County proposes building at former Puget Sound Hospital site

$67 million project would save the county more than $39 million in 25 years through consolidation, staff cuts

Staff writerJuly 21, 2013 

Pierce County Executive Pat McCarthy is moving forward with a proposal to build a $67 million county government building on the campus of the former Puget Sound Hospital in Tacoma.

McCarthy will speak to the County Council on Monday about the plan, which states the project would save county taxpayers $39.65 million over 25 years compared with the current costs of having a dispersed workforce.

The plan would consolidate workers now based at the Pierce County Annex and those spread out in leased buildings. The Annex needs $9 million in renovations for long-term use.

In addition, the county would eliminate 20 positions no longer needed because of the consolidation of 21 departments into one facility.

Offices for the executive and the County Council would move from the County-City Building to the new building.

“This makes sense from a financial point of view,” McCarthy said. “I think that’s the way the public wants government to look at their money.”

McCarthy wants to proceed with construction even though the county is facing a $4 million shortfall in its jail operations because of losses of contracts.

“The jail aside, the county is in a better place today than we ever have been,” McCarthy said.

Leaders have been fiscally conservative and made numerous budget cuts, she said.

About 980 employees would work in the new building. McCarthy said the current County-City Building would become a law and justice center. More workers in those departments would move into the County-City Building.

“We’re still going to have a huge footprint in downtown Tacoma,” McCarthy said, noting that the county’s presence would expand up the hill of Pacific Avenue 2 miles to the former hospital.

The proposal calls for a nonprofit corporation to contract with a developer to construct a three- to four-story building. The county would lease the building and own it at the end of 25 years. Lease payments would be fixed.

The project would be built using a public-private partnership called the 63-20 program. It’s named after the Internal Revenue Service rule that enables nonprofit corporations to issue tax-exempt bonds for constructing government buildings. The developer would be responsible for cost overruns and penalties for any delays.

King County has had buildings constructed using the approach. In Tacoma, the Center for Urban Waters was built with the same funding mechanism.

County facilities management director Bret Carlstad said the 63-20 program blends low financing rates associated with the public sector with the “ingenuity and get-it-done attitude of the private sector.”

A study team for McCarthy issued its report recommending the project after a year of work. It included representatives of departments that report to her directly, plus the auditor, assessor-treasurer and a staff member for the County Council.

In an interview Thursday, McCarthy said she has endorsed the recommendation.

“It’s the most cost-effective approach that we could possibly do,” McCarthy said. The study team “made it plausible and possible.”

Offices for the county auditor, assessor-treasurer and Planning and Land Services are located in the county-owned annex.

Law and justice operations — including the county’s Superior and District courts, Tacoma’s Municipal Court, and offices for the Prosecuting Attorney and Sheriff’s Department administration — would remain in the 54-year-old County-City Building, which the county owns.

The county also owns the former hospital, which sits on a 13-acre site with ample parking east of Interstate 5. Vacant since 2011, the old hospital would be torn down for the project.

The new building would be 225,000 square feet. The county would no longer lease space in eight buildings.

Some County Council members have already said the project will have to save money to win their approval.

The council must take three steps before construction could start. The first two could happen in September when the council will be asked to approve a nonprofit corporation to manage the project and an interfund loan of up to $1 million for design costs.

Final council approval would be required in the fourth quarter of 2014 for the lease-to-own agreement.

Construction could then start in the first quarter of 2015. The proposal calls for the building to be completed in the first quarter of 2016.

Steve Maynard: 253-597-8647 steve.maynard@ @TNTstevemaynard

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