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Originally published Saturday, March 27, 2010 at 4:17 PM

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Powerful Segale family has massive vision for Tukwila expanse

Powerful Segale family has a vision for Tukwila expanse that includes offices, condos, shops — and nearly as many workers as the Microsoft campus.

Seattle Times business reporter

Tukwila South

Proposed uses: 5 million to 10 million square feet of office/research buildings; 1 million to 2 million square feet of retail, restaurants, hotels; 700 to 1,900 housing units.

Estimated future employment: 25,000

Years to full buildout:

25 to 30

Source: Tukwila South Project Master Plan,

May 2009

Segale family's holdings

THROUGH SEVERAL CORPORATIONS AND PARTNERSHIPS, the Segale family owns thousands of acres and several businesses in Washington. Here's a partial list:

Segale Business Park, Tukwila:

13-building, 1.9-million-square-foot warehouse/office complex. Part of Tukwila South redevelopment site.

Pacific Gateway Business Park, Kent:

Two of the largest warehouses in

the Kent Valley, plus 80 acres of undeveloped industrial land.

Segale Retail Center, Tukwila:

125,000-square-foot center kitty-corner from Southcenter. Tenants include Barnes & Noble

and Office Depot.

Gravel pits:

In Auburn, Olympia, and Castle Rock, Cowlitz County.

Undeveloped commercial land, Kelso:

100 acres at the I-5/Highway 432 interchange. Segales applied last month to build 725,000-square- foot retail center called Kelso Village.

Undeveloped industrial land, Auburn:

At least 90 acres, some of it

wetland.

Undeveloped residential land:

39 acres in North Bend, 14 acres in Renton and numerous tracts and lots in Auburn and Tukwila.

Forest land:

More than 500 acres near Black Diamond, purchased from Plum Creek Timberlands in 2003.

Eastern Washington lands:

More than 2,000 acres in the Othello, Adams County, area, including a rock quarry and Frenchman Hills Vineyard, which sells grapes to wineries.

Southcenter Golf, Tukwila:

Driving range. Part of Tukwila South redevelopment site.

Seattle Tractor Parts & Equipment, Tukwila:

Buys and sells construction- equipment parts. Part of Tukwila South redevelopment site.

Sources: County property records, Segale Properties Web site, Officespace.com, Washington Department of Natural Resources,

The (Longview) Daily News.

Research by Seattle Times business reporter Eric Pryne

Many levels beyond 'Super Mario'

Timeline of Mario Segale's rise

1952: Starts construction company M.A. Segale.

1974: Completes first building at Segale Business Park, warehouse/office complex in Tukwila.

1980: Nintendo leases space at Segale Business Park. It names its "Super Mario" video-game character after Segale.

Early 1980s: M.A. Segale dredges Cowlitz River after Mount St. Helens eruption.

1993: Washington State Racing Commission selects Auburn property owned by Segale over two competitors as site for region's new racetrack, later dubbed Emerald Downs. Segale leases property to track for 60 years.

1998: Assets of M.A. Segale — construction, gravel, asphalt — sold to Oldcastle Materials for $60 million.

2002: Segales sell land under Emerald Downs to Muckleshoot Tribe for $73.6 million.

2003: Segale property in Tukwila proposed as site for regional sex-offender halfway house. Segale hires former state Supreme Court Justice Phil Talmadge (pictured) to fight the plan, which is later dropped.

2003: Segale buys 120 acres of Kent industrial property from Boeing for $32.2 million.

2004: Seattle Times analysis reveals Mario Segale among state's top 50 political donors.

2004: Segale proposes Tukwila South, 500-acre mixed-use development.

2009: Segale and Tukwila sign development agreement for Tukwila South.

Research by Seattle Times business reporter

Eric Pryne

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Sometime this spring construction crews should start moving earth for an enormous development in South King County that you've almost certainly never heard of.

It's called Tukwila South. It covers 500 acres in that city's south end between the Green River and Interstate 5 — an area bigger than downtown Bellevue.

Tukwila officials and the Segales, the powerful, secretive, politically well-connected family behind the project, envision a campus of midrise office and research buildings. They would be surrounded by stores, restaurants, town houses, condos, a hotel — 10 million square feet of development in all.

That's about as much as Paul Allen has built in South Lake Union plus what he still plans to build there.

Patriarch Mario Segale, 75, has been buying and developing real estate in South King County and elsewhere for decades. Tukwila South is by far his biggest reach.

As an employment center, backers say, it could be in a league with Microsoft's Redmond campus, the University of Washington or Boeing's Everett plant.

Regional business leaders say Tukwila South's size and location, just minutes from the airport, could help the Seattle area compete for companies that otherwise might locate elsewhere.

"I don't know of any piece of property that big, that centrally located, that's under one ownership in a major metropolitan area anywhere in the country," says Tom Flavin of Enterprise Seattle, King County's economic-development council.

Segale began assembling the land for the project more than 50 years ago. The master plan acknowledges it could be 25 or 30 years before the site is fully built out.

But business associates say Segale has always focused more on the next generation than the next business cycle. "He's very patient," says one longtime observer of the commercial real-estate scene. "He's not out to make the quick buck."

"Obviously, a project this size is going to be around long after he's gone."

Politically powerful

The Segales first proposed Tukwila South in 2004. The project never has encountered any serious public opposition, but there are wetlands on the property, and endangered salmon in the Green River. Part of the site is in the river's federally designated floodplain.

And Tukwila city officials, while excited about the prospect of millions more in tax revenue, worried that in the early years the money might not be enough to cover the cost of providing services to the project.

Sorting through those issues has taken six years.

In all that time the project has attracted little attention. That's partly because the Segales shun publicity as if it were a virus.

"They like to stay under the radar," one former business associate says.

Mario Segale and his son, Mark, haven't spoken with the press since the 1990s, and this story was no exception. Most people who have worked with them spoke only on condition their names not be published.

The Segales have mostly succeeded in avoiding the spotlight. And that has masked the magnitude of their impact on Washington business and politics.

They are major property owners. In addition to Tukwila South's 500 acres, they own thousands of acres elsewhere — warehouses, a shopping center, gravel pits, a vineyard, timber land.

They also are major political donors: Mario and Mark Segale were among the state Democratic Party's largest contributors in 2008. Since 2003, Segale family members and companies have contributed more than $350,000 to candidates and committees, and spent $400,000 more on lobbyists.

They have called in some heavy hitters to help guide Tukwila South past regulatory obstacles. Lawyers who have represented the family on the project include former state Supreme Court Justice Phil Talmadge and Jenny Durkan, now U.S. Attorney for Western Washington.

Gov. Chris Gregoire, Sen. Patty Murray and Sen. Maria Cantwell are among the elected officials who have urged agencies to approve needed permits.

Murray's former chief of staff began lobbying for the Segales last year. Their previous lobbyist — Durkan's brother Jamie — helped Tukwila win state and federal earmarks and grants that will pay more than two-thirds of the $26 million cost of a new, five-lane road to serve Tukwila South.

Work on that road will start in early May, says Lisa Verner, the Tukwila city planner who has worked full-time on the development since 2004. The Segales intend to start clearing, grading and filling the site this year, Verner says.

Tukwila South has no announced tenants. Even so, according to the master plan, the Segales will spend more than $50 million over three years preparing the entire property for development, building infrastructure and completing environmental projects.

"The Segales take the long view," Verner says. "That's very different from most other developers I've worked with."

Inspired "Super Mario"

Google "Mario Segale" and you'll get more than 6,000 hits — the vast majority related to his claim to pop-culture fame.

Nintendo named its video-game character "Super Mario" after Segale: The company rented a Tukwila warehouse from him when it established its first beachhead in the U.S. in the early 1980s. "You might say I'm still waiting for my royalty checks," Segale told The Seattle Times in 1993.

He didn't confirm widely circulated stories that "Super Mario" got his name after Segale stormed into Nintendo's office, angrily demanding overdue rent. But many business associates say those tales fit the Mario they know — a hard-driving businessman who can be warm and generous, but also can display a temper when he doesn't get what he wants.

"When his feathers get ruffled it can make for some interesting exchanges," one former employee says.

Segale opened a construction business right out of high school in 1952. "He started out with one bulldozer," one former business associate says.

His company, M.A. Segale, repaved runways at the airport, graded right-of-way for freeways and dredged rivers after Mount St. Helens' eruption filled them with sediment. It also mined gravel and produced asphalt.

In 1998 Segale sold the assets of M.A. Segale to an Irish company for $60 million. A news release said the Segale family "plans to pursue other business interests."

Those interests centered on real estate. "He buys to hold long-term," says one former employee. " 'Sale' is a dirty word for them."

One notable exception: Segale owned the land under Emerald Downs when the Auburn racetrack was built in the 1990s. He sold it in 2002 to the Muckleshoot Tribe for $73.6 million.

The next year the Segales bought 120 acres of industrial property in Kent from Boeing. That brought their total holdings in the Green River Valley to 1,600 acres, they said at the time.

Commercial real-estate brokers who work in the valley say the Segales build high-quality projects, keep them in good condition, and treat their tenants well. But the family's penchant for privacy extends to many of its business dealings.

"I've met [Mario] once in 20 years," one broker says. "He's the man behind the curtain."

Long negotiations

If it's built according to plan, Tukwila South would rival the Southcenter area, Tukwila's commercial hub, in total square feet of development. But the site today is a crazy-quilt landscape.

There's a golf driving range, a construction-equipment parts business, and a pasture where llamas graze. Corn and hay grew in fields at the south end until a few years ago.

Segale Business Park, a warehouse complex the family developed in the 1970s, fills the northeast corner. It will be the last area redeveloped, according to the master plan.

The Segales maintain their offices in the complex. At its edge stands the house Mario Segale's father built nearly 60 years ago.

The Segales are prominent corporate citizens of Tukwila, population 18,000. They provide Christmas trees and poinsettias for city offices during the holidays. Once, when a city park project fell short of money, Mario Segale made up the difference, says Pam Carter, a former City Council member.

"Sometimes he provides things out of the goodness of his heart," she says. "But they like things their way. ... They can be difficult to work with."

It took five years for the city to negotiate a development agreement with the Segales that governs what can happen on the Tukwila South site, and how it will be paid for.

Mayor Jim Haggerton and his predecessor, Steve Mullet, say the Segales initially requested concessions the city couldn't afford. Negotiations got testy, council minutes show. There were blowups, ultimatums and at least one long cooling-off period.

In 2005 the council turned down a Segale request to condemn property the family didn't yet own for the proposed road serving Tukwila South. A few weeks later a Segale representative asked the council if the city still wanted poinsettias and Christmas trees.

By 2007, Mullet's last year in office, negotiations had reached an impasse. "There were a lot of personalities involved," the former mayor says cryptically.

Talks resumed after Haggerton was elected. The 42-page development agreement was signed last June.

The Segales supported Haggerton, who defeated Carter in the mayoral election. But she and Mullet both say the agreement protects the city well, and they're excited about the project's potential.

Among other things, the deal requires the Segales to pay the city the difference — up to $12 million — if taxes produced by Tukwila South fall short of the city's costs. The contract also bans new warehouses, which generate relatively little tax revenue.

About a quarter of the site would remain undeveloped. As compensation for filling 9 acres of wetlands and streams, the Segales plan to improve a 32-acre wetland complex and build 4.5 acres of rearing habitat for salmon just off the Green River. The Muckleshoot Tribe, whose treaty fishing rights give it a big say, supports the project.

The Army Corps of Engineers must approve the Segales' wetland plans, as well as their proposal to build a new levee to improve flood protection at the site's south end. After years of study, local Corps officials say they're getting close to a decision.

Meanwhile, the Segales have entered Tukwila South in a competition among South King County developers to build a new, 500,000-square-foot regional headquarters for the Federal Aviation Administration.

Gregoire and Murray have been invited to the May groundbreaking ceremony for the new road serving Tukwila South.

Ken Behrens, president of Mitchell Moving & Storage, won't be among those celebrating.

His business sits on one of the few properties in the project area that the Segales don't own. When construction starts, Mitchell will lose its road access from the south for 18 months. Behrens says that will cost his trucks time, his business money.

"Segale is the big elephant in the room in Tukwila," he says. "Whatever he wants to get done, he usually gets done."

But Behrens says he has no problem with the Segales' grand vision for their 500 acres.

"It's going to be an economic boon," Mayor Haggerton says. "Twenty years down the road, people are going to look back and say somebody had some good ideas there."

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

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