[Vision2020] Schweitzer 'shocked' by agreement with Hawkins

[Tom Hansen]

Courtesy of today's (January 18, 2012) Moscow-Pullman Daily News

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Schweitzer 'shocked' by agreement with Hawkins

By Kelli Hadley Daily News staff writer

Edmund Schweitzer III thinks Whitman County commissioners didn't do their homework before agreeing to the Hawkins Companies' contract for a 700,000-square-foot shopping center on the state line.

In fact, he sent them a letter Monday explaining how and why they should have done their "due diligence."

"This particularly struck me, I don't normally write a lot of letters like that," Schweitzer said during a telephone interview Tuesday.

Schweitzer, president and CEO of Pullman-based Schweitzer Engineering Laboratories, said his concerns stem from the amount of money committed, the speed in which the decision was made, the lack of transparency to the public and the lack of legal and fiscal safeguards in the agreement. In the letter, Schweitzer expresses his "shock" that commissioners committed $15 million to reimburse Hawkins for public infrastructure at the site, especially when funding is typically "the role of private investors, not an issue of state."

"The commissioners who favor this have made the argument that the reason it should happen is for the financial benefit to the county," Schweitzer said. "If indeed they are approaching it for a hope of fiscal benefit, they'd better work out the details first, dealing with the financial analysis that any business should do."

Schweitzer also said in the letter that agreeing to reimburse for the infrastructure may set a dangerous precedent, allowing others to approach the county for money. In a conversation Schweitzer said he had with Commissioner Greg Partch, he asked what would happen if he approached the commissioner asking for $15 million.

"He said he'd do it in a heartbeat," Schweitzer said. "My reaction was, 'Wow.'... It's almost like this money comes out of thin air."

Schweitzer's letter brings up legal flaws in the agreement, stating that the public should have been made aware of Prosecutor Denis Tracy's concerns.

"It is just not clear to the public where it (money) would actually go and whether it is in the public interest," Schweizter said. "Some of these things are a matter of degree, they're not all black and white."

In a seven-page memo sent from Tracy to all elected county officials and judges on Dec. 28, 2011, Tracy wrote that signing the agreement would result in the county paying at least $22.8 million in principle and interest payments over the next 20 years. He points out that while sales tax may eventually generate some revenue, last year the Shopko and Walmart in Pullman together only generated a 1 percent sales tax revenue of about $500,000. Additionally, Tracy wrote, the property on the Moscow-Pullman corridor could be annexed into the city of Pullman at any time, meaning there would be no property tax revenue and sales tax would be reduced by 85 percent - the county would still be left with the debt.

Tracy also states that the agreement has the county paying for infrastructure it would not own, particularly grading of the development site, which he said the county cannot legally pay for.
In the conclusion of his memo, Tracy wrote that accepting the agreement could put every county department budget at risk.

"I'm not willing to risk the ability of the prosecutor's office to function, in order to have the chance at that shopping center. The current proposal would risk my office, and I believe your offices," Tracy wrote.

Whitman County Treasurer Bob Lothspeich said that concern is a long way down the road. One ease to his concerns is that before the county pays any money, Hawkins has to sign two tenants and their bank has to OK financing for the project. According to the contract, the deal with Hawkins is off if the company does not begin development by 2014.

"It has an impact on us, but also on them," Lothspeich said. "They'll end up spending way more than the $15 million the commissioners committed."

Sheriff Brett Myers said he too has concerns about the agreement affecting his department, but they will not allow public safety to be sacrificed.

"I think there's a good chance it'll work, and we'll be able to make bond payments. But if it doesn't, where will the money come from?" Myers said. "I think that certainly should have been explored more."

Among ideas in his letter, Schweitzer suggests the commissioners perform cash flow analyses with contingencies, liberalize zoning in Whitman County, encourage privatization of Port of Whitman County assets to generate more property tax revenue, and refrain from seeking any revenue for the project until they've done an adequate amount of "homework" on the issue.
"I run from office, not for office, so I have a lot of respect for people who run for office," 
Schweitzer said. "But there's no way that if I were in a public office, that I'd commit moneys when I have no idea where I'm going to get them."

Schweitzer also encouraged the commissioners to step back, realize they hurried the process and have public discussions on the issue. He suggests that commissioners invite Hawkins to a "frank discussion," admitting that funding is not in place and that legal review is necessary.

"It may be wise to start over at this point, pursuing options that do not commit money we do not have," he wrote.

Partch said Tuesday that Schweitzer's letter "makes some very good points" and that he agrees with suggestions to share more information with the public.

"Many of the things he talks about are not controlled by the county, like regulations set by the state and rezoning, but I take it very serious, and I'm going to make a response to him," Partch said. "We've done our due diligence."

Partch said commissioners plan to hold some sort of public meeting in the near future to explain the details and the urgency in which the decision was made.

"We need to do a response, and it needs to come fairly soon," Partch said. "I think it'd be best when we get back from Olympia, we'll have some better indications then."

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Seeya later, Moscow.

Tom Hansen
Post Falls, Idaho

"If not us, who?
If not now, when?"

- Unknown
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