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Thursday, March 25, 2004 - Page updated at 12:00 AM

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Nickels will return $500 contribution from Vulcan

Seattle Times staff reporter

Responding to an ethics complaint filed yesterday, Seattle Mayor Greg Nickels will return contributions that Paul Allen's development company, Vulcan, made to the mayor's office fund.

The complaint by affordable-housing activist John Fox asserts that Vulcan illegally contributed a total of $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.

An office fund is used by elected officials mainly to entertain and buy gifts for visiting dignitaries without having to dig into their own pockets.

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.

In his complaint to the Seattle Ethics and Elections Commission, Fox contends 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 that was struck in June 2001, when Vulcan's real-estate arm, City Investors, 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 those commitments constitute a contract.

Bichsel noted that, while the contributions came from Vulcan, the contract is with City Investors. 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 blamed Fox's "misguided antics" as a reason why Seattle has struggled to become a "vibrant world-class city."

Limits on contributions

Though Nickels wasn't in office at the time the deal was made, contributions to office funds still are prohibited from parties that have contracts or transactions with the city.

Nickels has used his office fund to buy refreshments for his inaugural ball, lunch for visiting officials and Seattle tokens for foreign dignitaries. While in office, Nickels has raised more than $53,000 for the fund, which now has a balance of $5,627.

Elected officials create office funds because they cannot use campaign contributions for such purposes and the city will not reimburse them for such gifts.

The ban 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 city business.

Fox is not alleging that Vulcan and Nickels acted in such a manner. But his complaint says 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."

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

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

Complaint criticized

Bichsel said the complaint was "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 confirming that they don't have a contract or other transaction with the city. Bichsel provided documents showing that Vulcan government-affairs manager Dan McGrady had signed such affidavits when the company contributed to Nickels' office fund. 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 and building a streetcar line as well as new streets and an electricity substation. Nickels has publicly backed these improvements.

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

City documents obtained

Fox pointed to an array of city documents, obtained through a public-records request, that seemed to outline actual and potential business arrangements between Vulcan and the city. For example:

• Vulcan contributed $20,000 to a City Light study of an "energy district" in South Lake Union. The company also agreed to lend City Light $20,000 for a more detailed analysis of an energy district.

• Allen owns a 1.8-acre lot near Denny Way and Westlake Avenue North, known as Denny Playfield, that he has leased to the Seattle Parks Department for free since 1995. City Investors has paid the taxes on the land — about $90,000 last year — in return for the city maintaining it.

• City Light has considered collaborating with Vulcan on acquisition and development of a site for a new $120 million electricity substation in South Lake Union. Several city documents refer to a possible deal. These documents also reveal that Vulcan and the city have primarily focused on buying one of three sites for the substation. The Seattle Times owns two of the sites and recently announced that it wants to sell nearly five acres of the 16 it owns in the area.

Coincidentally, at its meeting today, ethics commissioners are scheduled to discuss a proposal by Seattle attorney Hugh Spitzer to drop the ban on office-fund contributions by contractors.

Seattle Times staff reporter J. Martin McOmber contributed to this report. Bob Young: 206-464-2174 or byoung@seattletimes.com

Copyright © 2004 The Seattle Times Company

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