City briefs council on Bellwether Prisma purchase, state grant, deeded parcel and possible $1 million city subsidy to preserve deeper affordability

City planning and parks staff briefed the Committee of the Whole on the Bellwether Prisma affordable housing project planned for surplus Sound Transit land in the Overlake Village neighborhood adjacent to the light rail station, and on two related city finance items: (1) a proposed purchase and sale of an approximately 1,600‑square‑foot city commercial space within the development and acquisition of an adjacent Parcel B via deed of dedication to meet zoning/permit requirements, and (2) staff’s work to help preserve deeper affordability for larger family units through grant funding and a proposed $1,000,000 city allocation from an existing affordable housing fund.

Deputy Director Sarah Fee Allen and Parks Deputy Director Dave Chuchak described the project as 328 deeply affordable units serving families with two‑ and three‑bedroom units near the Overlake Station. Allen said the city previously approved a memorandum of understanding with the developer and is now ready to execute a purchase and sale agreement; the city’s packet includes the draft agreement. Allen said the development is expected to open in 2028 and noted the city will continue to refine programmatic uses for the purchased commercial space.

Allen said the city applied for and has “confirmation” of a Washington State Commerce grant for $618,000 to support the purchase and tenant improvements; she said staff completed the project‑readiness questionnaire the same day. Staff told the committee the city already budgeted funds in its capital improvement program and that, if the Commerce funds are awarded formally, the city would use the grant to reimburse those CIP funds.

Allen also described a deed of dedication for Parcel B (a triangular open‑space parcel next to the project) so Bellwether can meet permit and zoning activation requirements. She said the parcel will be used during construction and then returned to city ownership for future activation; staff expect activation options to be considered in future budgeting and planning.

At the committee’s close, staff provided an update on a time‑sensitive funding gap Bellwether has identified because of federal voucher uncertainty and increased construction costs. Allen said Bellwether had proposed raising some two‑ and three‑bedroom units from 50% area median income (AMI) to 60% AMI and that staff had worked with King County and the developer to limit that shift. Staff said with combined city and county contributions they could “potentially buy down 25 three‑bedroom units” to preserve lower AMI levels, and that City Council would be briefed further when Bellwether finalizes financing; Bellwether is scheduled to present to council on Oct. 7.

Council members asked clarifying questions about timing, the grant acceptance process, the deed of dedication for Parcel B, how much of the city’s housing fund remains, and alternatives to a developer subsidy. Director Helland and Deputy Allen said staff are exploring alternatives, expect additional funding sources including federal vouchers may materialize, and are positioning city funds as last‑resort gap financing. Staff emphasized the Bellwether developer is a nonprofit housing provider and that staff are seeking to preserve family‑sized units at deeper affordability. Council members asked for an itemized commitment matrix and additional documentation; staff said they would circulate the funding matrix and that Bellwether would present a full financing package on Oct. 7.

No formal council vote was taken in committee. Staff said the purchase and sale agreement and related items will be returned to council for required approvals and that the $1,000,000 allocation is being managed from previously committed housing funds; staff emphasized they were providing a briefing and that council does not have an immediate decision role on the time‑sensitive financing discussions.