One buyer, 40 acres: a quiet revolution in Sodo

Henry Liebman makes a lot of people nervous. City officials, labor leaders, Port commissioners.

An immigration lawyer-turned-developer, Liebman has quietly assembled acre after acre in Seattle's Sodo neighborhood, becoming that area's largest private-property owner -- in a creative, some say cunning, way.

Using an obscure federal program that swaps green cards for job-creating investments, Liebman has tapped foreign investors for $150 million he has used to buy just more than 40 acres south of Safeco Field.

Liebman's vision for the area concerns those who say they want to protect blue-collar jobs and a grimy bit of Seattle's identity. Where there are now forklift operators, Liebman envisions software engineers; where there are low-rent warehouses, Liebman sees high-end retail.

Already, he has told a large freight-hauling company, MacMillan-Piper, that he intends to more than double its rent. That may drive MacMillan-Piper and its 200 employees out of Seattle, said company President Steve Stivala.

Industrial jobs are important, city leaders say, because they employ a quarter of Seattle's workers, pay above the city average and attract people with varying levels of education. They keep Seattle's fingernails a little dirty, while maintaining the city's history and strength as a trading port.

Liebman's plans could be "devastating" to the Port of Seattle, said Port Commissioner Alec Fisken.

"I don't think it's just a fear. I think Henry is clear about wanting to bring in non-industrial users," added City Councilmember Sally Clark.

The city is now trying to figure out how best to protect industrial jobs in a rapacious real-estate market. The Planning Commission this week recommended some first steps. Mayor Greg Nickels will follow with his own proposal. Then it's up to the City Council, which has the final say on how land is used.

Liebman says a break with the past is inevitable in Sodo because economic forces bigger than his business are causing "traditional metal-benders" to leave. "We don't view it as us driving anyone out ... We view it as replacing someone who is going to go anyway."

A good prospect

Sitting in his office overlooking a Burger King and weigh station, wearing khakis and sneakers, Liebman, 55, tells this story with a smile:

Two investors from Zimbabwe paid a visit to his office and asked, "Where's the welcome kit?"

" 'Hello' is your welcome kit," he told them.

Liebman is now second only to Paul Allen in amassing large swaths of property in a single Seattle neighborhood.

With a poster of Jimi Hendrix dominating his office, Liebman calls himself "an aged hippie."

He moved to Seattle in 1970 to study political science at the University of Washington and escape brutal summers in his native Florida. After selling Panamanian tapestries for a few years, Liebman earned a law degree from the University of Puget Sound and soon found himself specializing in immigration law.

Now he doesn't practice law at all.

In the early 1990s Liebman learned about a new federal program aimed at attracting foreign investments to American businesses. Pushed by Democrats such as Sen. Edward Kennedy and signed into law by President George H.W. Bush, the EB-5 program works like this: Foreigners can gain green cards by investing $1 million in a business that directly creates at least 10 jobs, or by investing $500,000 in a "regional center" -- an area targeted for economic growth -- and producing 10 jobs directly and through spin-off jobs.

Liebman applied to create a Seattle regional center in 1996 and his proposal was backed by then-Mayor Norm Rice's economic-development director Mary Jean Ryan, now a high-ranking Nickels aide.

Liebman's company, American Life, didn't really take off until 2003, when legal issues regarding the program were resolved in federal court. In all, American Life has attracted 303 foreign investors, making it one of the top EB-5 participants in the country. He is applying to create regional centers in Tacoma and Everett.

The typical investor in American Life is a self-made businessperson over 40, Liebman said. Most live in Florida and other retirement hot spots. They come from 26 countries, but mostly South Korea, England, India, Japan and the Netherlands.

Investors get 70 percent of the rent and capital gain from properties they invest in; American Life gets the rest.

Some of Liebman's investors have never set foot in Seattle. Michael Green is a retired British executive who now lives in Florida, where he spends his days golfing. Although Green has never seen his Sodo property, he said Liebman's business plan convinced him "Seattle was a good investment prospect."

Betting on the future

Liebman's strategy amounts to a big bet on Sodo's future.

He believes the area is destined to be more urbane, with its proximity to downtown, quick access to highways, and two light-rail stations coming in 2009 when Sound Transit opens its downtown-to-Sea-Tac line.

"When we were kids, you could hop on a freeway and be anywhere in 20 minutes. Now that 20 minutes is an hour, so people everywhere are trading places, the rich are moving into cities and the poor are moving further away," he said.

As the area changes, Liebman tells investors, they'll see a significant increase in the values of their properties.

Liebman wants to turn his larger properties into corporate campuses for technology firms that want to be near Microsoft and Amazon.com.

To pull off his vision of five-story office complexes, he needs the city to allow larger buildings in industrial zones. The area south of the stadiums is reserved mainly for industrial use; office buildings are allowed, but severely limited in size.

He would also like the city to redefine "industry" to include software development. Together, the two changes would let him carry out his plan.

Pushing values upward

Liebman has operated in recent years with little publicity or controversy. But in April he completed a deal that put a bull's-eye on his back.

He paid $13.5 million for five acres on Sixth Avenue South where MacMillan-Piper loads and unloads about 5,000 cargo containers a month for such companies as Starbucks and Weyerhaeuser.

MacMillan-Piper's rent is below-average for Sodo, Liebman said, and he plans to raise it 60 to 70 percent when the company's lease expires in 2010.

"Our business can't afford those kinds of rents," said Stivala, the company's president. "That would drive us elsewhere."

Stivala said he would like to stay in Seattle, where the company was founded 38 years ago, ideally in Sodo, near rail lines and the Port.

But that might be difficult because Liebman is pushing property values upward with his buying spree.

If MacMillan-Piper and other blue-collar companies move -- even if just to Tacoma or the Kent Valley -- Stivala says Seattle would lose some of its soul.

"You'd lose a portion of the city's backbone," he said. "You'd lose a work ethic and a roll-up-your-sleeve mentality and family-wage jobs."

Fisken, the Port commissioner, and Deputy Mayor Tim Ceis worry MacMillan-Piper's plight will be repeated over and over in Sodo, with Liebman raising rents and chasing industry out.

"He's creating a cycle and he knows it. It's an investment strategy on his part," Ceis said.

The Planning Commission, which advises the mayor and council, issued a report Wednesday urging them to leave industrial zoning in place.

Local labor leaders are also fretting. The King County Labor Council is holding a July 30 summit to discuss strategies for preserving industrial lands not just in Seattle, but in Pierce and Snohomish counties, where Liebman hopes to expand.

"Mr. Liebman's scheme is one of the more insidious moves to convert industrial properties in Seattle to commercial use," said Dave Freiboth, head of the labor council. "We're going to marshal our forces to push back."

An unapologetic view

Liebman takes a long, unapologetic view of his goals.

He tells investors that Sodo's zoning is not likely to change for at least five years -- but change is coming.

That's why he was able to buy so many vacant properties in the first place, he said. Manufacturing plants are closing and consolidating. Founders of small businesses are retiring and cashing out rather than handing over operations to their children.

Local government is already encroaching on MacMillan-Piper's turf, Liebman notes.

City officials have encouraged downtown condo towers and they're considering allowing taller office and residential buildings blocks from MacMillan-Piper's headquarters.

If they really want to protect Sodo industry, Liebman said, why did local officials put two sports stadiums and a light-rail line in the neighborhood? And why has the city permitted properties to switch from industrial use to something else?

If officials are so determined to preserve the area's industrial tradition, Liebman said, "why aren't they buying properties around here?"

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