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May 06, 2016

Yesler Terrace: Inside the metamorphosis of Seattle's 'projects'

Puget Sound Business Journal

Marc Stiles

Fadumo Isaq strides up the hill toward Yesler Terrace on a sunny spring afternoon, her bright yellow dress and matching head scarf like a beacon to the cluster of children she is shepherding home from nearby Bailey Gatzert Elementary School.

Mama Fadumo, as she's called by both children and adults, has become something of a fixture for a neighborhood in the midst of a metamorphosis.

"Everybody knows me," she says. "I came from Ethiopia direct to Yesler."

That was 18 years ago after she fled the violent uprising in her home country. Today she runs a daycare from a three-bedroom apartment nestled in the cluster of buildings on 30 acres between First Hill and the International District.

Hers is a story not unique among Yesler Terrace residents, many of whom are immigrants or first-generation citizens. Yesler's 372 households speak 15 languages and the average income is $15,920, about $31,000 a year less than the median income for the city.

It's a place former Washington Gov. Gary Locke knows well. He grew up in what has long been considered Seattle's "projects" - Yesler's subsidized apartments in squat buildings, some with moss-covered roofs and twisted rain gutters.

"It was very multi-ethnic, multi-racial," said Locke, 66, whose family moved to Yesler when he was about 2 years old.

Now, though, Yesler Terrace is in the midst of a dramatic transformation.

In the next 15 years, the neighborhood - which is bordered by Alder Street to the north, Interstate 5 to the west, South Main Street to the south and Boren Avenue South to the east - will go from a pocket of poverty with 561 forlorn apartments and a handful of jobs to a mixed-income neighborhood with as many as 5,000 residences and thousands of jobs.

It is the largest redevelopment in Seattle and includes a surprising cast of investors, including Microsoft billionaire Paul Allen.

Yet the estimated $1.7 billion project is often overshadowed by the massive redevelopment of South Lake Union and the Denny Triangle. While those neighborhoods might attract more attention, the transformation of Yesler will be even more striking.

When the redevelopment is complete, Yesler Terrace's density will increase from 19,200 people per square mile to at least 110,000. Depending on what ultimately gets built - some projects are still in the design stages and some sites have not yet sold - density could be as high as 132,800, making it the densest neighborhood in the city. Capitol Hill is currently the densest with just over 50,000 people per square mile.

A key question hanging over the discussion is what will happen to the residents of old Yesler, such as Isaq. While it's expected that most will continue living in the community, their presence will be diluted. In exchange, they will have many more economic opportunities, though whether they'll be able to capitalize on them remains to be seen.

Jimi Hendrix lived here

Since it opened 75 years ago, Yesler has been home to thousands of people, including Jimi Hendrix and Locke, who lived there in the early 1950s. The housing subsidy provided a much-needed boost for his mom and dad, a World War II veteran, as they were starting their family.

"Low-cost housing can be that first step," Locke said.

Today, Yesler looks very different than it it did even three years ago when the massive construction project began.

Some of the low-slung gray and beige buildings have been replaced by bold, mid-rise apartment buildings, including the Kebero Court. The new building has a central playground where Mama Fadumo and her friends have coffee and watch over the neighborhood children.

Next door is a new, bright yellow apartment building called Anthem. Nearby, construction is about to begin on a central park for the neighborhood with stunning views of Mount Rainier.

Many more new buildings - including possibly some residential and office high-rises - are on the way. Depending on what does get built, the redevelopment could be home to as many as 8,300 people, though the Seattle Housing Authority currently thinks a population of 6,875 is more likely. Before redevelopment started three years ago, 1,200 people lived at Yesler.

Yesler's location on top of First Hill with its views of Mount Rainier, Elliott Bay and the Olympics makes it the most unlikely of places for a public housing project. When it opened in 1941 it was the first public housing project in Washington state and the first racially integrated one in the country.

Locke homed in on his family's former apartment during a walk through the neighborhood on a cool morning in April. Like most residential neighborhoods on a gray Seattle weekday, the sidewalk and grassy lawns between the row-house-style buildings were mostly empty. Garbage and recycling bins were lined up neatly against a wall.

"It wasn't the brightest apartment," said Locke, pointing up at the building where he lived for about four years.

He remembers it having two bedrooms - tight quarters for him, his parents and two siblings. He has fond memories of playing ball with other kids in the grassy yards that remain today.

"I can still picture where the family car was parked in the street," he said, recalling thrilling rides with his dad and uncle down the steep hill in the family's white Chevy sedan.

"They'd be going at a bit of a fast clip, and the humps in the street made it exciting," he said. "It was like a roller coaster."

They would often be headed to the Locke family's restaurant in Pike Place Market. Sadie's Cafe, where Il Bistro operates today, was "like a 'Happy Days-type restaurant," Locke said, with a horseshoe counter, swivel chairs and wooden booths with high backs.

The family's hard work and discipline - plus a leg-up thanks to subsidized housing - provided them enough money to buy a house on nearby Beacon Hill, where the Lockes moved when one of Seattle's most prominent future leaders was about 6 years old.

Locke went on to become governor of Washington from 1997 to 2005, and was later appointed the U.S. ambassador to China by President Barack Obama.

Building a mixed-income community

The redevelopment of Yesler is predicated on creating a mixed-income community. When the project is complete, all the subsidized housing will come back, along with nearly 1,150 new residences for lower-income workers - janitors, baristas, cooks, maids - and higher-wage earners, such as teachers, medical technicians and clerical workers. Up to 3,200 market-rate housing units also are part of the plan.

"When you create a mixed-income community," said Seattle Housing Authority Executive Director Andrew Lofton, "you create a higher opportunity community that is healthier and better for residents."

Those opportunities could come in the form of jobs at one of the new office buildings planned for a Yesler property next to Harborview Medical Center. SHA has retained Seattle real estate company Kidder Mathews to find a buyer for the property, where up to 900,000 square feet of office space could be built. It would be a huge change for Yesler Terrace, where the only businesses today are in-apartment daycares.

Kidder has come close on a number of deals to sell the site, said Kidder broker Stan Snow.

"We just haven't found the right fit yet," he said.

A range of companies, including tech firms, have looked at the property, though medical offices seem most likely given the site's location on "Pill Hill," as locals call the neighborhood because it is home to three major hospitals.

SHA's plan also calls for around 100,000 square feet of retail and restaurant space. If the rents are right, this could work for small business owners, such asSanjay Bhadu.

From his orange and lime-colored smoothie stand at Boren Avenue and Yesler Way, Bhadu has a front-row view of the massive changes occurring across the street at Yesler Terrace. Bhadu, an immigrant from India, sees the redevelopment as both an opportunity and a threat.

He hopes the thousands of new residents, many of whom will have disposable income, will lift his business.

"My only fear is that when things get better, the landlord is going to ask for more rent," said Bhadu, who doubts he would be able to afford retail space in Yesler's new buildings. "Small businesses don't have deep pockets like Starbucks."

Finding ways to help small businesses get into new space at Yesler Terrace is part of Seattle Housing Authority's mission for Yesler. Lofton said businesses could get micro-loans or reduced rents. In addition, SHA is designing some of the new apartments so they're suitable for daycares.

Yesler as an investment

Real estate developers are key to financing the redevelopment of Yesler. The base cost, as approved by the Seattle City Council more than three years ago, is $290 million. Some of that will come from public and private grants, but SHA is banking on the sale of land to the developers to cover most of the cost.

"It is far and away a larger amount of money than the funds we're getting from the government," said Seattle Housing Authority Director of DevelopmentStephanie Van Dyke.

It was a huge challenge for SHA given the reputation of Yesler as "the projects."

A decision by Vulcan Real Estate changed that. Paul Allen's company announced in January it is buying three parcels for around $22 million. The company will invest $200 million to build three mid-rise buildings with a total of 650 market-rate and moderate-income apartments. Construction of the first phase will start this year.

The perception of Yesler as a seedy place "does not concern us at all," Vulcan Vice President Ada M. Healey said last year. She drives through the neighborhood regularly and said it doesn't feel any different than other parts of town. Eventually, she thinks Yesler will be a place people seek out, not just drive past.

Van Dyke said that after Vulcan invested in Yesler, the housing authority and its multifamily broker, Frank Bosl of CBRE, started getting more calls from developers. They wanted to know when the next parcels would be sold.

Bosl and SHA are reviewing offers for a site.

"We got very substantial interest from very credible firms at really good pricing," Van Dyke said.

The 'G' word

When housing authority officials talk about the redevelopment, one word they do not use is gentrification. In an hour-long interview Lofton didn't mention the word, but he did talk about the enormous scope of the change and how SHA worked to get buy-in from Yesler residents.

"All of that (change) was extremely challenging for anyone to absorb and understand and commit to," he said.

To explain it to the residents in myriad languages was a Herculean task. SHA used the same set of interpreters throughout the process, which entailed hundreds of meetings. Former Seattle Mayor Norm Rice was brought in as chairman of the citizens' review committee.

"The residents' biggest fear was that we were going to create a brand new community, and they were going to be left out," Lofton said. "We committed to make sure that wouldn't happen, and that they have a place here, a place to call home."

Many people already have been relocated temporarily for the first phases of construction, and early signs are that most people will return when construction is completed. Of the 184 households that were moved, all but 15 have said they will come back, according to SHA.

Isaq has lived through the upheaval. Not only were familiar buildings razed, but the streets were ripped up for construction of the First Hill streetcar, displacing parking for her daycare customers.

"The train construction, the housing. It's too much," she said. "But you have to deal with it."

She likes some parts of the redevelopment, but not the mid-rise buildings. She would prefer to have the shorter buildings with the yards where children play as Locke did 60 years ago.

Eventually the apartment where Mama Fadumo has cared for hundreds of Yesler children over the years will be demolished. She plans to move to a new Yesler apartment after construction, but worries some of her friends won't make the transition.

Still, she looks forward to life in the new Yesler "because I like this area," she said.

The new Yesler comes with not just new buildings but new opportunities. One of Mama Fadumo's daughters is studying nursing at Seattle Vocational Institute with a dream of being a surgeon. Maybe, Isaq said, her daughter will practice medicine one day in a new Yesler Terrace office.

That promise of economic opportunity gives Mama Fadumo hope for the neighborhood's future.

"Everybody," she said, "likes new things."

For the full story, go to Puget Sound Business Journal.

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