"Outnegotiated": City stuck with $4 million park tab

Outnegotiated.

That's how Seattle City Councilman Richard McIver describes the situation facing city leaders over an unexpected bill for $4.2 million to remodel South Lake Union Park.

McIver, who leads the council's finance committee, said the council is obliged to approve additional spending for the park because Paul Allen's team got the best of city officials in a complex deal approved last year.

"If I ever get a divorce, I want you to be my lawyer; you write a heck of an agreement," McIver told Lyn Tangen, director of government relations for Vulcan, Allen's development company.

McIver made his comment Wednesday when his committee voted to add $4.2 million to the park's $25 million budget to replace the bulkhead, or retaining wall, between the park and lake. McIver felt council members had to pay the increase instead of scaling back the park's features because of their agreement with Allen. Part of the money would come from the city's general fund and the rest from Parks Department projects that are under budget or delayed.

That brings the total budget for the 12-acre park to $29 million. Plans for the grassy park include a model-boat pond, boardwalk, wharf for historic vessels, lawn for festivals, a Native American longhouse and canoe-carving shed, paths for cyclists and walkers, and a pocket beach to launch and land small boats.

At issue is a recent determination by the Parks Department that the park's retaining wall requires more expensive repairs than budgeted for the project.

The problem, according to Parks Superintendent Ken Bounds, is that the 45-year-old retaining wall is nearing the end of its expected life.

Designers hired by the city thought the wall could be saved by reinforcing it. But as they got into more detailed construction design they realized the only way the city could avoid replacing the wall is by shoring up the park's edge with boulders to create a riprap. But that would pull back the northern edge of the park 27 feet.

"That was a problem for us and the [Seattle] Parks Foundation," which is trying to raise $10 million for the park from private donors, Bounds said.

Under the latest plan, taxpayers would contribute $9 million for the project, while the foundation would raise $10 million and Allen would pay another $10 million if the city meets certain conditions.

Allen has amassed 60 acres in the South Lake Union neighborhood to develop offices, biotechnology laboratories and new residences. The park is considered a key amenity for tenants and residents. Vulcan announced last year the largest private contribution to a public park in Seattle history, under certain conditions.

Bounds said he's at fault for not seeing the problems sooner. "I will take 100 percent responsibility for that. I thought we had a plan that would meet the intent of design and fit in the budget," he said.

McIver initially considered trimming the project rather than spending $4.2 million that could go to other city needs. For starters, he focused on an $800,000 footbridge that would span a cove between the park's east and west sides. Without the footbridge, pedestrians would only have to walk about 1,000 feet farther, he noted.

Then McIver was reminded of the importance of the fine print in contracts. It turns out the council had approved an agreement with Allen's company last year that tied its hands on some South Lake Union Park spending decisions.

The agreement spelled out the terms for a $10 million contribution from Allen for the park. The first $5 million would come from Allen when the city completed the first phase of planned park improvements. That phase calls for a new pedestrian footbridge, boardwalk and terraced steps to the water, plus a stable retaining wall.

The second $5 million would come if the nonprofit parks foundation raised $10 million and the city started work on reconfiguring Mercer and Valley streets, adjacent to the park, making them easier for pedestrians to cross.

When McIver began talking about cutting back the park project, Vulcan's Tangen reminded him of the contract language. In an e-mail to McIver she wrote: "It is difficult to imagine a clearer statement of what constitutes Phase 1 and how it is to be funded."

Tangen said the company insisted on that language because the costs of repairing the wall were uncertain at the time of Allen's $10 million pledge. "When we agreed to provide $5 million for Phase 1, we wanted to be sure that Phase 1 would be completed even if the initial estimates were wrong. The language gave us that assurance," she wrote.

McIver later said council members could have read the agreement more closely, but it was unlikely they would have anticipated the bulkhead problems and added costs.

"We weren't aware of that at the time [council approved the agreement] and we thought we had a good design," McIver said. "In my opinion, we were outnegotiated."

Mary Jean Ryan, the city's chief negotiator in the deal with Allen, disagreed.

"I felt I did a really good job and got a lot of money for the city," Ryan said in an interview. "I'm not up to speed on the latest [retaining-wall problems] and don't want to comment on that," she said.

The full council is expected to vote on the issue Monday and consider safeguards McIver has proposed to prevent future financial surprises.