Last Friday afternoon, Mayor Mike McGinn released the draft of an ordinance that would deny the Museum of History and Industry (MOHAI) millions of dollars—which the museum was expecting from a land deal with the state—and instead keep that money for the city. But the Seattle City Council has headed McGinn off at the pass and appears poised to give the money to MOHAI anyway.
"To renege on an agreement that has been seven years in the making is reprehensible," says City Council Member Sally Bagshaw, chair of the council's parks committee that will handle the legislation. "It’s a slap in the face to this organization that has done so much for the city."
The city council has drafted its own ordinance for MOHAI, Bagshaw says, and it will refer that legislation to committee at a meeting this afternoon. It would follow through on a June agreement between the parks department and MOHAI to give the museum up to $7 million. "What the council is saying is that a deal is a deal," Bagshaw continues. "We’re moving forward."
The background, very briefly: The state must condemn the MOHAI building in Montlake and the surrounding park to build an expanded 520 Bridge. In exchange, the state will pay for the building and the land, which are both owned by the city. But the museum gets to keep that money, thanks to a law passed by the city council last fall that allowed MOHAI to lead negotiations. The funding will allow MOHAI to construct a new museum in South Lake Union Armory Building (also owned by the city). But MOHAI used its power as a museum to negotiate much more money than the city expected ($40 million, not $15 million) for the building. And in another deal that has not gone through, MOHAI is expected to get up to $7 million for the land.
"The Executive was initially agreeable to this proposal, but that was before the $40 million settlement was revealed," the mayor writes in a letter to the city council (in full after the jump) that he sent along with his draft of the legislation.
The mayor's letter says MOHAI isn't entitled to keep that money from the park property. "Although MOHAI may claim an equitable entitlement to the building proceeds—insofar as the value was increased due to the presence of MOHAI—the same cannot be said for the value of the land," the letter says. The ordinance passed by the council last year, which authorized MOHAI to lead the negotiations, "does not authorize transfer of these proceeds to MOHAI, and we do not recommend that Council dedicate these proceeds through this Council bill," McGinn continues.
"We think Council should carefully consider and weigh MOHAI’s funding needs against other priorities," McGinn writes, citing unfunded city projects such as a new Rainier Valley Community Center and a new South Park Bridge.
Bagshaw also says that the issue is about more than MOHAI. For example, she cites the city's attempt to bring a retired space shuttle at the Museum of Flight. "If people can't trust the city to negotiate in good faith, where will we be on big items like that?"
The letter from the mayor is after the jump.
September 6, 2010
The Honorable Richard Conlin
President, Seattle City Council
Seattle City Hall, Second Floor
Dear Council President Conlin:
I am transmitting the attached proposed Council bill, which would accept funds from the Washington State Department of Transportation (WSDOT) to acquire the City-owned Museum of History and Industry (MOHAI) building at McCurdy Park for $40 million.
Ordinance 123132, as adopted in October 2009, authorized conveyance of the museum building proceeds to MOHAI. Under the proposed Council bill, the City will receive the WSDOT funds in two $20 million installments. The first installment will be paid this year, so that MOHAI can begin renovation of the Armory Building in Lake Union Park for a new regional history museum. The City will receive a second installment next year and convey the proceeds to MOHAI. The proposed bill also authorizes the Superintendent of the Department of Parks and Recreation to enter into amendments to the Lake Union Park Armory development agreement and lease with MOHAI to adjust the project timeline, and to clarify the commencement date of City operations and maintenance payments for the Armory.
As you know, MOHAI has requested a share of additional proceeds, which will be forthcoming in 2011, or later, when the State acquires the land under and surrounding the MOHAI facility at McCurdy Park. Ordinance 123132 does not authorize transfer of these proceeds to MOHAI, and we do not recommend that Council dedicate these proceeds through this Council bill. Additional background regarding this matter is set forth below.
The 2009 Legislation. Ordinance 123132 adopted a Project Development Agreement and lease between the City and MOHAI for renovation of the Armory. The Development Agreement, and the accompanying fiscal note for the legislation, indicated a total project cost of $45.4 million — $30.3 million to renovate the Armory building, and $15.1 million to be spent on museum exhibits and related improvements. The City agreed to dedicate the proceeds from the existing MOHAI building, as provided above, together with proceeds for “temporary construction use” of the site. The total value of these proceeds was estimated at approximately $15 million. The project budget, as presented to Council, is attached for reference.
Negotiations Following the Legislation. Following adoption of Ordinance 123132, MOHAI informed the City that WSDOT would no longer pursue a temporary construction use of the site, and would instead acquire the land from the City. MOHAI sought a share of the City’s proceeds for the property, to compensate for the estimated $5.5 million that would have accrued from the temporary use. The Executive was initially agreeable to this proposal, but that was before the $40 million settlement was revealed. The question now is whether Council should go forward with legislation to dedicate a share of future land proceeds to MOHAI, in light of the settlement.
Relative Needs for Funding. With the passage of the proposed bill, MOHAI will receive $40 million dollars. This is substantially more than the City anticipated when it approved the project, less than a year ago. Whereas Ordinance 123132 contemplated a $15 million contribution to a $45 million capital project, the City will now contribute $40 million — as much as $47 million, if land proceeds are included — to a project of unknown scale. MOHAI has indicated that additional funding is needed for construction of “ancillary” facilities, but the City has not analyzed this aspect of the project in any detail, and Council has not considered any budget that addresses it. Although MOHAI may claim an equitable entitlement to the building proceeds — insofar as the value was increased due to the presence of MOHAI — the same cannot be said for the value of the land.
As you are well aware, the City faces serious budget deficits in 2011 and 2012. The list of the City’s unfunded needs includes the South Park Bridge, the Rainier Beach Community Center, Linden Avenue North, shortfalls in the Fire Levy, and a host of other projects. Proceeds from sale of McCurdy Park land will not be forthcoming until 2011, at the earliest, and will otherwise accrue to the General Fund. We think Council should carefully consider and weigh MOHAI’s funding needs against other priorities, before adopting final plans for these proceeds.
Thank you for your consideration of this proposed legislation. Should you have questions, please contact Carl Marquardt, at 684-0962.
Copy: The Honorable Members of the Seattle City Council