A question of profit
“The Terminal,” a 30-second TV commercial by the National Republican Campaign Committee, illuminates the ugly points of a public-private partnership between Spokane Transit Authority and Don Barbieri’s company in the early 1990s. A deal to build a downtown transit high-rise fell through, and the ad claims Barbieri made a $900,000 profit off of it. It also accuses him of dropping the two contracting companies he hired to build the structure and questions why he didn’t return the profit to STA when the project was dumped.
Barbieri’s stance “I think the NRCC needs to spend less time slinging mud and more time learning their business basics,” Barbieri’s press secretary, Stephen Barbieri, said. The cost of acquiring land and preparing it for new development is a lot higher than just the price tag on the property. And even though CenterPlace, a 23-story transit center, hotel, retail and condominium building, never came to fruition, Don Barbieri has put money into downtown Spokane in other developments and retains a good relationship with STA. | NRCC’s reaction “Don Barbieri made all these promises and then he couldn’t get the financing and he walked away,” NRCC spokesman Carl Forti said. Forti said the candidate has been on TV telling voters what a good businessman he is, but “Don Barbieri’s business record isn’t as stellar as his press secretary would have you believe.” |
The NRCC’s attempt to squeeze a complicated issue into a 30-second spot is a bit like baking a wedding cake in a pudding cup. Unfortunately, doing so misleads voters on a few points. STA wanted to enter into a public-private partnership to build a transit center downtown. It selected Barbieri’s company, Goodale & Barbieri, for the job. The parties agreed that G&B would sell the land to STA and then lease it back. STA also would get 4 percent of the building’s gross sales. The building was to include hotel rooms, condominiums, retail shops and other amenities. The deal was supposed to earn the transit authority $34 million over 60 years. The ad says STA bought five of the six parcels for $3 million, even though G&B only paid $2.1 million for that land – which is true. That transaction did occur soon after the two parties reached an agreement to work together, and that price is backed by a Dec. 20, 1990, article in the Journal of Business. For all six parcels, though, G&B spent almost $2.7 million. On top of that, the company spent almost $1.3 million demolishing buildings on the property, doing an environmental cleanup and covering other costs. The ad doesn’t include the price of the sixth parcel or the other associated costs. A real estate firm appraised the property at $3.525 million after the land was cleared. Since state law prohibits a public agency from paying less for land than its appraised value, negotiations started there. STA ended up buying the land from G&B for $3.689 million, more than a half a million more than the ad says because it didn’t include the cost of the sixth parcel. If anything, Barbieri lost about $300,000 on the deal, according to the appraisal and court records. Attorney Steve Eugster filed a lawsuit claiming STA paid too much, but the courts said the purchase price was reasonable. The ad’s claim that Barbieri’s financing for CenterPlace was dropped is true, and he did cut loose two contracting companies when the project started to cost more than anticipated. But the ad’s impression that Barbieri did this to make a profit isn’t fair. STA entered into the agreement with G&B before the financing was in place. CenterPlace didn’t pencil out, so STA ended up building its own, scaled-down plaza – although some would argue the current plaza is anything but austere. | |
Ad watch is an analysis of campaign advertising that will run regularly during election season. If you have questions about Ad watch, contact reporter Megan Cooley, (509) 927-2165 or meganc@spokesman.com, or political editor Shawn Vestal, (509) 459-5431 or shawnv@spokesman.com | For more information on the election, visit the online election guide at: www.spokesmanreview.com/elections |