This editorial will appear in Tuesday’s print edition.
The City of Tacoma and the LeMay Automobile Museum find themselves at an impasse that serves no one.
City officials say it would be imprudent for them to allow the museum to borrow against property donated by the city. Museum officials say that restriction comes as a surprise to them – and a threat to their project.
The crux of the controversy is contract language drafted in 2007.
LeMay CEO David Madeira says the agreement anticipated the museum’s desire to use the donated property as collateral. City Manager Eric Anderson, who signed the 2007 agreement, disagrees, saying that it would never be the city’s intention of giving away first position on land donated to a project.
The city has valid reasons for its opposition. It is chastened by the possible loss of a Market Street parking lot given to a private developer in 2004 in return for promised replacement parking and artist lofts. The project went bust, and now the city faces the prospect of having to buy back donated land.
The artist loft deal was done before Anderson became city manager, and he seems determined to not let the same thing happen to the LeMay property.
That reflex is a healthy one. City officials must protect the public interest. Tacoma has promised the LeMay museum $25 million in land and other considerations; safeguards ensuring that taxpayers don’t bear the brunt of the project’s risk are warranted.
But the city’s cautionary posture comes late in the game. Museum backers have built a financing plan based on the premise that they would be able to mortgage the property donated by the city.
That premise appears to be supported by the Second Amended Development Agreement the city signed in 2007. The News Tribune hired a Tacoma real estate attorney, Frank Crawford, to review that document. He said it is peppered with references that contemplate LeMay’s encumbering of the property.
“I am convinced that when this agreement was signed that both parties knew or should have known that LeMay would be able to obtain financing on the property,” Crawford said.
A HUD loan now holds first position on the property. LeMay officials acknowledge that loan has priority and agree that they won’t be able to leverage the land until it is repaid. But they want the ability to encumber the land later, in the second phase of the project.
A proposed amendment approved by the City Council last week appears to kill that plan, at least for now.
Museum officials also want the ability to pledge parking revenues for repayment of a loan needed to fund the project’s first phase. Anderson says nothing prohibits the museum from using the parking revenues in that way, but he has declined to explicitly give permission in the proposed agreement.
The Tacoma City Council and city manager can be forgiven their exasperation. Madeira is known as a hard charger, a trait that is sometimes more of a liability than an asset. In an e-mail to a LeMay board member, City Councilman Rick Talbert explained that Madeira’s “threats to take his museum and go somewhere else are playing real thin.” (Madeira claims his threat to advise the LeMay board to “quit our efforts with the city” was misconstrued.)
But winning this battle of wills isn’t worth the price. The Tacoma City Council needs to ask why the city shouldn’t offer additional assurances that the museum can borrow against the parking revenues. Then the council needs to get to the bottom of what the city promised in 2007 and whether it’s holding up its end of the deal.