by Mark Gardner

The Free Press

Despite the sanctimonious tone of a Times' Dec. 23 editorial lauding the reporting of Barbara Serrano and Deborah Nelson, followers of the Nordstrom saga know that this story was just the belated exposure of the tip of an iceberg. And at each step of the game, the story percolated from the bottom-up, with indifference or active resistance from the major media. The Free Press' Doug Collins was the first to reveal Nordstrom's subsidy grabbing in a June 1995 cover story (see "In the Bag") documenting how faulty crime statistics, and misrepresentations over Nordstrom's role in the development by city officials, brought in a $24.2 million Housing and Urban Development (HUD) loan guarantee intended to counter the mysterious malady of "spot blight" - localized urban decay that would qualify the area for HUD funding.

Collins' story reported many of the findings resulting from investigations into the deal by indefatigable civic activist Jordan Brower, and by the citizen's group Friends of Westlake Park, whose attorney Rick Aramburu forced the city to disgorge the questionable crime stats. Collins followed in August 1995 with a piece showing that Nordstrom was attempting to wrangle the same type of deal in Spokane, right down to the HUD subsidy for another parking garage (see "Nordstrom Gets Its Way with Spokane").

Brower, and housing activist John Fox challenged the city's case before HUD, prompting an investigation by HUD's Inspector General - an investigation coming at the inopportune time when Norm Rice was up for nomination as Secretary of HUD. The Free Press and the Stranger carried stories focusing on the substance of the HUD investigation, while the dailies focused perfunctorily on the play-by-play. The Seattle Times even intoned in an editorial that the White House was "treating Rice badly" when it held up the mayor's appointment pending the outcome of the initial investigation.

You know the rest of the story: the successful campaign to meet Nordstrom's demands to open Pine Street to traffic; the breach of city policy to build Nordstrom a skybridge between the store and the parking garage; the $23 million overpayment on the garage (mysteriously, almost exactly the same amount owed Nordstrom by Rhodes' Pine Street Development group).

The Story Goes Mainstream
What finally moved the story from its status as fringy paranoia to acceptability was the willingness of the "new" Seattle Weekly to enter the fray. Former Weekly editor and publisher David Brewster's dour crankiness provided some critical edge to Seattle's urban debate, and this dapper fly in the City's ointment was an incessant if minor irritant to city officials. But Brewster was never willing to go after the big stories such as the Nordstrom deal either because of his cautious temperament, or his connection to the City's establishment (many of whom formed the publishing group behind the Weekly).

That's all changed now that the Weekly is Village Voice-owned, and with Brewster having been shown the door. Since Brewster's departure, Weekly investigative reporter Rick Anderson completed articles in August and September 1997 documenting various conflicts-of-interest surrounding the deal, including the hiring of garage developer John Finke to be the city's consultant on the project. Free Press co-founder, and now Weekly writer Mark Worth just uncovered another Nordstrom bombshell, with two articles in December 1997 showing how $43 million in loans from the Washington State Housing Finance Commission helped subsidize not housing, but the familiar Nordstrom parking garage. The articles went on to show how the Finance Commission also helped float such non-needy recipients as the Lake Washington Rowing Club, Lakeside and Overlake Schools, and the Pacific Science Center.

After being left flat-footed time and again, the Times' finally weighed in with its late but important story. But the excellent work of reporters Serrano and Nelson didn't shake the confidence of the Times' editorial board in the general thrust of city policies, and on Dec. 28 the board declared that "Years from now, only the crankiest citizens will remember the current parking garage controversy. Most will remember a grander legacy: Rice saved downtown."

Saved from what, we're not sure. Downtown was in a bit a slump when the Nordstrom deal was brokered, but the failures of Frederick and Nelson, of I. Magnin, and of Woolworths were all failures of their respective national chains, and had nothing to do with what was happening in Seattle proper. As the original Free Press article pointed out, other buyers were in line for the Frederick and Nelson building, and as the Times' own reporters later documented, many of the retailers purported to be lured downtown by the deal had signed leases before the deal was struck.

The Times' investigation seems to indicate that the story had just gotten too big, and that the facts were holding up too well to be ignored. The P-I, of course, has never has really gotten it. A December 23 lead editorial following the Times' story continued the boosterism, arguing that the deal will eventually be a profit-maker for the taxpayers. Perhaps this reluctance to break ranks was a result of the P-I's role in letting the story slip through the cracks in the first place. As the first Free Press story pointed out, the P-I's Rebecca Boren dutifully reported the distorted crime statistics. When asked if she would put forth a correction, Boren said, "It's so far after the fact, it would be a little late."

Despite the dailies' editorial sneering about the misguided opposition of the "crankiest" citizens, the now-exposed facts show that the critics were right, and the editorialists were wrong. The recently-released report from HUD's Inspector General, while exonerating those involved from criminal wrongdoing, charged that Seattle had deliberately misled the agency in order to obtain funding, and that Nordstrom had indeed mounted a national campaign to pull in HUD subsidies for its development schemes.

Also absent from the dailies' editorials is the possibility that the Nordstrom package could have been put together without questionable financing from sources meant to help low-income citizens. The questionable ethics behind the options of using HUD and Washington State Housing Finance Commission money for private, for-profit developments could have been used by the city as a bargaining chip to get the company to commit without being directly subsidized. The willingness of public officials to give into corporate blackmail when other more pressing needs are literally going begging is what is at the heart of the issue.

What Should Government Do?
If taken as more than a morality play, these stories should occasion a lively debate on the role of the public sector in economic development. Is it really government's role to subsidize business by agreeing to outrageous subsidy schemes? Or is it government's role to "get the fundamentals right" by providing the infrastructure and services needed by the public and business?

These stories should also focus attention on the questionable evolution of programs designed to help low income citizens. The last two decades have seen a well-publicized campaign to rollback the social "safety net" helping the economically vulnerable. Much less well-publicized has been the transformation of programs designed to target housing and other development monies to disadvantaged populations, into entities willing to fund upscale developments that help these citizens only tangentially, if at all. The rest of us pay for this government largess through our taxes. Given the reluctance of politicians to make the case for higher (and fairer) taxes, should we be squandering scarce revenues on projects more efficient at enriching the already wealthy than they are in serving the general public?

That a self-styled "progressive" city such as Seattle would fall into this trap bodes ill for other places less concerned with economic justice. The mavens of corporate welfare fancy themselves steely "realists" able to wring some meager public benefits from an unforgiving privatized world. But as the Nordstrom saga reveals, public officials were willing to maneuver themselves into extremely weak bargaining positions, seemingly oblivious to the many advantages prime Seattle real estate holds for retailers. Seattle is not Detroit. As stories eventually revealed, downtown Seattle was poised for a mini-real estate boom even without the Nordstrom deal.

It is time for Seattle to get a backbone, and to have some confidence in itself and its future. The city has a low unemployment rate, an educated populace, one of the nation's prime natural settings, and a very vibrant economy generating some of the most important industrial and service sector innovations. It is time for it to stop acting the part of the country rube quivering in the face of corporate legions, and to begin working to spread the benefits of its incredible economic wealth to those not part of the current boom.

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Contents this page were published in the January/February, 1998 edition of the Washington Free Press.
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