A retired federal building that the City of Seattle could have gotten for free to create affordable housing is slated to be auctioned on the Internet instead -- with city and federal officials each pointing a finger at the other as to why.
The old Immigration and Naturalization Service building on Airport Way South is headed to auction in the wake of a decision by the General Services Administration -- the federal division that disposes of surplus property -- to turn down a proposal by Mayor Greg Nickels in which the city would buy and then resell the building to developer Greg Smith.
Smith originally planned to pay $2.1 million for the four-story neoclassical structure, which served from 1932 to 2004 as an immigrant holding facility, and turn it into a "green" design center of architectural and other offices. The proposal included a first-floor museum that would trace the building's history from the days of the Chinese Exclusion Act.
Another proposal from a public development agency, the Seattle Chinatown International District Preservation and Development Authority, also called for a first-floor museum, but would have turned the cells into 75 units of mid-range apartments with rents from $865 to $1,175.
Both plans were submitted in March to the city's Office of Housing in response to a call for proposals for what to do with the INS building, which is a National Register landmark in need of costly renovation and seismic upgrades. At the department's prompting, the proposals were later combined, with Smith agreeing to pay roughly $1 million for the building and $1 million to SCIPDA so it could develop housing elsewhere.
Though the city doesn't own the INS building, it had planned to act as a transfer agent by acquiring the property from the General Services Administration and then passing it to a developer in one of two ways, either by negotiating the sale for a buyer or by taking permanent ownership and leasing the property for free under what's called a historic monument conveyance -- the route that SCIPDA advocated in its $19.5 million proposal.
"From a community perspective, we needed to take [the INS building] back in order to banish all the ghosts that are there," says Sue Taoka, SCIPDA's executive director. "That's why it was so important to us -- it has cultural and historic meaning to the community."
After the agency turned down the proposed sale to Smith, Nickels sent the GSA a testy letter on Oct. 22. In it, the mayor said the agency acted in bad faith by changing the terms of the deal at the last minute in August, when GSA insisted that Smith pay the $2 million he had originally offered rather than $1 million -- an amount that Adrienne Quinn, director of the Seattle Office of Housing, says the city and GSA had agreed upon as a fair-market price prior to putting out a call for proposals.
But an official in GSA's Auburn office says there would have been no charge for the INS building at all if Nickels hadn't opted for a negotiated sale to a private party. In such cases, says Fred Zderic, a realty specialist in GSA's property disposal division, the agency is required to get full value for the property.
Under a historic monument conveyance, "The city could have gotten the building for free and could have given it to the PDA on a long-term lease for free," Zderic says. But "they wanted to pass it on to a developer" without the restrictions of the historic monument conveyance, which requires that profits made for the building be reinvested in historic preservation or parks.
Quinn says it's unlikely, however, that the GSA would have accepted a deal that didn't include some cash. In 2005, after GSA put out its own call for proposals for the INS building, she says the agency turned down both of the reuse plans submitted to it. One was from SCIPDA and one was from the Salvation Army, which would have put a food bank, low-income apartments and a women's shelter at the site -- a proposal that would have lived up to the federal McKinney Vento Act, which calls for federal surplus buildings to be used for homeless housing.
Both of the earlier proposals called for free leases under the historic monument conveyance. "The read between the lines that we got from GSA was that they wanted money for the building," Quinn says. "That's one of the reasons why we encouraged SCIPDA to work with [Smith] on a joint proposal," which she says the city is still hoping to somehow pull off.
She says that the GSA hasn't been straightforward. But Zderic says neither has the city. Even though the city listed historic monument conveyance as an option in its call for proposals, the mayor's Oct. 22 letter to GSA states that "we clearly indicated the city was not interested in long-term ownership of the building" -- something that SCIPDA needed for its proposal to work.
"I've been baffled with how this has gone on," says SCIPDA's Sue Taoka. "When [GSA] talked to us years ago, before the first RFP, they said we want a project the community wants, we want it to fit into the International District."
"For them to say we'll put it out on an Internet auction and come who may," she says, "is appalling."