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Vulcan to buy land from Times

By J. Martin McOmber
Seattle Times business reporter

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The deal might be more important for The Times, which faces a costly legal fight with its crosstown rival, the Seattle Post-Intelligencer, over the fate of the city's two major newspapers.

For Vulcan, the 6 acres of parking lots and old buildings, most to be torn down, will give the company control of nearly 60 acres in the South Lake Union area. After The Times deal closes June 25, Allen will have spent about $250 million buying land to try to transform the neighborhood with new homes, shops, offices and life-science laboratories.

For The Times, the money will help repay loans, cover mounting legal costs and avoid deep cuts in staff and operations in the near future, publisher Frank Blethen said. But the sale also ends the company's long-term plans to redevelop the property as a source of extra income for the newspaper.

"Our conclusion was we have either got to sell this land and get an infusion of cash so we can relieve some of these pressures, or we may as well throw in the towel," he said.

In December, the paper made $9.6 million by selling 34 acres in Renton that had once been considered for a printing plant. And in March 2003, the city of Seattle refunded more than $1 million The Times had paid for the right to control development of several city streets near its headquarters.

The Times' finances have been at the center of its battle with the Hearst Corp., which owns the Post-Intelligencer, over the future of companies' joint-operating agreement (JOA). The dispute, which could spell the demise of one of the city's two major papers, has led to a legal battle that is before the state Supreme Court.

Billionaire's South Lake Union land Since the Microsoft co-founder lent more than $20 million to buy land for the failed Seattle Commons, he has accumulated nearly 60 acres of land north of downtown. 1992: Microsoft co-founder Paul Allen lends the Commons committee $20 million to begin buying land for a park. 1995: Allen agrees to donate $21 million worth of land for a park if voters approve the Seattle Commons property-tax levy. 1996: Allen takes control of 11.5 acres of land in the neighborhood after the Commons levy fails twice. 1999: Allen buys two more parcels, giving him 12.5 acres. 2001: City Investors, one of Allen's companies, pays $20.8 million for eight key properties, giving him control of 50 acres of land in the neighborhood. 2002: Another of Allen's companies, Vulcan, buys a sliver of property at 766 Thomas St. 2003: Vulcan pays $21.25 million for 3 acres at the intersection of Mercer Street and Westlake Avenue North. 2004: Vulcan is buying 6 acres from The Seattle Times. Once the deal closes, Allen will own nearly 60 acres in the South Lake Union neighborhood. Source: Seattle Times archives

Blethen blames the company's financial troubles on a 2000 strike and the lingering effects of the economic downturn that has sapped nearly $50 million in yearly revenue. The paper has twice come close to violating the repayment terms on 1998 loans to buy newspapers in Maine.

"This doesn't allow us to start rebuilding or avoid the potential that we will have to do some kind of cuts or restructuring," Blethen said.

Vulcan doesn't have any immediate plans to develop The Times property, spokesman Michael Nank said. The paper has used most of the land for employee parking, and it is talking with Vulcan about whether it will lease back a small office building included in the deal.

The sale marks Vulcan's second high-profile purchase in the South Lake Union neighborhood in the past year. In October, the company bought 3 acres along Mercer Street for $21.25 million.

"We are not really looking to purchase more property," Nank said. "Obviously, we are acquiring these properties because they complement the existing portfolio we have in the neighborhood."

Vulcan paid The Times about $119 a square foot for the land, which places the sale among some of the company's more-expensive purchases in the area.

The Times, PEMCO and Vulcan had been among the major property owners in the South Lake Union area. The paper started buying land around its main building at Fairview and John streets in the late 1970s and early 1980s to give the paper room to expand and to shield it from redevelopment in the surrounding neighborhood.

Eventually, Blethen said his family, which owns a controlling interest in the paper, saw the property as a chance to create a separate and stable source of income that would help balance the up-and-down cycle of the newspaper industry.

The paper envisioned building a 4½-block development featuring twin office towers, a parking garage and a printing plant.

"(The sale) reduces our ability to protect our campus and working environment here, and it ... eliminates this notion of doing something special with the land," Blethen said.

Seattle Times staff reporter Bob Young contributed to this report.

J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com

Copyright © 2004 The Seattle Times Company

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