Seattle Project Violated Laws, Officials Say Mayor Plans Review Of Findings, Defends Downtown Redevelopment
City, state and federal laws have been broken in the $400 million public-private downtown-redevelopment project, city ethics investigators say.
The four-block project has come under fire before, and city officials again defended the undertaking as an investment that reversed a decline in the downtown retail core.
The report on the Frederick & Nelson renovation and Pacific Place project was released Friday by Carolyn Van Noy, executive director of the city Ethics and Elections Commission.
Mayor Paul Schell said Thursday he planned a review to determine whether Van Noy’s findings were substantive “or a failure of process.”
“Until then, I guess I stand by previous statements that the city got a good deal,” Schell said.
The centerpiece of the project is a $100 million overhaul of the old Frederick & Nelson department store as the Nordstrom retail clothing chain’s flagship store.
In an interview with the Seattle Post-Intelligencer published Friday, Van Noy said she found “nothing in there of a criminal violation,” and did not plan to send the report to federal agencies whose regulations she believes have been violated, though they will have access to it.
The document is intended for use in correcting problems in city agencies, Van Noy said.
The report says ex-Mayor Norm Rice’s administration failed to sufficiently monitor its non-profit partner, the National Development Council, and disregarded a potential conflict of interest by the group.
Rice could not be reached for comment. Also unavailable was John Finke, the council’s vice president and Seattle director, who did not immediately return calls for comment on the report.
The council was hired to submit a loan application to the U.S. Department of Housing and Urban Development and later to manage construction of a 1,200-space parking garage.
An earlier federal audit cleared the city of accusations that claims of neighborhood blight were exaggerated to obtain the $24 million discount HUD loan. State and city auditors also are reviewing the project.
Council officers first helped the city obtain the HUD loan, and then worked through a subsidiary to join forces with private developers who benefited from it, Van Noy’s report said.
In addition, the council has been paid more than $480,000 and its contract has been renewed routinely without competitive bidding as required by law, Van Noy’s report said.
The council already has refunded $17,500 to the city as a result of the investigation, which was prompted by a whistle-blower, Van Noy wrote.
Her report also said City Council members violated state law by failing to conduct a public hearing before approving the $73 million Pacific Place garage deal in June 1995. Auditors have said the parking garage is only costing about $50 million - an overpayment of about $23 million to Pine Street Development. City Council President Sue Donaldson said the city attorney’s office advised the council that a public notice of the transaction met legal requirements.