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City of Mercer Island sells First Hill land to developer
With a vote of 5 to 0, the Mercer Island City Council sold the vacant property at the corner of S.E. 32nd Street and 74th Avenue S.E. to a local developer for $1.9 million.
The land, owned by the city’s water utility, was declared surplus in 2009. The land, first acquired before the city was formally incorporated in 1970, was purchased to be used as the location of a water storage facility.
Instead, the city decided to build a new emergency water facility at the more centrally located Rotary Park. To finance that project, the city declared the First Hill property surplus in 2009 in order to use expected proceeds from the sale of that land as collateral in order to borrow money. The emergency well was completed in 2010.
In the interim, the city had discussed building multi-family affordable housing for the 30,660-square-foot lot but abandoned the idea due to neighbors’ concerns.
Over the last couple of years, the city reduced the amount owed on the bond, applying savings from the emergency well project and lowering the interest amount.
The Council’s intent is use the proceeds from the surplused property sale to pay off the bank loan for the new well and apply the residual to any other water utility and to fund other water utility needs.
The Council had decided to hold off on selling the surplus property until last December, when it appeared that the local real estate market was improving for sellers.
In December, an appraisal determined that the undeveloped land was worth between $1.44 and $1.575, depending upon its final use. The property was listed in January and received five offers. The winning bid is $1.9 million, offered by luxury home builder, JayMarc Homes, LLC, based in Renton.
The bid included two important contractual promises. First, the buyer must construct single-family residential homes that meet or exceed the Built Green Three Star rating. Next, the buyer must work with the city to save as many trees as possible and to provide mitigation for trees that must be removed.
According to the builder’s website, the buyer has four homes under construction on Mercer Island, one of which has already sold for $1.45 million. Another recently completed Island home by the company home sold for $1.25 million. The houses range in size from 2,600 to 4,600 square feet.
Proceeds from the sale of the land will be used to pay off other existing obligations such as the outstanding bill with Seattle Utilities for unbilled water use. According to the City Council board packet, any residual amount could be used to decrease water rates.