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Tuesday, February 1, 2005 - Page updated at 12:00 AM

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"Village" ideal eludes Issaquah Highlands

Seattle Times Eastside bureau

If places to live, work and play are what it takes to make an urban village, Issaquah Highlands is still missing a big component: an employer.

The Highlands was supposed to be a community where residents could saunter down the street, grab a latte on their way to work and show up at a satellite Microsoft campus a mere stone's throw from their doorsteps.

Seven years on, homes are cropping up, a 1,000-stall park-and-ride is under construction and several businesses will open this summer.

But Microsoft won't be around anytime soon. The software giant's recent announcements that it would slim down its Highlands plans and focus its growth in Redmond for the time being have left many involved in the Highlands project wondering who will fill the space Microsoft is leaving behind.

"We have the 'live' and we're getting the 'play,' but we don't have the 'work' yet," said Kevin Beares, a Microsoft program manager and a resident of the Highlands for four years.

Fast growth in the late 1990s prompted Microsoft to look to Issaquah for expansion because Redmond imposed a moratorium on commercial development. In 1997, Microsoft signed a deal to buy 150 acres in the Highlands for a campus that would hold as many as 12,000 employees, said developer Judd Kirk of Port Blakely Communities.

Then Redmond lifted its moratorium, so Microsoft decided to redevelop its Redmond campus, leaving the Highlands project on the back burner.

The company ended up buying 63 acres from Port Blakely and let its options lapse on the remaining land. But the 63 acres will sit fallow until Microsoft needs to expand in the future.

Part of the leftover 87 acres is now slated to become a so-called "lifestyle center," an upscale shopping and dining mall in the mold of University Village in Seattle's University District, but with office space for tenants such as small corporations and technology firms, Kirk said.

The Highlands has about 2,600 residents now; after all the home construction is done in 2½ years, it's estimated that nearly 7,000 people will live there, in 3,250 homes.

It remains to be seen who will anchor a development that was designed to cater to a skilled and educated work force. Kirk said he's been approached by several people, but no one has signed a deal.

One taker could be Swedish Hospital of Seattle, which has submitted a proposal to the state to build a 175-bed, full-service facility on 15 acres in the Highlands.

Overlake Hospital of Bellevue, which is also vying for state approval to build a hospital in Issaquah, also has shown interest in the Highlands.

The state Department of Health won't decide for several months on which hospital will get permission to build in the Issaquah area. And even after that, it would be at least five years before construction is completed and a hospital would be open.

City officials say they're disappointed that Microsoft has backed off its Issaquah plans, but they also say they hope the change will open up the area to a diversity of employers.

"That's very desirable property up there," Councilman Fred Butler said. "It's all been graded out, the environmental-impact review has been done, and it's easily accessed by I-90.

"And you've got a million-dollar view."

Microsoft spokeswoman Tami Begasse said the company will look at future projections to see if expansion warrants moving to the Highlands.

And the setbacks aside, residents say they are still optimistic that the Highlands will eventually become the ultimate urban village.

"At first I thought, 'Wow, that's a bummer,' but when you think about it, it's an opportunity for a mix of employers," said Mike Krassner, who has lived in the Highlands for 3-1/2 years.

"Instead of it being dominated by Microsoft, we could have a full-fledged emergency hospital and other companies here. It could be a really good thing."

Sonia Krishnan: 206-515-5546 or skrishnan@seattletimes.com

Copyright © 2005 The Seattle Times Company

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