MOHAI Deal Could Cost City $6 Million

By Erica C. Barnett October 12, 2012


Image via WSDOT.

Thanks to a new, drastically reduced estimate by the state Department of Transportation (WSDOT) of the value of land it plans to sell to build the western approach to the new SR-520 bridge, the city of Seattle could be out as much as $6.1 million, the city’s budget director said in a letter this week.

“The original intent of Council’s agreement with MOHAI was to preserve City services,” city budget director Beth Goldberg wrote. “It would be a shame to have to sacrifice those same services by significantly lowering the sale prices of the land with WSDOT,”

A bit of history: In 2010, the Museum of History and Industry, which occupies city-owned land, agreed to sell its land and building to make way for the new 520 bridge, which needs extra land for its bridge approach in Seattle.  WSDOT ultimately agreed to pay a little more than $40 million for the building---$20 million more than MOHAI and the city originally expected---and agreed to buy the land later at a price of about $18 million.

At the time, the city was facing a $60 million budget deficit, and the council went to MOHAI and asked the museum to share its windfall. Ultimately, MOHAI agreed to loan the city $8.5 million, with the agreement that when the museum sold the land to WSDOT, MOHAI would get either $7 million or 40 percent of the proceeds, whichever was less; the city would get the balance, and would use that money to repay MOHAI’s loan.

Based on WSDOT’s original $18 million appraisal, the math worked out: If WSDOT bought the land for even $15 million, the city would make at least the $8.5 million it needed to pay back the MOHAI loan.

Now, however, WSDOT has changed its tune, telling city council members Sally Bagshaw and Richard Conlin in meetings this week that the agency now believes the land is only worth about $4 million. Using the payment structure the city and MOHAI agreed to in 2010, that means the city would only receive about $2.4 million from the sale—a $6.1 million shortfall that would have to be made up from other city funds.

“This is deeply troubling to us,” Goldberg’s letter continues, “particularly when you consider the serious budget ramifications of such a change.”

WSDOT remains $2 billion short on funding for the 520 bridge, and state house speaker Frank Chopp, along with state Rep. Jamie Pedersen (both D-43) have expressed concern about the state’s ability to fund the Seattle portion of the bridge, from Foster Island to I-5. An extra $14 million---the difference between WSDOT’s initial appraisal and its current estimate---could help make up that shortfall.

WSDOT was not available for comment today. Goldberg, however, was. She told PubliCola, “[WSDOT] needs to explain that discrepancy. It’s a pretty big difference [and it] leaves the city vulnerable in terms of needing to find another funding source to pay back the loan.

“We’re just not seeing a justification for how you could go from $18 million to $4 million.”

We have calls out to Bagshaw, Conlin, and council budget chair Tim Burgess. 

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