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Wednesday, January 21, 2004 - Page updated at 12:33 A.M.

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What the state promised Boeing

By David Bowermaster and Ralph Thomas
Seattle Times reporters

Martha Choe, who led the state's negotiations, defends the agreement.
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A few days before Christmas, Washington Gov. Gary Locke and Boeing Senior Vice President Mike Bair held a photo-op to sign the "memorandum of agreement" solidifying Boeing's promise to build the 7E7 in the state.

The event was ceremonial, but the signatures bound the state, as well as Everett and Snohomish County, to a long list of financial and strategic perks to Boeing that go well beyond the $3.2 billion in tax incentives approved by the Legislature last June.

The specifics are contained in a copy of the agreement obtained by the Evergreen Freedom Foundation under a public-disclosure request.

The agreement's highlights:

• The state will spend a minimum of $10 million to design and build an Employment Resource Center dedicated exclusively to 7E7 work-force development.

• The state will hire a "work-force-development coordinator," in consultation with Boeing, who will develop a recruitment, screening and training program to help Boeing and its suppliers hire workers.

• The Department of Transportation and the city of Everett must make road improvements to support employment levels of 35,000 at the factory and up to 83,000 in the surrounding area through 2030, including extending the HOV lanes on Interstate 5 in Everett and widening Highway 527 to five lanes for 20 blocks.

• The Port of Everett must spend $34 million to build a 27-acre facility at its south terminal capable of handling cargo transported by ship directly from Japan; such cargo now offloads in Seattle or Tacoma and then makes its way to Everett by barge.

• The county of Snohomish must improve the runways and facilities at Paine Field to support modified 747s that will transport 7E7 parts, plus build a road at least 30 feet wide between the cargo pad, Boeing's factory and its suppliers' facilities.

• The state will designate a "747 large cargo freighter coordinator" to help Boeing acquire and modify a small fleet of 747s to deliver 7E7 parts.

Many details of what the state offered Boeing to win the 7E7 have been kept secret. Some are emerging as the state Legislature is being asked to approve a second package of concessions, which adds to the $3.2 billion tax credit Boeing won last June. Many of the details of the agreement have not been publicly discussed.

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Martha Choe, who led the state's negotiations with Boeing as executive director of the department of Community, Trade and Economic Development, yesterday defended the agreement, which she said includes the sort of things the state typically offers when competing for a large project.

Choe said the department will hire only two additional employees to help with the project; the rest are current employees who will work on the 7E7 project in addition to carrying out other duties.

She said Boeing will help to choose those employees, but does not have the final say. "The whole spirit of this agreement is to work together with Boeing in a partnership," she said.

Bob Williams, president of the Evergreen Freedom Foundation, said, "To me the biggest shock is despite a $3.2 billion tax credit ... that wasn't enough to land the 7E7." He said EFF requested a copy of the agreement in December but didn't get the last of the documents until last week.

Evergreen, based in Olympia, is a nonprofit public-policy-research organization.

Williams said the fact that the Locke administration felt it needed to help clear so many regulatory paths for Boeing is proof of the state's poor business climate. While he questioned whether some aspects of the agreement were legal, he said much of it is the sort of thing the state should be doing for others.

"Yeah, it's good for Boeing, but what about the rest of business?" said Williams. "Other businesses would die to get a deal like this."

House Appropriations Chairwoman Helen Sommers said she talked to Williams yesterday but hadn't had a chance to take a close look at the agreement.

"I think there'll be a lot of heavy concern about this," said Sommers. "It's not a very comfortable situation when you learn about this sort of thing in the newspaper."

Sommers already has been raising concerns about the Boeing agreement, particularly the part requiring the state to help Boeing come up with a plan for using large cargo planes to transport 7E7 parts from abroad. That part of the project is expected to cost the state nearly $5 million.

Sommers said that might violate a provision in the state Constitution that bars the state from giving a "gift of public funds" to a company if there is not public benefit.

"That's one of the first questions I asked," said Sommers, D-Seattle.

In a memo last week, Assistant Attorney General David Walsh concluded that "there are clear benefits to the state" and said he did not think the agreement violates state law.

Other legislators were reserving judgment until they see more specifics.

"I don't know the details. I didn't negotiate the contract. I can't say was it worth what they did here. But clearly Boeing is a big deal," said Senate Majority Leader Bill Finkbeiner, R-Kirkland. "I voted for the tax break and I think it was the right thing to do."

Rep. Barry Sehlin, R-Oak Harbor, agreed. He said the Legislature set some parameters when it approved the Boeing tax breaks last year, but left it to the Governor's Office to negotiate the details. "That's who should do it," he said. "Now that it's done, I know a number of us are anxious to see what are the details."

Seattle Times reporter Andrew Garber contributed to this report.

David Bowermaster: 206-464-2724 or dbowermaster@seattletimes.com

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com

Copyright © 2004 The Seattle Times Company

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