P4 South Lake Union Briefing
Meeting Notes

Wednesday, September 6, 2000
2:30-3:30 p.m.
Room 221, Municipal Building

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Attending

Panelists: Maria Barrientos (Project Panel Chair), Jan Hendrickson, Bob Mahon, Jackson Schmidt, George Staggers (observing)

City Staff: Sara Levin (P4 Coordinator); Geri Beardsley (City Council Central Staff), Lee Belland (City Budget Office), Layne Cubell (DCLU/Design Commission), John Eskelin (Neighborhoods), Michele Finnegan (Parks), Donald Harris (Parks), Dave Haworth (City Council Consultant), Lisa Herbold (Councilmember Licata's office), Bill McGillin (Law Dept.), Jim Reinhardsen (Heartland, City's real estate consultant), Mary Jean Ryan (Office of Economic Development), Karen Tsao (Executive Services Dept.)

Guests: James Bush, Sam Bennett, Brian Court, Ed Geiger, Shirlee Holmes, Peter Hummel, Shirley Mesher, Charles Payton, Kevin Teague

Welcome and introductory comments

Maria Barrientos, Chair of the SLU P4 Panel welcomed the group and asked for introductions. She asked Panelists to keep in mind their purpose: to review the public benefits of the SLU property disposition, with a focus on the public benefits listed in Resolution # 30080.

P4 Panelist George Staggers disclosed that he is not a participating, voting panelist on the South Lake Union Panel, as he has a conflict of interest - his organization (CADA) receives grant funding from the Office for Economic Development, the prime sponsor of the SLU project. George is interested in the project, and will continue to observe as a member of the public, but will not participate on the review panel or vote on the final recommendation.

Maria mentioned that convening this group was difficult, due to many conflicting schedules. In order to prevent further delays in reviewing the project, the next meeting will be scheduled to accommodate as many of the Panelists as possible, but will not be delayed to accommodate any one absent member.

Sara Levin reminded the group about the P4 and SLU websites, and announced that panelist Greg Sundberg was out of town, but still hopes to provide comments and participate in this review.

South Lake Union Redevelopment briefing
(Mary Jean Ryan, OED and Jim Reinhardsen, Heartland))

Mary Jean Ryan from the Office for Economic Development (OED) began the presentation by telling the group that a lot has happened with the South Lake Union property since the first P4 briefing at the end of March. There are still many steps to take before the transaction is complete. This briefing is an opportunity to check in with the Panelists, update them on the steps taken since they last met, and to solicit feedback and advice on the City's work.

The South Lake Union Neighborhood Plan guides the City's work in the neighborhood. The interdepartmental team working on South Lake Union is composed of many City departments, including Parks, Executive Services, OED, and the City Budget Office. Redevelopment in South Lake Union is a good example of collaboration between a neighborhood and the City.

Since the group last met, the South Lake Union Park Master Plan has been updated and the City took acquisition of the Naval Reserve Property. Next spring, an agreement between the City and the Maritime Heritage Foundation will come before the P4 Panel. The ProParks ballot measure before Seattle voters this fall includes $5 million for further development of the South Lake Union Park. As the City moves forward on the property disposition, they are trying to orient their work towards what is happening with the park.

A number of smaller scale transportation improvement projects are planned in the area as well, to improve mobility and safety. These include realignment at the Fairview/Valley intersection.

In spring 2000, the City selected Vulcan Northwest for negotiations. The City received two fully responsive proposals per the RFQ issued in early 2000. Vulcan was selected because it offered the opportunity to respond to a large number of the public benefits in City Council Resolution # 30080. Negotiations began in June.

Jim Reinhardsen continued the presentation. The work to date has stemmed from an intense process, with weekly meetings of the interdepartmental team and a very hands-on approach to the project. Two goals have evolved: the goal of achieving the City's objectives; and obtaining fair value for the assets (property) in context of achieving those objectives.

In forming an approach to the negotiations, City staff realized that the City is wearing two hats in the process: the City is acting as the landowner wanting a good deal for the property, and as the regulator, which will be involved in the redevelopment process well into the future. Considering these two roles, and the objectives outlined in Resolution #30080, the interdepartmental team drafted a chart that indicates which objective is related to which role. Jim Reinhardsen walked the group through the chart, which is summarized below.

City staff realize that understanding the interests and objectives is important on both sides. To that end, they need to:

1. Filter through what are or are not contract issues;

2. Focus on fairness/appropriateness/proportionality in the contract; and

3. Identify alignment between Vulcan NW and the City and create mutual commitments

The City could simply sell the properties subject to the entire regulatory process, but early on Vulcan suggested that the City do an earlier closing of the transaction. City staff agree that the sale will accomplish objectives, and will then allow the purchaser to pursue the MUP, SEPA, street vacations, etc.

The City hopes to conclude negotiations later this fall. They would like to bring the transaction to P4 at an appropriate time, to allow for substantive feedback. Mary Jean asked Panelists to let her know what level of detail they would like to review - at a minimum, summaries of all of the relevant documents, a final P4 Protocol, and appraisal information.

Questions and comments from Panelists

tBob Mahon asked for further discussion of what exactly the Panelists should be reviewing. The City's objectives chart indicates that only four issues would be subject to the contract/transaction. Jim responded that the regulatory issues already receive a lot of oversight; the Panelists are encouraged to review those which don't fall under oversight structures already. Mary Jean added that the City has thought a lot about the approach (dividing the issues into those which are subject to the contract negotiations and those which are subject to regulatory processes), but that if the Panel thinks that the approach is faulty, the City would like to know.

Bob reiterated that this is a real estate deal, rather than a true public-private partnership. Mary Jean agreed that this is not a true public-private partnership, but that the City Council determined that the combination of needing to meet a list of public benefit objectives and the size of the assets make it worthy of P4 review. Bill McGillin urged the Panelists to ask themselves what role they would like to play in terms of this project - especially considering the regulatory processes, which already receive a great deal of oversight. There is currently a sale before the panel, but not a project.

Jackson Schmidt asked whether the Panelists would know what the proposed uses are for the properties when they receive the contract materials to review. Mary Jean replied that they will not know - the sale is before the Panel, but not specific projects. She referred back to the two roles that the City is playing in this process - as property seller and as regulator.

Jan Hendrickson commented that the Panel is on a steep learning curve regarding their role in general and how they can add value. She asked whether there will be performance measures, so that once the sale is closed, the City can ensure that the objectives are met. What if Vulcan purchases the properties and then becomes a "slumlord" - how will the City make sure that Vulcan holds up their end of the deal?

Maria Barrientos concurred with this comment and asked how the panel is to review the whole project if most of the issues are going to be dealt with in the regulatory process. Mary Jean responded that this briefing is focused on the City's approach. They are taking performance measures very seriously - both the City Council and the neighborhood are interested in them as well.

In telling the Panelists about the approach, if they think that it is too weighted towards the regulatory process, the City would like to know. The City would like any comments on the approach to the transaction. Panelists did not have any recommended changes or comments at this time, but wanted to be sure to understand exactly what their role is in evaluating this project, so as to be able to provide an appropriate recommendation.

Mary Jean also stated, per the Panel's request, that when the City brings the sale of the City-owned property transaction back to the Panel (prior to going to City Council), the City will bring a detailed proposal which lays out specifics as to how each public objective will be met.

Jackson Schmidt asked what benefits are coming directly from the sale of the properties. Jim responded that these are focused on what have been identified as contract issues. He hopes that they have focused on points that are relevant to the Panel.

Public Comment

One of the observers asked whether it is appropriate to assign value to regulatory issues.

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