Downtown property owners owe $16 million for Seattle waterfront

Property owners in downtown Seattle owe the city $16 million to help cover the costs of the new waterfront, a Washington Court of Appeals panel of judges found this week, reversing a lower court decision from last year.

The ruling is a boost for Seattle’s sprawling new $750 million downtown waterfront, which is entering the final stages of construction. The project, running parallel to Elliott Bay from Colman Dock to north of the aquarium, is partially funded by a special tax on more than 6,000 downtown properties whose values are likely to benefit from the overhaul.

After the tax — known as a Local Improvement District — was passed in 2019, Seattle used an assessment to determine the property owners collectively owed around $160 million. The tax is levied on properties between Sodo and Denny Way.

Following the assessment, seven property owners covering 20 properties, including the United Way, Hyatt Hotels, the Four Seasons and Marriott, sued the city. They alleged the city’s method of evaluating property values was off, particularly in light of the pandemic’s impact on assessments.

King County Superior Court Judge Matthew Williams agreed. “The City failed to discount the special benefits for the risks and uncertainties associated with the [Local Improvement Districts] improvements and the impact of COVID-19,” Williams wrote. “Rejecting evidence of the impact of the Global Pandemic and refusing to consider its effect on valuations was arbitrary and capricious.”

The ruling had the effect of knocking about $16 million off expected income from the property owners.

Seattle City Attorney Ann Davison challenged the ruling and the appeals court agreed.

“We hold that the City’s [Local Improvement District] assessments were not calculated on a fundamentally wrong basis and that the City Council did not act arbitrarily or capriciously in adopting the [Local Improvement District] assessments,” the court ruled.

Lawyers for the property owners did not immediately respond to a request for comment.  

In addition to the special tax, the waterfront project is funded by city dollars and private donations. The park is currently trying to raise $200 million to close the final gap. Major donors MacKenzie Scott and the Bill & Melinda Gates Foundation recently pledged $10 million each toward its completion.

The park is emerging in what was once the shadow of the Alaskan Way Viaduct. It’s anchored on the southern end by a new beach and ferry dock. Its defining features will be the new “promenade” along the water, made up of widened walkways, a new bike lane and tree-lined boardwalks. On the northern end will be the new overlook walk, a massive platform over the new Elliott Way, connecting Pike Place Market to the Seattle Aquarium.