Vulcan's Inside Track

The mayor's office has given Paul Allen's company early looks at financial and other information related to the South Lake Union streetcar line—ahead of other affected property owners.

Most Seattleites know that Mayor Greg Nickels and Vulcan, the holding company of billionaire Paul Allen, work closely to promote development in the South Lake Union neighborhood. But even Seattle City Council members are surprised at the kind of information the mayor's office has shared with Vulcan during the process of promoting a local improvement district (LID) to build a 1.3-mile streetcar line from Westlake Mall to the Fred Hutchinson Cancer Research Center. Vulcan received previews of new taxes for other property owners in the area, city Web pages about the LID, and city correspondence in advance of its release to other businesses or the public. "They are dangerously close to crossing a line of appropriateness," says City Council member Nick Licata, a streetcar opponent. "They may have crossed it." Licata's criticism is political—not legal. He doesn't assert that the mayor's office has broken any laws or violated the city's ethics code, but he believes the executive's actions undermine public trust. The mayor's office vigorously denies that anything untoward has occurred. "I'm communicating with a group of property owners who want to build an improvement in their neighborhood," says Michael Mann, deputy director of the Office of Management and Policy. "We have done this absolutely fairly to everybody."

Nickels and Vulcan want South Lake Union to become a biotech wonderland, a 24/7 neighborhood filled with as many as 20,000 new jobs and 10,000 new households over the next 14 years. Vulcan has bought around 60 acres of property in the neighborhood, and major development abounds. Even before Nickels took office, Vulcan pushed the idea of a streetcar to help spur development. Nickels adopted the idea in 2003. The notion is that a fixed transit line will encourage investment because property owners will be drawn to build along the route. Streetcar opponents—like the Seattle Displacement Coalition's coordinator, John Fox, a low-income-housing activist—consider the streetcar an expensive frill. In a city that is strapped for mass transit, Fox argues, it is obscene to subsidize the development dreams of the third-richest man in the U.S.

Last June, after a lengthy and boisterous debate, the City Council approved a local improvement district—a localized taxing mechanism that can be used to pay for improvements like streets and utilities— to pay for $25.7 million of the streetcar's $48.2 million construction cost. The rest of the construction cost is supposed to be paid with public money, mostly state and federal grants. Under the streetcar LID, 750 property owners in the area around the streetcar's proposed route will be assessed.

Fox, who fears that gentrification of the neighborhood will reduce housing affordability, hopes to rally property owner opposition as part of an ongoing campaign to defeat the project. He hopes the owners will finance a lawsuit or an initiative campaign to kill the streetcar.

Very few property owners are opposed, however. Only 12, who represent 1.47 percent of the LID's total assessment, formally protested their new tax—nowhere near the 60 percent needed to stop the assessments. A group of about 15 property owners is meeting periodically to organize resistance, but even they don't believe they can stop the streetcar. Loren "Monty" Holmes started a business now called Athletic Awards in South Lake Union in 1949. He was at the center of the campaign that twice defeated the Seattle Commons, a park and development plan for the land between Westlake Avenue North and Ninth Avenue North. He and his wife own the building at 817 Republican St., where his son now runs the business. They've been assessed around $14,000. He has no hope that the streetcar can be stopped. "Whatever that Vulture group down there wants, it gets," Holmes says. "Everybody thinks it's going to enhance their land value, and everybody is selling out to Paul Allen."

As part of Fox's campaign to stop the LID, he has reviewed boxes of city documents released under the state Public Disclosure Act. Among the documents is an e-mail that shows that Build the Streetcar, a lobbying organization co-chaired by Dan McGrady, a former Seattle City Council staffer and Vulcan's government and regulatory manager, received a preview of some of the other property owners' assessments on June 28, 2005—before the owners themselves received it.

There is no indication that Vulcan benefited from this particular preview of information. In fact, Vulcan's assessment actually increased from $7.9 million to $8.1 million during subsequent adjustments in response to property owner complaints. But the fact that the city granted the courtesy is troubling. Says City Council member Licata, "It's a question of fairness. The city should be treating all businesses equally. It doesn't strike me as fair that one company has access to information before other companies receive it. It raises a red flag."

Mayoral staffer Mann says, "We considered it proper protocol." Mann stresses that he vetted his actions thoroughly up the mayor's chain of command, and there were no concerns raised, much less objections. He says that Build the Streetcar was in the process of contacting property owners about the city's assessments, and he wanted to make sure the organization had the correct information. "We were both communicating to a lot of property owners, and we wanted to make sure they were consistent."

On July 12, Mann sent copies of part of the city's new streetcar Web pages, before they were released to the public, to McGrady at Vulcan and others connected to Build the Streetcar. He wrote, "Please look at webpage that we have put together for frequently asked questions and let me know if you have any suggested edits."

Licata says, "Build the Streetcar is a private venture. The city doesn't have any public representatives on that group. It seems a little loosey-goosey to me."

Mann says he was simply sharing information with a business group that shares the same goals as the mayor. "I don't recall any substantive feedback" from Build the Streetcar about the Web pages, he says.

On the same day, Mann sent Vulcan's McGrady a copy of the letter that was to be sent to all South Lake Union property owners in the LID. McGrady forwarded the letter to other Vulcan employees, including Ada Healy, vice president of real estate. Again, Mann doesn't recall any particular concerns raised by Vulcan.

This sort of communication is clearly business as usual at the mayor's office. Mann says he communicates with Vulcan or its allies sometimes daily. He says this kind of relationship would be no big deal if Paul Allen wasn't involved. "John [Fox] is trying to see a conspiracy here," he says. Says Vulcan spokesperson Michael Nank: "A LID is a joint effort between the city and property owners, so of course we work closely with the city." He says other cities and other property owners work the same way.

Yet Vulcan is going to get a tremendous financial gain from construction of the streetcar. The city's LID assessment consultant, Deborah Foreman of Allen Brackett Shield in Bellevue, estimates those financial benefits to be around $21.4 million.Neither the city nor Vulcan would vouch for or disagree with those figures.

Says Licata, "Public information should be distributed in a manner that does not give any private parties making a profit an edge."

Foreman is continuing to review property owner concerns about the size of their new tax bills. The city hopes to mail a final assessment to South Lake Union property owners soon. After that, property owners will have a final chance to appeal assessments to a hearing examiner, whose findings will be reviewed by the Seattle City Council.

There is one large property owner, however, that will not be questioning its $973,000 bill—the taxpayers of Seattle. Under Foreman's formula, that's the amount of assessment for city-owned land in the neighborhood. Two parks—Denny Park and South Lake Union Park—have been assessed nearly $400,000 for the streetcar. In a memo to the City Council, Foreman says that parks are assigned zero or "nominal special benefits compared to other surrounding properties due to substantial use restrictions." In an interview, Foreman says she considers the parks' assessments nominal.

Says Licata: "That doesn't sound nominal to me. That's a lot of moolah. This is the kind of thing that drives me nuts. We find ways to subsidize projects like this when we have trouble getting money to people in need."

Since Licata was on the losing end of a 7-2 vote against the streetcar plan, how-ever, there is little likelihood of that subsidy being halted.

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