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This city of 540,000 residents is poised to move ahead with an ambitious plan for a long neglected section just north of the downtown. It calls for a 74-acre park and the redevelopment of 400 acres nearby with stores, offices and housing.

The project, called Seattle Commons, comes before the City Council soon and faces a referendum in the fall on a $50-million to $80-million bond issue.

Mayor Norm Rice supports the proposal, which has had wide civic support in the three years since Paul Allen, co-founder of Microsoft Corp., based in suburban Redmond, lent the city $30 million to acquire the park property.

Some $2.3 million in planning money has been donated by 2,000 citizens, including a $1.5 million gift from the founders of McCaw Cellular, Bruce and Wendy McCaw. Among the other contributors were such companies as Boeing, Weyerhaeuser, Nordstrom and Seafirst Bank.

“The Commons seems to be a beneficial vision for the city as a whole,” says William Karst, principal and chief executive of Callison Architects. “Seattle has a small amount of green space and it takes a grass-roots initiative like this to set aside land for the future.”

But not everyone favors the idea, especially some third-generation business owners who would be displaced and perhaps would find suitable replacement property only in the suburbs.

Among these owners is Mike Foley, who with some others has built a war chest to fight the Commons. Since 1922, his family has owned property on Mercer Street that is now the Pacific Lincoln and Mercury car dealership.

“This is the best location for commercial property in the state,” he said, noting that 80,000 cars pass by daily.

The area is a neighborhood of car dealerships, gas stations, warehouses, light manufacturing plants and “mom-and-pop” stores, almost all with parking lots for customers. The businesses sell or produce items such as ornamental iron, sports trophies, wholesale flowers, electronics and marine equipment.

Over the decades the area has changed little because it is in a valley that denies it views of Puget Sound and the mountains. It is bounded by Interstate Highway 5 to the east, downtown to the south, Lake Union to the north and the 100-acre Seattle Center grounds on the west, where the coliseum, opera house and an arena are situated.

The proposal has been pushed by the nonprofit Committee for the Seattle Commons, which is acquiring land with Allen’s money and overseeing park planning.

The total park cost is expected to be $296 million, including road improvements and rerouting. This would come from public funds; private development on the fringes is expected to spur an investment of as much as $2.3 billion over the next couple of decades.

Planners say Seattle’s population is expected to swell to 610,000 within 20 years. They believe that the Commons could account for 15 percent of the growth. In two decades, they calculate, King County will swell to half again its current population of 1.6 million.

A thriving commercial and residential Seattle Commons, planners say, could spur further downtown revitalization.

“We’re confident the development will go forward,” said Jerry Johnson, a lawyer and president of the 48-member volunteer board of directors of the Committee for Seattle Commons. “Within 10 years, we will have a new neighborhood with 20,000 people living in the heart of the city where only 1,500 people live now,”

Many view the Seattle Commons park as the catalyst for development nearby.

“We would not build housing there without major changes, such as the park,” said James Fitzgerald, chairman and chief executive of Quadrant, the development arm of Weyerhaeuser Co., which builds apartment buildings and townhouses in the suburbs in the $120,000 to $260,000 price range.

“We have not tied up property there yet, but as soon as we see the park become a reality, we’d do that.”

The momentum has sent many developers knocking on doors. In 1992, land in the Commons area sold for $40 a square foot; prices have risen to $45 to $50.

Once the vote is in, real estate transactions are expected to be swift, with prices rising to $70 to $80 a square foot, said Joel Horn, project director for the Committee for the Seattle Commons.

So far, the committee has paid $21 million for 12 properties and expects to close soon on a $4.5 million deal for a boarded-up car dealership. Some 68 percent of the parkland has been acquired for the city or is in city control, including streets, sidewalks and lake shore holdings.

Concerned that land prices will soar, the City Council has allocated $7 million to help preserve 800 existing low-income housing units.

The first to receive funds was the 75-year-old, 35-unit Brewster Apartments on Pontius Street, which was given $1.1 million. It will be owned by the Capitol Hill Housing Improvement Program, which will invest $1.5 million of its own money. The funds will be used to upgrade and repair the building.

Brewster residents initially opposed the Commons. They feared sponsors did not realize a vital neighborhood existed, said Patricia Borman, a teacher and Brewster resident who serves on the Commons board.

“Because of the Commons, this building has been saved,” she said.

The Seattle Times had planned to build a printing plant on the Brewster site. But the Commons committee swapped other property it had assembled for the apartment building, producing “a win-win situation for everyone,” Johnson said.

Not so, says Van Zefkeles, who for 25 years has operated one of the largest volume gas stations in the state near the Mercer Street exit to Int. 5.

“For us, it’s location, location, location,” he said. “If the park goes through, we’re history, we’re gone.”

Walter Johnson, whose father built a company in 1921 that produces packaging materials, says, “This is the only place to grow close to the downtown for light commercial. They want to tear our buildings down so developers can have a field day.”

Matt Grinard says a stream in the park will flow through the area where his electronics business now stands. He notes, “They don’t care what private property rights are.”

Shirley Jarnig, whose family has run A1 Ornamental Iron Works for 50 years, said a move would be “devastating.”

“We can’t relocate in the Commons growth area,” she said, “because the zoning won’t allow fabrication businesses.”

Horn said the Commons committee, which has budgeted $5 million for relocation, had tried to show Mrs. Jarnig sites in South Seattle suburbs “where she would do just great.” But, he added, “she does not want to be there.”

David Maryatt, whose family built a recently closed industrial laundry in the neighborhood in 1927, wants to sell the property. “No one ever wanted to buy our property until the Commons came along,” he said. “Lately, I’ve been contacted by a dozen different developers who want to put in everything from multiple housing to a biotech campus.”

Richard Reed, a developer who since 1984 has bought five parcels nearby, wants to buy the Maryatt property, considering its neighborhood a “natural growth area in the path of progress.” He said he would provide production space for a media company and housing.

Recreational Equipment Inc., an outdoor gear and clothing retailer, now has a 269,000-square-foot flagship store with underground parking under construction in the neighborhood.

Michael Collins, a company spokesman, called the site “excellent regardless of how the area evolves” because it is has access to I-5.

If voters turn down the bond issue in the fall, the Commons committee will sell its properties to repay Paul Allen’s loan. Because land prices have risen, said Horn, it would realize at least a $2 million profit, which would be given to the city for parks or housing.