Drafter
Clerk 09/29/2026
Title
AN ORDINANCE related to an affordable housing development at 701 South Jackson Street, Seattle, Washington; authorizing the county executive to execute a master lease by 701 Essential Housing to the county, subject to ratification and confirmation by motion of the council; approving certain provisions of the development and financing plan of 701 Essential Housing, including the county's pledge of taxation and credit to pay rent as required by the master lease; agreeing to take unencumbered title to the facilities when bonds issued by 701 Essential Housing are discharged; and approving certain other provisions of the lease financing transaction.
Body
STATEMENT OF FACTS:
1. King County lacks sufficient availability of permanently rent-restricted homes available to all, including low-income households. The county has a particular need for affordable housing that is either reasonably close to regional and subregional job centers or easily accessible by public transportation, or both.
2. Increasing the availability of housing supply in the county relieves pressure on the larger housing market and improves housing affordability, while preventing displacement of essential workers from neighborhoods close to jobs and accessible by public transportation. Furthermore, affordable housing reduces traffic congestion on county roads and adverse climate impacts by increasing walkability and the use of public transit.
3. 701 South Jackson Street is a parcel within the city of Seattle that has been identified as suitable for the development of affordable housing. The site is located in the Chinatown-International District, in walking distance to the ID/Chinatown Link Light Rail Station and other transit options, the Pike Pine Retail Core, the historic Pioneer Square District, the Seattle Waterfront, and various medical care facilities. The site previously served as an automobile service and gas station from the 1940s through 2008, but has sat vacant since that time.
4. In summer 2023, developers completed three months of work to remediate environmental conditions pursuant to a Prospective Purchaser Consent Decree entered into on November 23, 2022, and the Washington Department of Ecology approved the Cleanup Action Report on March 18, 2024.
5. The county has received a proposal from 701 Essential Housing for a lease-to-own plan for the permitting, design and construction on the 701 South Jackson Street site of an eight-story, mixed-used building with approximately 111 affordable housing units, intended to supply housing to households earning up to 80 percent of area median income ("AMI"), with not less than 40 percent of the units restricted to households at or below 60 percent of AMI, at affordable rental and utility rates, as well as approximately 3,230 square feet of commercial space ("the project"). The county has determined that this approach to the project has been established as an effective and efficient method for development of the project, and accordingly will lessen the county's burden of providing these affordable housing units, which satisfies the county's public interest, welfare and benefit burdens.
6. Terms of a master lease and development services agreement have been negotiated, and the county wishes to approve the master lease and to approve the plan of 701 Essential Housing, a nonprofit corporation, for developing and financing the project, including the issuance of bonds by 701 Essential Housing to be secured by rent to be paid by the county under the master lease, if necessary, taking into account rents received from residential tenants. The substantially final form of the master lease shall be ratified and confirmed by motion of the council as provided in this ordinance.
7. The council hereby finds that the public interest, welfare and environmental benefits support the construction of the project. The project will result in approximately 111 new units of affordable housing, priced to serve households earning up to 80 percent of AMI, with not less than 40 percent of the units restricted to households at or below 60 percent of AMI, in walking distance to downtown Seattle's commercial core and healthcare facilities, and various public transit options. Accordingly, the project will help improve housing affordability in the county, prevent displacement of essential workers from neighborhoods close to jobs and public transportation, and reduce traffic congestion and related adverse climate impacts.
8. The council further finds that a lease-to-own transaction is appropriate for the development of the project and supports the county executive's proposed plan for financing and managing construction of the project. The council further finds that the proposal by 701 Essential Housing best serves the county in connection with financing and managing construction of the project.
BE IT ORDAINED BY THE COUNCIL OF KING COUNTY:
SECTION 1. Master lease authorization.
A. The county expects to enter into a Master Lease Agreement by and between 701 Essential Housing, as landlord, and the county, as master tenant, a draft form of which is set forth as Attachment A to this ordinance ("the master lease"). The county executive is hereby authorized to sign the master lease in substantially the form ratified and confirmed by motion of the council, subject to such changes, not inconsistent with the material terms of this ordinance and approving motion, as may be required by the county, underwriter, ratings agency or agencies or trustee for one or more series of lease revenue bonds to be issued by 701 Essential Housing, as described in section 4 of this ordinance ("the bonds"), and subject to those changes, not inconsistent with the material terms of this ordinance and approving motion, that are approved by counsel to the county, but only if:
1. The term of the master lease shall commence no earlier than the date of issuance of the bonds and shall expire no later than December 31, 2060, unless earlier terminated pursuant to its own terms; and
2. The master lease shall not require payment of rent by the county until the project is ready for occupancy as provided therein; and
3. The master lease shall provide that no part of the cost of construction of the project shall ever become an obligation of the county; and
4. The project shall comply with prevailing wage requirements.
B. When fully executed, a copy of the master lease shall be filed with the clerk of the council.
SECTION 2. Pledge of taxation and credit; county funds designated for affordable housing. The county's obligation to pay rent under the master lease will constitute a limited tax general obligation of the county. [Amounts to be paid under the master lease are funds designated for affordable housing.] The county hereby irrevocably covenants and agrees that it will include in its annual budget and levy taxes annually on all taxable property within the county, within and as a part of the tax levy permitted to the county without a vote of the electors, in amounts sufficient, together with all other money legally available and to be used therefor, specifically including rent paid by project tenants, to pay the monthly rent and any additional rent due under the master lease as the same shall become due. Upon execution of the master lease, the full faith, credit and resources of the county are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such amounts.
SECTION 3. Approval of 701 Essential Housing.
A. For the sole purpose of complying with the requirements of Revenue Ruling 63-20 of the United States Department of Treasury, as compiled and supplemented by Revenue Procedure 82-26 of the United States Department of Treasury (together, "the ruling"), so that all or a portion of the bonds may be tax-exempt, the county hereby approves 701 Essential Housing and the purposes and activities of 701 Essential Housing as described in its articles of incorporation (which purposes are public in nature), a copy of which is Attachment B to this ordinance, subject to the following terms and conditions:
1. 701 Essential Housing shall remain a Washington nonprofit corporation and shall at all times operate on a nonprofit basis;
2. None of the income of 701 Essential Housing shall inure to the benefit of any private person; and
3. Upon discharge of the bonds, 701 Essential Housing shall convey legal and unencumbered title and exclusive possession and use of the project to the county.
B. The county requests that 701 Essential Housing undertake the development of the project and thereby lessen the burden to the county of providing affordable housing, which satisfies the county's public interest, welfare, and benefit burdens.
SECTION 4. Approval of plan for development and financing. The council hereby acknowledges the intent of 701 Essential Housing to enter into a development services agreement for the project with Housing Diversity Corp. ("HDC") a draft of which is set forth as Attachment C to this ordinance ("the development agreement"). For the purpose of complying with requirements of the ruling, the county hereby acknowledges and approves 701 Essential Housing's plan to develop the project by entering into such development agreement with HDC and approves the bonds in one or more series in the aggregate principal amount of not to exceed $90,000,000 that 701 Essential Housing proposes to issue to finance the project. The county hereby acknowledges and approves 701 Essential Housing's pledge of rent it will receive from the county under the master lease to secure payment of the bonds in accordance with an indenture of trust to be entered into by 701 Essential Housing with a trustee for the bonds. The county agrees that upon discharge of the bonds, the county shall accept delivery of full legal and unencumbered title to the project and exclusive possession and use of the project for no additional consideration.
The county further acknowledges that, as master tenant under the master lease, it will be an "obligated person" with respect to the bonds under Rule 15c2-12 of the Securities and Exchange Commission ("the rule"). To permit the underwriter of the bonds to comply with the rule, the council hereby directs and authorizes the manager of the county's finance and business operations division ("the finance director") to enter into an undertaking for ongoing disclosure relating to information about the county, the master lease and the leased premises, in substantially the form set forth in the official statement for the bonds, with such additions or deletions as are necessary or desirable to sell the bonds ("the undertaking"). Pursuant to the rule, the finance director or the finance director's designee is also hereby authorized to "deem final" information about the county, the master lease and the leased premises included in any preliminary official statement for the bonds, and approve such information included in any final official statement for the bonds.
SECTION 5. General authorization. The appropriate county officials, agents, attorneys, and representatives are hereby authorized and directed to do everything necessary and desirable to accomplish the lease-to-own plan for construction of the project as authorized by this ordinance, and to do all things necessary or desirable to permit 701 Essential Housing to issue, sell and deliver the bonds, including but not limited to the execution and delivery of an acknowledgement of 701 Essential Housing's sale of the bonds to the underwriter thereof and such other certificates and opinions relating thereto and to the master lease as may be approved by counsel to the county.
SECTION 6. Severability. If any one or more of the provisions of this ordinance shall be declared by any court of competent jurisdiction to be contrary to law, then such provision or provisions shall be null and void and shall be deemed separable from the
remaining provisions of this ordinance and shall in no way affect the validity of the other provisions of this ordinance, the master lease or the undertaking.