November 17, 1999
I never got around to writing one of those letters, but I was moved by those who did, which is why I skipped dinner and drove to Council chambers during rush hour on October 18 to comment on the Public Private Partnership Task Force (PPPTF) recommendations before Sue Donaldson's committee for Education and Labor.
Given the "batting" record on some of Seattle's more infamous private-public "investments" (Safeco Field, the Pacific Place parking garage), this meeting was a great chance for citizens to comment on the future of public deals with private interests in Seattle. Surprisingly, only three of us had anything to say.
For those who missed the opportunity, let me bring you up to date on two pending public (or private) projects that deserve public attention. The Seattle Center Hotel Public-Private partnership is currently being reviewed under the newly released PPPTF report guidelines. Plans for this hotel (Second Avenue North and John Street) are part of the Seattle Center Master Plan which itself is the result of a two-year citizen-based planning effort. By requiring this project to be scrutinized (from the very beginning) under PPPTF guidelines, this development sets a good first example for evaluating the public's costs and benefits from participating in a public-private partnership.
Just down the street, however, on Pier 88, the Immunex/Galer Street "flyover" (a grade-separated access ramp across the Burlington Northern railroad tracks) partnership has somehow managed to avoid the public spotlight. The price tag for this development has grown from $12.5 million to $18.9 million. Thanks to City Council, the public is picking up all of these "unanticipated" escalating costs. (I heard that the Mayor would like to kick in an additional $1.8 million from next year's budget).
The flyover is all part of a complex interlocal agreement between the City of Seattle, King County, the Port of Seattle, and a private partner, Immunex. The current proposed breakdown for funding this project shows that the city will pay 51 percent (including the Mayor's $1.8 request), the county 17 percent, EDA and ISTEA grants 21 percent, the Port 3 percent and Immunex zero. The project is still about a million short but I heard the Port is considering bumping its share up to 8 percent. No promises have been made.
The Office of Economic Development (OED, the same people who brought us Pac-Med on Beacon Hill) recently retrofitted our public reasons for engaging in this project. In a report released last week, OED claims this partnership "advances the goals of the Ballard Interbay, Northend Manufacturing Industrial Center (BINMIC) and the city's priorities for comprehensive land use and economic development."
A closer look at the time-line for developments of these two planning efforts, however, reveals that the Immunex project predates the BINMIC Neighborhood Plan by about four years. The BINMIC was finalized in 1998, which means that it had nothing to do with initiating or justifying our partnership with Immunex. In 1994 the Port and Immunex convinced the city that taxes generated from Immunex's relocation to this prime piece of waterfront property (for which I am not convinced the Port received full market value) would far outweigh the costs of the city's borrowing to pay for its share of the flyover. The city signed on, hoping not only to reap tax benefits but also to get financial help on building the ramp it was convinced it needed. Neither panned out as expected. The city now will spend more but get nothing more in return. Is this still a good deal? Was it ever?
Despite OED's recent attempts to prove that this partnership fulfills the goals of the city's Comprehensive Plan and brings public amenities in the form of high-paying jobs (640 newly created), access roads, and improved landscaping on public and private land (that primarily serves private employees), some of us are not entirely convinced that this is really such a good public deal after all. I heard one comment down at City Hall that the Immunex partnership is "beginning to look more like a corporate welfare package for a business with a 200 percent profit margin."
Maybe I am missing the point, but my understanding of public-private partnerships is that they enable the public to obtain private financing (and therefore participation) for doing something the public decides it wants but cannot (or doesn't have the will to) collectively pay for. As stated in the PPPTF report, these partnerships "achieve benefits for the public which would not materialize in absence of the partnership." The report further emphasizes that guidelines are necessary for successful negotiations and for providing appropriate levels of public input and confidence in order to improve and clarify partnership arrangements.
Since the city's financial responsibility for the Immunex partnership now exceeds $10 million (the threshold for reviewing partnerships under PPPTF guidelines is $5 million) and OED's evaluation did not include anyone from the PPP project review panel (also a requirement), I asked councilmembers to consider having this partnership scrutinized under the PPPTF guidelines. Peter Steinbrueck responded to my request and informed me that he was the only councilmember who voted against the decision to double the city's contribution to this project. He also mentioned that he was the only councilmember to suggest that this project be measured against the PPPTF guidelines (before Council committed the additional funds).
Listening to council's current deliberations on whether to approve the Mayor's most recent request for additional spending on this project, I learned that the city inexplicably neglected to put a spending cap on its Immunex partnership obligations. This means that the "public" part of the partnership is responsible for all "cost overruns" and all "unanticipated costs." One other important detail worth mentioning is that there is no recapture provision in the city's agreement. This means that if Immunex decides Pier 88 is not the place it really wants to be, it can walk away from this deal (with money in its pocket from the sale of its valuable waterfront property) and we are left with a shiny new flyover for high-paid Immunex employees not to drive to work on.
With spiraling costs and a questionable return on our investment, this might be a good time to question the need for the "public" to participate in this partnership. If the Galer Street flyover or is something we collectively want and are willing to pay for, then let's do it on our own time, to our own specifications. Otherwise, let's be more willing to drive a harder bargain with Immunex, the Port, and the County. I can think of a lot more projects (like building a new community center or other street improvements) where our money can be put to better public use.
If you would like a copy of the PPPTF report "Shaping Public-Private Partnerships in Seattle" contact Sara Levin at Sue Donaldson's office at 684-8806.