’HAMSTER CAGE: They hugged each other with such fierce, rapturous joy you’d think they’d been granted clemency and released from prison; and perhaps, in a sense, they had. For almost certainly the Port of Bellingham staff who with the blessing of City of Bellingham staff this week inked a master development agreement with Belfast-based Harcourt Developments will all be living on a fat government pension and associated investments before the monstrous folly of their boondoggle implodes on the public years hence.
Under the terms of the agreement, Harcourt would complete two building projects on Bellingham’s central waterfront by the end of 2021. Harcourt would supposedly adaptively reuse the Granary Building by 2019, and complete construction of a second building with a minimum of 40,000 square feet of mixed-use space by 2021. Staff performed a little victory dance.
Minds and pencils sharper than the Gristle’s have marked through the master development agreement, but—honestly—it’s hard to know how seriously to evaluate a product as deficient in requirements and expectations as the port’s agreement for the development of the central waterfront.
The recipe of “certainty” and “flexibility” (always stirred in one direction, with “certainty” in taxpayer outlay and “flexibility” in what taxpayers might expect to receive for their money) that the city delivered to the port in approving the master development plan might’ve filled an aquarium. The recipe delivered in turn by the port to Harcourt in their master developer agreement might fill an Olympic-sized swimming pool.
The historic Granary building may be undertaken as a renovation project by 2019; or maybe not. A second, unspecified structure—cryptically described as Building 2—may be constructed by 2021; or maybe not. Both of them could be completed as a project together; or perhaps neither.
Harcourt is requested to purchase the Granary—valued at $700,000—in a good-faith deposit toward an asking price of just $200,000, an amount the Irish developer probably spends in attorney fees on one cloudy morning, delivering to them an initial taxpayer subsidy of more than half a million dollars. Quite a gift.
Gee, wasn’t the purpose of acquiring an outside developer to generate private dollars to pay for cleanup and development?
Port expenditures on the waterfront now exceed more than $54.2 million, throwing the agency into a cash deficit there of $22.5 million, with no demand from the developer that would make taxpayers’ whole. In fact, the agreement waives Harcourt’s impact fees, meaning those impacts will be borne by the public.
The port agreed to carry the financing for the unpaid purchase of property at a modest interest rate “and neither the unpaid balance nor the interest shall incur a prepayment penalty,” the agreement notes. Which means if port assumptions about future finance and interest rates are underpowered the public will carry those costs, too.
The port got crammed down to a valuation of the property at $20 per square foot, half the value they originally presented to the city and state Legislature. Meanwhile, the port continues to kick the City of Bellingham hard in the belly for $50 million in early roads, bridges, stormwater and parks, with no similar reassessment or reappraisal. No price reduction or market consideration there.
In three years when, and only when, the city has completed the infrastructure for this early phase, and the port has completed their environmental work, Harcourt will need to make a decision whether to actually purchase this land for $10 million. Undoubtedly, the company could engineer additional extensions to stretch that window or cramdowns to further sweeten their deal.
The lost opportunity costs and forfeiture of tax revenues from this flaccid, face-saving agreement are enormous.
One must wonder if the Port of Bellingham had gone out originally to the wide market with the offer they now sign with Harcourt whether the agency might’ve gotten more requests for proposals to develop the site. Ten million dollars in seller financing at below prime rates, a commercially zoned building on the waterfront for one third its assessed value, the entire acreage at half its originally assessed value, with no timetable or outlay demanded from the developer for nearly ten years before they default on the agreement—with all that they might’ve gotten more than one nibble from a single foreign investor.
The port’s own independent appraisal details how unlikely their plan is to succeed and practically cries out for retrenching and reassessment:
“There is very little fundamental support for developing the property to the maximum allowable densities,” Seattle real estate consultants McKee and Schalka wrote. “Development to the highest densities would most likely result in a significant oversupply of space to the market and potentially damage other submarkets in the city by attracting tenants away from those areas. On a longer development timeline, the higher densities could start to contribute value but this is speculative.”
The current agreement is outrageous, yes, but fanciful as to be almost without meaning: The unicorn is pink, not blue; it has gills instead of wings. It will now be led to a barn in Belfast until 2020.
A decade ago, the Port of Bellingham packed the Mount Baker Theatre as hundreds listened to commissioners sketch their vision for the future of the city’s central waterfront. Optimism and excitement flowed, a community was engaged.
This week, the commission could barely fill their own meeting room for a listless signing ceremony witnessed by a handful of mostly glum and grumbling critics, the excitement and optimism savagely beaten out the community by the port’s aggressive tunnel vision and brutal mishandling of public opinion—a massive squandering of perhaps their most important public asset, the support and engagement of the public.
The excitement instead had transferred to KAPOW!, the city’s guerilla urban design competition. Again, hundreds packed the Mount Baker Theatre last week to see innovative, low cost and fun designs by local talent for urban renewal and revitalization. Even Port Commissioner Michael McAuley offered a design. It’s a wonderful model of community engagement that might have been employed on the central waterfront instead of the unwieldy and expensive search for a phlegmatic foreign investor.
The final design proposal of the evening featured a large interactive revolving sculpture, a ’Hamster Wheel—impressive in presentation but disqualified by complexity and cost, and perhaps even by potential for public liability. With marvelously broad and creative humor, the presenters sketched why their design was perfect for Bellingham: Lots of people in motion on a fancy wheel, but they’re not going anywhere.
Alas, we can think of no better monument for the city’s waterfront.
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