On December 2, 1939, President Franklin D. Roosevelt (1882-1945) approves a $3 million loan to the Seattle Housing Authority for the construction of 700 dwelling units in a slum area in the First Hill neighborhood. This becomes Yesler Terrace, the first racially integrated public housing in the United States.
The project began with the demolition of substandard housing, which was replaced by 93 frame buildings. Each dwelling cost approximately $2,500. The project housed a total of 3,000 persons. Not only did the project upgrade the substandard units in the "Japantown" neighborhood, but it stimulated a construction industry badly affected by the Great Depression. Part of the government subsidy guaranteed the low-rent status of the units.
The project was situated in a loosely defined area called "Profanity Hill," located up the hill from Pioneer Square around 7th, 8th, 12th, and Maynard avenues, with Main Street to the south, and Jefferson Street to the north. The name "Profanity Hill" came from the cursing resulting from the necessity of climbing the steep hill up to the courthouse, which once sat at the top. Most of the rundown frame units demolished had been constructed between 1895 and 1905. The rundown neighborhood's proximity to the police station, city offices, and the financial district was an embarrassment to the city.
Displaced residents were given priority for the new units, which made the project the first racially integrated public housing project in the nation. Yesler Terrace was also the first public housing project to use wood-frame construction.