Mayor returning Vulcan money involved in ethics complaint

By Bob Young
Seattle Times staff reporter

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The complaint by affordable-housing activist John Fox asserts that Vulcan illegally contributed $500 to Nickels' office fund in 2002 and 2003. City rules prohibit contributions to those funds from parties that have current contracts or "other transactions" with the city.

Representatives of the mayor's office and Vulcan dismissed the charges as "without merit" or inaccurate. But Nickels will refund the contributions, said his spokeswoman Marianne Bichsel, because they might appear improper.

Fox says that Vulcan has made or discussed several business arrangements with the city that amount to current contracts or "other transactions."

The most prominent is a purchase and sale agreement between Vulcan and the city struck in June 2001, when Vulcan's real-estate arm, City Investors Inc., bought eight parcels of city property in the South Lake Union area for $20 million. As part of that deal, the company agreed to provide 50 units of affordable housing and a 20,000 square foot cultural facility in the neighborhood.

The deal gave Vulcan six years to provide the housing and cultural facility. Fox maintains that those commitments constitute a current contract.

Bichsel noted that the contributions came from Vulcan while the contract is with City Investors Inc. That makes the contributions technically legal, she said.

But she acknowledged that both companies are owned by Allen and they have overlapping leadership.

"So for the sake of appearance we are going to refund the money," she said.

Vulcan spokesman Michael Nank maintained that the company "fully complied with the letter and spirit of the law." He also blamed Fox's "misguided antics" as a reason why Seattle has struggled to become a "vibrant world-class city."

Although Nickels wasn't in office at the time the deal was made, contributions to office funds are still prohibited from parties that have contracts or transactions with the city.
 
An office fund is a financial vehicle mainly used by elected officials to entertain and buy gifts for visiting dignitaries without having to dig into their own pockets. Elected officials create office funds because they cannot use campaign contributions for such a purpose and the city will not reimburse them for such gifts.

Nickels has used his fund to buy refreshments for his inaugural ball, lunch for visiting officials and Seattle tokens for foreign dignitaries.

The ban on office-fund contributions is intended to keep people from effectively bribing city officials to get contracts and to keep city officials from shaking down those who want to do business with the city.

Fox is not alleging that Vulcan and Nickels acted in that manner in his complaint to the Seattle Ethics and Elections Commission. But his complaint does say that Vulcan's contributions "can become a way of skirting city campaign contributions limits and paving the way for contractors to obtain special and improper consideration for lucrative city contracts."

Campaign contributors can only give a candidate $650 in a four-year period under city regulations. Contributors can give $250 a year to an elected official's office fund.

Fox, who heads the Seattle Displacement Coalition, said that such apparent violations "undermine the integrity of the city's political process" and at least "create an appearance of impropriety."

Bichsel called the complaint "an effort by John Fox to derail the good things happening in South Lake Union."

She also noted that contributors to Nickels' office fund are asked to sign an affidavit swearing that they don't have a contract or other transaction with the city. Bichsel provided affidavits showing that Vulcan government affairs manager Dan McGrady had signed such affidavits when the company contributed to Nickels' office fund in April 2002 and March 2003.

Vulcan executives said it was hard to respond to Fox's complaint because they hadn't seen it. But they dismissed his charges, as explained to them, as inaccurate. Steven Crosby, Vulcan's vice president for corporate communications, said he was not aware of any business arrangements between Vulcan and the city that could be defined as current contracts or other transactions.

Vulcan owns 50 acres in South Lake Union and plans to lead the development of a biotech hub and several thousand apartments and condos in the area. The company has asked the city to spur the redevelopment by relaxing zoning restrictions, building a streetcar line, as well as new streets and an electricity substation. Nickels has publicly stumped for these improvements.

The estimated public cost for such improvements exceed $500 million. Fox said city decisions and investments could increase the value of Vulcan's land and "produce enormous profits" for the company.

Bob Young: 206-464-2174 or byoung@seattletimes.com

Seattle Times staff reporter J. Martin McOmber contributed to this report.

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