Mercer Island council adopts GMA compliance strategy, opens public feedback after staff maps 510-unit deep-affordability gap

Mercer Island City Council on Feb. 17 directed staff to pursue a Growth Management Act (GMA) compliance strategy that concentrates upzones in the town center and adjacent multifamily zones and opened a public feedback period on a draft station-area boundary.

Staff presented a data-driven analysis showing that recent zoning changes and planned upzones increase modeled residential capacity from 2,133 to about 3,164 units but still leave a shortfall concentrated in the 0–30% area median income (AMI) band. Michaela Jelico, senior economist with the consultant team, summarized the findings: "The remaining deficit of units that require new subsidies or incentives is about 510 units," she said. The team estimated direct development costs of roughly $510,000–$600,000 per affordable unit, and a total direct-delivery cost for the deficit in the range of $264.7 million to $311.4 million.

City Manager Jesse Bond framed the size of the challenge and the need for partnerships. "We don't have $250 to $300 million," Bond said, urging council members to use the analysis in conversations with state and federal legislators. Staff noted that leveraging mechanisms (for example, ARCH partnerships and loan-to-cost assumptions) could reduce the city’s direct funding requirement under certain scenarios, but partnerships and grant sources would still be necessary to fill the remaining gap.

The presentation explained the tools under consideration: targeted upzoning (town center to eight stories, multifamily zones to six), an inclusionary program example producing an estimated 171 internally subsidized units in one model, and a fee‑in‑lieu (in‑lieu) option that staff modeled at $25 per gross square foot for the phase‑one subarea (generating an estimated $30.7 million under those assumptions). Staff cautioned that, even with fees and leverage, the modeled scenario still requires substantial additional funding or donated land to reach the full 0–30% AMI goal.

Council discussion focused on technical clarifications (how ADU production was calculated, AMI banding and household-size adjustments, and why mid‑rise/low‑rise building types were modeled as more likely to produce lower-rent units than high‑rise prototypes) and on infrastructure implications (sewer, water, storm, parks). Jeff Thomas, CPD staff, noted additional infrastructure planning is underway and that concentrating density in a station-area could help focus infrastructure upgrades.

Votes at a glance: - Motion directing staff to pursue "Scenario One" (limited upzones in town center and adjacent multifamily zones) — moved by Council member Reynolds, seconded by Deputy Mayor Becker; outcome: passed (unanimous roll-call vote). - Motion to open a public feedback period on the preliminary station-area boundary through March 13, 2026 (report back March 17) — moved by Council member Reynolds, seconded by Deputy Mayor Becker; outcome: passed (unanimous).

What comes next: staff will run a public feedback period on the draft station-area boundary and return to council on March 17 with a summary of comments and a request to finalize the boundary so staff can complete the legislative package needed to comply with the Growth Management Hearings Board order by the July 31, 2026 deadline. The council also approved a public engagement plan to guide outreach and information sessions.

Reporting note: Numbers in this account (capacity totals, deficit units, and cost ranges) come from staff presentation slides and council discussion during the Feb. 17 meeting; where staff reported ranges or assumptions, the article presents the mid/low-high estimates rather than a single definitive figure.