven or better. For this analysis, we have assumed that this project serves a mix of residents whose incomes are at 80% (7 units), 50% (12 units), and 30% (12 units) of Area Median Income. The 210 Bellevue Ave. E. operating income and expenses are detailed in Table 4. 6 Table 4. FY 2018-19 Operating Expense Budget for 210 Bellevue Ave. E. INCOME AND EXPENSES Revenue: Rent Per Unit $ 2018 1,260 462,924 Gross Potential Rent (GPR) 462,924 $ / Unit / Month 1,244 Vacancy Vacancy -5.0% (23,146) Collection Loss -1.0% (4,629) Total Economic Loss (27,775) Effective Gross Income $435,149 $ / Unit / Month $1,170 Expenses Payroll - Property Mgt. $ 2,054 63,680 Payroll - Supportive Services $ 4,824 149,535 Utilities $ 905 28,050 Administrative Overhead $ 2,661 82,500 Turnover Expense $ 168 5,200 Maintenance/Landscaping Contracts $ 213 6,600 Repair & Maintenance $ 1,757 54,480 Leasing & Marketing $ 53 1,650 Program Sullpies $ 106 3,300 Insurance $ 186 5,775 Property Taxes $ - Mgt. Fee $ 612 18,974 Replacement Reserves $ 373 11,550 Total Expenses $ 13,913 $431,294 $ / Unit / Year Net Operating Income $ / Unit / Year 0 $13,913 $3,855 $124 7 Table 4 gross potential rent is further detailed in Table 5, which shows the assumed unit mix and rents. Table 5. Unit Mix and Affordable Rent Levels (Projected) at 210 Bellevue Ave. E.1 Unit Mix 80% AMI 50% AMI 30% AMI Studio 5 5 1x1 4 4 4 2x1 3 3 3 Total 7 12 12 Unit Rents Studio 1x1 2x1 80% AMI $ $ 50% AMI $ 1,070 2,006 $ 1,337 2,167 $ 1,445 Total Rental Income / Year 80% AMI Studio $ 1x1 $ 96,288 2x1 $ 78,012 Total $ 174,300 1. AMI is Area Median Income for the Seattle Metropolitan Statistical Area. various income levels. Total 10 12 22 31 30% AMI $ 642 $ 802 $ 867 50% AMI 30% AMI Total $ 64,200 $ 38,520 $ 102,720 $ 64,176 $ 38,496 $ 198,960 $ 52,020 $ 31,212 $ 161,244 $ 180,396 $ 108,228 $ 462,924 Rent payments are calcualted as 30% of the This is not to recommend a particular mix of unit rents for 210 Bellevue Ave E., or that mixed income projects are necessarily the correct approach. However, the mixed income unit plan as shown in Table 4 and Table 5 roughly breaks even the project for the estimated expenses, and thus eliminates the need to raise capital for the operating phase of the project. Providing all of the units for zero rent (to residents without income) would result in an operating loss approximately equal to the annual expense budget, or $431,294 (growing with inflation). In this zero-income scenario, some rental income could likely be secured through housing vouchers from the Seattle Housing Authority, though these are scarce and the number of vouchers that this project could secure is unknown. Further, according to the operating experience of Compass Housing Alliance, zero-income residents who secure housing are often able to meet the 30% AMI rent threshold after a few months of working with social services coordinators. V. Conclusion The goals of this analysis were threefold. 1. Identify surplus publicly-owned sites in King County that are feasible for near-term development of affordable housing . Of the information provided by the King County Department of Assessments, we identified 26 potential sites that could be candidates for near 8 term development of affordable housing. Of these, eight were deemed to be very high quality, ‘Priority 1’ sites. 2. Create cost-effective affordable housing design and development programming for a select group of the Development Sites. We collaborated with Blokable to develop unique and cost effective affordable housing plans for three of the Priority 1 sites. The first site, 210 Bellevue Avenue E. has 31 apartment units in a mix of studios, one-bedroom, and twobedroom units. 3. Estimate construction cost and operating cost budgets for the Development Programs. With assistance from Blokable and Compass Housing Alliance, we estimated allin construction costs for the 31 units at 210 Bellevue Ave. E site to be approximately $6.9M, or less than $222,000 per unit. Additionally, the operating costs are estimated to total approximately $431,294 per year (growing with inflation), but a incorporating mix of 80%, 50%, and 30% AMI affordable units creates a breakeven operating budget and thus eliminates the need to capitalize the operating costs of the project. This analysis sought to create housing solutions that are cost-effective, high-quality, long-lasting, and well-designed. Blokable is currently applying their technology in the construction of affordable housing communities in Auburn and has plans for another affordable housing project in Edmonds. As we look for durable, high-quality, and cost-effective housing solutions, the final costs and operating efficiency of these other projects should be carefully monitored. Finally, the parameters of this study were to generate concrete, near-term affordable housing solutions, and do so in a way that is not adverse to the efforts of the local nonprofit housing development community. To meet this challenging goal, a development project like the ones described in this report will require alternative sources of capital to fund the project. A comprehensive study of alternative funding models is outside the scope of this report and likely requires additional analysis. 9