The Port of Seattle Commission has approved a request for up to $4 million in funding to begin planning the first phase of Terminal 91 redevelopment northeast of the Magnolia Bridge.

The Port’s 2016 Real Estate Strategic Plan proposes the creation of 700,000 square feet of new maritime industrial building space in Terminal 91’s Uplands area. Phase 1 calls for the creation of two 50,000-square-foot light industrial buildings to accommodate maritime and fishing-related manufacturers and suppliers as outlined in the Port’s 2019-23 capital improvement plan.

“Studies previously completed by the Port and others within the fishing and maritime clusters have determined that there is currently a limited supply of industrial property in Seattle in general, and Ballard Interbay in particular, resulting in rising rents and building sale prices,” according to a funding memo sent to the commission by Port managing director of economic development Dave McFadden and capital project manager Tim Leonard. “The Port is in a position to relieve some of this pressure while supporting the fleet and the maritime industrial sector by developing additional industrial space at Terminal 91.”

The funding approved by the Port of Seattle Commission on Feb. 26 will allow staff to proceed with retaining a consultant to begin the master planning and permitting process, as well as develop an environmental impact statement and site survey for the first two phases of Terminal 91 Uplands redevelopment.

Leonard said bidding for Phase 1 of the project is expected to be ready in two years, when staff would return to the commission for construction funding. Maritime tenants would likely be able to occupy the new light industrial buildings in 2023.

The total estimated cost of the first phase of development is $39 million, and will be funded through the Port’s property tax levy.

Phase 2 will provide another 300,000 square feet of light industrial space, while the third phase of development anticipates adding another 600,000 square feet. The Port will assess the success of the first two phases before considering proceeding with Phase 3.

“We’ve been trying to redevelop Terminal 91 for over 20 years,” McFadden told the commission. “Really, the first deep dive was in 2000 — the Harbor Development Strategy.”

A 2004 North Bay plan proposed mixed-use zoning for redeveloping Terminal 91, and also considered future redevelopment of the Seattle Armory to the north. An Interbay Public Development Advisory Committee has been formed to assess the best use of the armory site should the Washington National Guard relocate outside the city.

McFadden noted that the North Bay plan came out at the same time that South Lake Union was rapidly growing, which complicated a push for a mixed-use rezone in the uplands. There also was a lack of information about the cost, he said.

“So we came back at it eight years later,” McFadden said. “We did a very comprehensive study of T91.”

A redevelopment proposal in 2012 for a mix of light industrial buildings and yard leases — with consideration of a parking garage and office building — was challenged with unknown infrastructure costs.

An infrastructure study was completed last year, McFadden said, that concluded that Phase 1 redevelopment could proceed with a $700,000 investment in infrastructure.

The Port of Seattle is in the process of designing a new $23 million Gateway building — a 60,000-square-foot light industrial space — at Fishermen’s Terminal.

The vacancy rates for light industrial real estate across the region is 3 percent, according to the Port, and rents are increasing 3 percent annually.

“It’s the same challenge — finding space — especially if you’re in the fishing and maritime manufacturing world,” McFadden said.

Increased light industrial space at Terminal 91 will be prioritized for current tenants wanting to expand and other nearby maritime and fishing operations, McFadden said.

The Port of Seattle will be applying for a Major Planned Development permit for up to 15 years of construction, which will require robust community outreach before authorization is granted, McFadden said.

Port staff will provide updates on the Terminal 91 Uplands redevelopment process to the Magnolia Community Council at 7 p.m. on Tuesday, March 19, and Queen Anne Community Council at 7:30 p.m. on Wednesday, April 3. The MCC meets at the United Church of Christ, 3555 W. McGraw St. QACC meets at Queen Anne Manor, 100 Crockett St.

Commissioner Ryan Calkins asked about the seismically vulnerable Magnolia Bridge, which is in need of replacement; a 1:1 replacement could cost $340 to $420 million. Calkins also asked if there were any concerns about Sound Transit’s light rail extension to Ballard.

McFadden said there had been a light rail alignment proposal that would have cut through Terminal 91, but that it was off the table. Commission president Stephanie Bowman clarified that Sound Transit had changed course with its Ballard Extension alignment, but nothing has been finalized.

“It’s their decision, not ours,” she said.

Port spokesperson Peter McGraw tells Queen Anne News the environmental impact statement will review transportation and traffic impacts for the Terminal 91 Uplands project.

“This evaluation will include analysis of proposed major infrastructure improvements associated with the ST3 light rail link and potential Magnolia Bridge improvements and their associated impacts to the Terminal 91 project,” according to an email from McGraw.