MRED Students Propose Affordable Housing in Bellevue
Author: Dr. Gerard Mildner
Posted: March 11, 2016

On Wednesday, March 8, a team of Portland State University students in the Master of Real Estate Development (MRED) program presented a development proposal in Bellevue, Washington, for "The Kelsey",  a $132 million affordable housing project in Bellevue's Bel-Red district. The students presentation was part of the NAIOP Real Estate Challenge sponsored by the Puget Sound chapter of NAIOP Commercial Real Estate Association.

The students proposed project included 662 units of affordable housing and 525 parking spaces, located next to the proposed 130th Avenue light rail station. The units will be kept affordable for residents at 60% of area median income, fulfilling a pressing need in the Bellevue community. The parking spaces will be shared by the building residents and commuters using the new light rail line, which is due to the open in 2022.

The team faced a number of constraints in developing their proposal. The Bel-Red district is currently a light industrial district with no residents, much like Portland's Pearl District in 1990. The property owner, Sound Transit, required that 300 spaces remain available for commuters, but resulting in no revenue. The site included a piped and channeled creek that needed to be day-lighted and buffered, removing part of the site's development potential. Finally, the city's zoning essentially required an affordable housing component in order for the students to exceed a floor area ratio of 1.

The students solution consisted of two layers of underground parking, a concrete podium, and five floors of wood construction. The ground floor retail utilized glass-roll up doors acknowledging the district's industrial heritage. The students integrated the creek into a community plaza to draw visitors to the site. The project utilized low-income housing tax credits and generated $35.8 million of value. The project produced a return on net cost (after tax credits) of 6.19% and an internal rate of return of 38.9% for its equity investors.

Portland State's real estate program has been producing Real Estate Development Workshops for over 10 years. This year's team consisted of Jennifer Arnold, Darrin Brightman, Cameron Brown, Cameron Chester, Scott Holden, Jeff Hubbard, Alex Joyce, Alec Lawrence, Adam Seidman, Kerry Steinmetz, Marc Strabic, and Lisa Wise, all of whom are students in the Master of Real Estate Development program. The team was assisted by the instructor, Jerry Johnson of Johnson Economics, and Dr. Gerard Mildner, Academic Director of the Center for Real Estate.