Rewriting history of Pacific Place Parking Garage Scandal

  • Reprinted from a May 2011 Column  of “Outside City Hall”  included in Pacific Publishing Newspapers by Carolee Colter and John V. Fox:

The Pacific Place Parking Garage is in the news again.  Readers may recall the mid-90’s scandal surrounding this facility that cost the city $23 million in overpayments to developers, diverted Housing & Urban Development (HUD) funds intended for low-income and minority communities and wrecked the political aspirations of former mayor Norm Rice.

Located in the downtown business district, the 1200-space garage is an elevator ride away from shops at Pacific Place and a stroll across a skybridge to Nordstrom’s. The garage was part of a larger deal that included a complicated land swap allowing Nordstrom’s to trade its old location on 5th for the building it currently occupies–the old Frederick and Nelson Building.  In return Pine Street Developers took control of Nordstrom’s old location and built the garage with city funds.

Mayor Norm Rice’s administration made it all happen by landing a $24 million loan from HUD’s Section 108 Loan Guarantee Program, created to encourage economic development in low-income and minority communities.  They did this by claiming our downtown was “blighted” and the funds were needed to repair the Fredericks building.  Documents later showed that all the building needed were some repairs to its roof estimated at $2000.

In 1996 the Seattle Displacement Coalition and Jorden Brower, a neighborhood activist, filed a complaint with HUD’s Inspector General against Rice’s administration for abuse of the HUD 108 loan program.  While the Inspector General did not dispute our facts, Rice was not charged with wrongdoing.

Instead, she wrote that program rules were so general that Rice and other cities applying for these funds could literally create their own definition of blight.  As a result, HUD reformed the program, implementing stricter guidelines for determining blight for all future 108 loan requests.

All this occurred at the very time Rice was identified as the top candidate for Secretary of HUD in Clinton’s cabinet–something we were not aware of when we filed our complaint.  New York’s Andrew Cuomo, also in line for the job, got wind of our complaint somehow and slipped it to his contacts at the NY Times, Washington Post and Baltimore Sun.  The ensuing coverage torpedoed Rice’s bid and Cuomo got the job.  The Seattle Times and P-I, which had barely covered our complaint, then put out banner headlines blaming us for Rice’s downfall.

Six month later, Barbara Serrano and Debra Nelson, two enterprising Seattle Times reporters, wrote a huge investigative piece revealing that the city paid $73 million to buy the garage from the developers when it only cost $50 million to build.  Suddenly, theTimes editors were more critical of the deal, giving us some credit for bringing it to the public’s attention–especially the fact that Rice’s staff had concealed the true nature of the deal even from city Councilmembers.   

And now it seems the garage has become an enormous money loser for the city. Since 2008 revenues have failed to cover annual operating expenses or payments on the 30-year loan the city took out to pay for it.  With the annual shortfall rising above $500,000, the city was forced to borrow $1.5 million from its general fund to cover losses.

The garage’s budget woes have put some city bigwigs on the defensive, especially those in the mid-90’s who played a role in its construction.  A month ago, the Seattle Times reiterated its longstanding support for the project.  So did the Downtown Seattle Association’s Matt Griffin in a recent guest column to the Times.  Their argument is that despite the garage’s current financial problems, its construction was instrumental in reviving downtown business and stimulating new tax revenues for the city.

Remember Pine Street Developers, the folks who benefited from the city’s $73 million overpayment for the $50 million garage?  Who was head of PSD?  Yep, it was Matt Griffin whose company is still being paid by the city to manage the garage.

Meanwhile Norm Rice, now president of the Seattle Foundation, at a forum sponsored by the Committee to End Homelessness, told local and regional social service providers that the garage was vital to downtown’s revival and that without it, there would have been much less city revenue available to combat homelessness.

These claims drip with irony.  Throughout the 90’s over 2000 low-income apartments were torn down to make way for downtown redevelopment, including the parking garage itself.  Homelessness exploded during that era as a direct result.

Furthermore, as we substantiated in our HUD complaint, nearly all of the major downtown projects created in the 90’s were already either under construction, or going through permitting before the garage was ever built.

Any way you look at it, the Nordstrom Parking Garage deal was a colossal giveaway to corporate interests.  In its wake the city created a committee to review all public-private “partnerships” of this kind.  As far as we know this body is no longer convened.

The legacy of the garage is a deep cynicism toward our local government officials that continues to this day – and is regularly reinforced by other more recent boondoggles like the tunnel and Mercer Corridor giveaways.  What have we learned?


About John V. Fox

Director, Seattle Displacement Coalition
This entry was posted in City Hall, Uncategorized. Bookmark the permalink.