Some say PDAs may have spun out of control

May 31, 2002 

Public development authorities are becoming a common vehicle for local governments to accomplish grand projects. But some state leaders are concerned they may have gotten out of control.

State Auditor Brian Sonntag said Friday he is worried that some public corporations were created to allow local governments to avoid bureaucratic restrictions.

And state Rep. Clyde Ballard is calling for legislative hearings in the wake of problems at the Grays Harbor Public Development Authority uncovered by a six-month investigation by The News Tribune.

The investigation found that the development agency may have violated state laws as it rushed to accommodate a fast-growing Internet start-up called SafeHarbor. A more limited audit by Sonntag's office has reached the same conclusions.

Development authorities are responsible for some of the region's biggest and boldest projects. The Foss Waterway Development Authority is transforming the once-polluted industrial waterway into a vibrant business and cultural center. Similar agencies control Pike Place Market, the Seattle Art Museum and Bellevue's Meydenbauer Center. Seattle's new football stadium and Safeco Field were built under the direction of public corporations.

But their work has been overshadowed by allegations of mismanagement at the Grays Harbor PDA, which is attempting to turn a never-completed nuclear plant in Satsop into a high-tech business park.

Like government, but different

Public development authorities were created in 1985, allowing local governments to accomplish large projects beyond the scope and experience of most cities and counties.

They buy and sell property like a private company but are subject to the rules of government, including public meetings, bidding rules and conflict-of-interest restrictions. They cannot collect taxes but can apply for state and federal grants to fund their activities. They also usually do not receive funding from the local governments. Many of the development authorities are self-supporting, collecting rent on property they own.

Two dozen public development authorities are registered with the state auditor's office. And that's not all of them. Wenatchee recently created an agency to handle its Mission Ridge ski area. Centralia and Raymond explored the option in recent months. Others have yet to contact the auditor.

Some state leaders want to clarify the rules governing development authorities before more pop up.

Sonntag said people with some of the PDAs may think they have authority greater than or different from their parent governments. And that's not true. "You don't want PDAs to be created just so local government can get out from under restrictions," Sonntag said Friday.

He assigned a staff member to become an expert in PDAs in an attempt to better understand how they work. Sonntag said he hopes he can get to the agencies when they are created to educate them on the rules.

That may have been part of the problem at the Grays Harbor PDA, where The News Tribune's investigation uncovered a pattern of mismanagement. A final state audit of the agency due out later this month concurred with some of the findings, including the PDA's attempt to avoid state law requiring public bidding and violation of the state constitution's prohibition against lending public money to support a private company.

Grays Harbor PDA officials dispute the finding that they violated the constitution. Tami Garrow, the agency's executive director, told The News Tribune last month that the PDA's charter established the agency as a public corporation. As a result, she said, it did not have to abide by the constitution, as other arms of government must do.

Rep. Ballard said he hopes the Legislature will hold hearings to address what he sees as a huge problem.

"Unless we act, and act decisively, the Grays Harbor PDA will be the last PDA in this state for a very, very long time. We cannot afford to remove this option when the rural areas of our state are in an economic crisis," Ballard wrote in his letter to House Speaker Frank Chopp (D-Seattle). Chopp has yet to respond to Ballard's request.

A valuable tool

Most PDAs around the state are successful.

Seattle has eight development authorities that do everything from manage Pike Place Market to maintain the monorail system. The city has relied on them to take over projects beyond the expertise of the city, said Joann Cowan, public development authority coordinator for Seattle.

The Historic Seattle Preservation and Development Authority buys and renovates buildings and leases or sells them as part of the city's mission to preserve historic properties.

The agencies are useful tools for cities, allowing them to accomplish big projects, said Seattle lawyer Gerry Johnson, who works with public development authorities in Washington and is considered by many the foremost expert on the subject.

Johnson, who has not worked with the Grays Harbor PDA, acknowledges the rules are complicated but said good advice from lawyers and local governments usually stems problems.

"It's too bad one of them that maybe is not as well schooled makes others look bad," Johnson said. PDAs have had problems in the past. In the mid-1990s, a Seattle development authority was shut down after the state auditor found criminal activity on bid awards and infighting led to members bringing guns to meetings. A recent audit of the Pacific Medical Center PDA in Seattle raised questions about whether the agency could remain open. The PDA continues to operate at a loss and has not had consistent leadership.

Public development authority leaders say they hope the problems in Grays Harbor County don't threaten what they consider a valuable tool.

Don Meyer, executive director of the Foss Waterway development authority, said his organization is poised to accomplish what some considered unthinkable a decade ago. And much of that success comes from the expertise of the members on his board of directors. They include experienced business and financial leaders from the Frank Russell Co., Weyerhaeuser and Columbia Bank.

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* Staff writer Marcelene Edwards covers business. Reach her at 253-597-8638 or marcelene.edwards@mail.tribnet.com.

© The News Tribune

04/07/2002

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