City offers package to Russell Investments

The city of Tacoma is pulling out all the stops to keep Russell Investments from leaving town. The city has offered 330 parking spots for virtually no cost as part of a package of around $47.5 million in public support to the financial services company. Russell had issued a deadline of the end of May for Tacoma, Seattle and other interested cities to make their offers.

Including infrastructure improvements and state and federal funds, the total package to keep the company in Tacoma could be worth as much as $93 million.

“Our goal is to keep Russell,” City Manager Eric Anderson told Tacoma City Council members last week. “In order to keep Russell, we are reducing their costs.”     

Tacoma’s offer is split between short-term and long-term options. Short-term options would run through 2018, while the latter would run through 2028.

The city is offering up to 330 parking spaces split between 253 in A Street Garage and 77 in Park Plaza North for $1. This is not considered a gift, which would be prohibited under state law, Anderson explained, because the city is getting something in return – keeping jobs in town.

The value of the spaces is $450,000 per year. Ilahie Holdings, which owns Russell’s headquarters building, would agree to reimburse the city $225,000 per year.

Seattle is the frontrunner to become Russell’s new home. Private landlords and Downtown Seattle Association are eager to court Russell. Several skyscrapers in Seattle have a substantial amount of vacant space due to the recession and the collapse of banking giant Washington Mutual.

The city of Tacoma has established an international finances services area in the vicinity of Pacific Avenue and South 15th Street where a future Russell headquarters could be built. A parking lot owned by real estate investor Erivan Haub is considered a potential location. A variety of tax incentives are available to Russell or other financial services firms that would locate within this zone.

Right-of-way, streetscape and public art improvements are valued at $6 million. Storm drainage work adds another $3 million. Improvements to parks and open space includes renovation and enhanced security at Fireman’s Park, located near Russell’s current headquarters, and upgrades to Harold Tollefson Plaza, adjacent to the convention center.

A light rail stop is proposed at the corner of South 11th and Commerce streets at a cost of $1 million. The city would like a minimum of 300 Russell employees to get to work by means other than driving alone, so a new rail stop could help in meeting this goal.

Russell would need to employ a minimum of 700 people downtown and certify this each quarter. If this quota is not met, the company would pay the city the full-market value of one parking space for each employee under the 700 mark.

A substantial break in the company’s business and occupation tax would account for $14.1 million in the short-term option and $42.3 million in the long-term option.

Ryan Petty, director of the city’s Community and Economic Development Department, said Russell has made it clear it will make a decision by Sept. 30.

The company is evaluating several proposals. This could include using its current building with other buildings in Tacoma, or leaving for another city. “They still reserve all their options,” Petty said. “They are reviewing every option we have given them.”

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