County, Hawkins revising deal

A new deal could be in the works between Whitman County and Hawkins Companies on how much infrastructure the county will pay to build at the company’s proposed 714,000-square-foot shopping center west of the state line.

Commissioners Greg Partch and Michael Largent held an impromptu question-and-answer session on the possibility of a new deal with several citizens Tuesday morning in lieu of an announced meeting of commissioners.

Commissioners announced during their regular meeting Monday a series of upcoming workshop sessions and public hearings on a new proposal from Hawkins. They expected to receive the new deal in an executive session Monday and begin discussions on the proposal with an open workshop Tuesday.

Hawkins is scheduled to present its new proposal to the public in an evening meeting April 16. Commissioners scheduled time the next day to hear from the public on the new proposal.

Commissioner Partch told the Gazette Monday night they decided to scrap the session when they did not receive a new contract proposal from Hawkins, which they had expected.

“As it turned out, they weren’t prepared,” Partch told a group of citizens Tuesday.

Commissioners on a split vote Jan. 3 increased the county’s obligation to build public infrastructure at the stateline shopping center from $9.1 million to $15 million.

Milton Rowland, the Spokane attorney hired to represent the county against an injunction suit to nullify the deal filed by the Organization to Void Illegal Conduct, discussed the suit with commissioners in Monday’s closed session.

Partch said Hawkins wants to re-work the deal to address concerns in OVIC’s lawsuit.

“We do not intend for the project to go ahead unless Hawkins does the whole thing,” OVIC board member Dick Appel told Partch Tuesday.

“We’re happy to have Hawkins build. We just want them to do it on their own,” agreed Joe Henderson.

Several citizens, many members of OVIC, showed up for the announced workshop Tuesday morning, only to find out it had been canceled.

Cancellation of Tuesday’s meeting was news to Commissioner Michael Largent, who said Partch and Commissioner Pat O’Neill decided to cancel Tuesday’s workshop after he left Monday’s executive session.

“I’m going to sit here, and I’m going to talk to whoever shows up,” Largent said Tuesday morning.

Largent and Gary Petrovich, the county’s administrative director, spoke with attendees for about an hour.

Largent said the county now has an opportunity to redo the deal which he voted against. He stressed this would be an opportunity for the county to take control of negotiations.

“I don’t know why we’re letting Hawkins always drive the bus,” said Largent.

“Well, Mike, Hawkins owns the bus,” said Joan Willson, one of the citizens who showed up for Tuesday’s meeting.

As the deal stands now, the county will be obligated to fund $15 million worth of infrastructure when Hawkins signs two big box tenants and begins construction.

“I don’t think the county is in the same risk arena as a venture capitalist. Nor should it be,” said Petrovich.

Commissioners expect to pay back the $15 million from a portion of sales taxes generated from the shopping center.

Such a plan, called tax increment financing, is fairly common around the state, said Largent.

However, said Petrovich, those financing plans usually include a letter of credit from the developer’s bank to guarantee the county’s bond payments if the development goes bust.

He said he and Jack McLaughlin, the county’s long-time bond agent from the DA Davidson firm in Spokane, twice asked Hawkins for a letter of credit guarantee.

Petrovich said Hawkins refused that request with no explanation.

Partch later said Hawkins would not get a letter of credit because it would tie up funding the company needs for other developments.

“They want every project to stand on its own,” he said.

McLaughlin in December said his firm would not market bonds for the county on this project.

County officials spent much of January and February lobbying state officials for an alternate source of funding. Those efforts have thus far come up empty.

“Where is that money going to come from?” asked Largent. “We’re not going to be able to do this unless we get some financing.”

Largent explained he felt the deal signed in January put taxpayers and the county’s general fund at risk. With Hawkins open to negotiating a new deal, he said, commissioners could craft a new contract that would better “protect the county’s backside.”

He and Petrovich said they want to bring in a bond attorney to help write a deal that would protect the county’s finances and make the project easier to sell to bond buyers who could lend the county the up-front financing. The county could then present that offer to Hawkins.

Petrovich, though, noted Hawkins would not be compelled to accept the county’s offer.

“Their best interests aren’t served by opening up this contract if they don’t have to,” he said.

Hawkins submitted the amendment to the county in December. Commissioners’ Jan. 3 approval of the amendment was made without having the company’s proposal reviewed by an attorney, noted Largent.

Petrovich said he was charged with negotiating with Hawkins on the amendment, but was one day later told by two commissioners not to change the language.

The citizens then waited in commissioners’ meeting chambers until Partch showed up and met with them for the next hour-and-a-half.

Partch told them a new contract proposal should come from Hawkins, not the county.

“We’ve signed a contract with them. And they’re coming back to us,” said Partch. “I’m not willing to go back and start over. I think we’ve worked too hard on this.”

Partch said Hawkins would lose its two big box tenants if commissioners delayed negotiations by throwing out a new contract offer.

Hawkins needs the county to pay for infrastructure, he added, to keep its rental rates on a competitive scale.

“They have to lower their price per square foot to compete with Moscow,” he explained.

Tammy Lewis, public affairs specialist for Schweitzer Engineering Laboratories in Pullman, said the development will be bad for local business. Lewis was formerly head of the county’s economic development efforts.

“In reality, we’re pushing people to Moscow,” she said.

Karen Johnson, one of four OVIC board members, said she was concerned that Hawkins could begin building and the county would be obligated to pay for infrastructure even though it does not have the money.

“We’ve got 18 months to get the funding,” said Partch.

Partch noted the tax revenue from a fully-built shopping center would easily repay the county’s costs.

“This thing pencils fine. It’s just the up front money that’s the problem,” he said. “If the two box stores sign on, this thing works.”

“But you still don’t have the funding,” replied Lewis.

Partch said the county could pledge county assets to acquire a line of credit from a bank to cover initial payments.

“You’re going to mortgage the county,” said Joan Willson.

Bob Schultz echoed Johnson’s concerns that Hawkins could put the county on the funding clock.

“What’s to stop them from moving dirt right now in the mud?” he asked.

Partch said Hawkins has been an “honorable” partner with the county through the more than five years the partnership has been in the works.

Citizens Tuesday asked Partch if citizen input at the upcoming public sessions would be able to change either his or O’Neill’s mind on the project.

“That’s all a possibility,” said Partch. “Certainly we want to hear as much as we can from the public.”