Martin Selig’s list of unpaid bills is growing.
This spring, Seattle’s most storied office developer became delinquent on $2.2 million in King County property taxes on five of his downtown buildings, many of which have struggled with vacancy rates in the pandemic.
In early August, the city of Seattle sued Martin Selig Real Estate over $172,200 in unpaid fees related to street use permits for construction projects, as The Puget Sound Business Journal reported Friday.
And Selig may soon face an even bigger unpaid bill.
His company, which includes some 30 offices across Seattle, owes $2.7 million in fees, penalties and interest to a city-backed improvement district that is leading downtown recovery efforts meant to help pandemic-smacked businesses like Selig’s.
On Friday, the City Attorney’s Office said Selig’s unpaid fees to the Metropolitan Improvement District had been referred for collection — although it’s far from clear when or if the funds will actually be paid.
The district, one of 11 city-authorized business improvement areas, uses fees assessed on more than 1,000 downtown property owners in a 300-block area to pay for trash and graffiti removal, security and other improvement projects.
The fees are based on a complicated formula that can reflect property type, square footage and other factors, and are meant “to enhance services, create public programming, and help manage the area beyond what the city is already doing,” according to a city website.
In the downtown district, which the City Council reauthorized for another 10 years in May, these extras include things like downtown “ambassadors,” marketing, public art, events, research and transportation, and commuting services. All have played a part in downtown recovery efforts by the Downtown Seattle Association, which manages the district.
Selig’s $2.7 million delinquency represents well over half of all district delinquencies and “is a huge amount of capital that the business improvement area could employ to make significant impacts in the next six to 12 months,” says Steve Horvath, a district member via his Belltown condo and self-appointed watchdog of the district’s finances.
Selig’s district debt, most of which accrued during the pandemic, is small relative to the $18.5 million the district expects to generate from most of its 1,236 rate payers in the 2023-24 budget year.
But the arrears come as the Metropolitan Improvement District, which is overseen by an advisory board of 35 district ratepayers, faces rising costs and a downtown economy still languishing from the effects of the pandemic.
The Martin Selig Real Estate is “working with the respective parties to promptly and amicably address these outstanding balances,” the company said in a response Friday to questions about its various creditors.
The city hasn’t been much more forthcoming.
On Aug. 14, the city Office of Finance sent “a referral for collection of unpaid [downtown district] assessments on twenty-four Martin Selig Real Estate properties” to the city attorney, according to a statement Friday by the City Attorney’s Office. “The referral is currently under review for further action,” according to the statement.
Yet what action that review might generate isn’t clear, given that the Selig delinquencies have been on the city’s radar for over a year without resolution.
In spring 2022, officials with the Office of Finance and the Office of Economic Development (which oversees the business improvement areas program) met with the city attorney to “discuss next steps on BIA accounts with over $10,000 in nonpayment,” according to a June 21, 2022, email to Horvath from the Office of Economic Development that Horvath shared with The Seattle Times.
“Both of our departments are waiting to hear back regarding the current [Selig] debt … as the [City Attorney’s Office] is taking a formal review,” Phillip Sit, an economic development official, told Hovath in the email.
But Sit also cautioned Horvath that while some delinquent accounts “have been transferred to our City debt collection vendor for processing,” the outcome wasn’t certain.
“Given that it is not a property tax, governmental entities do not have the same amount of tools for corrective action (such as placing a lien on the parcel),” Sit said in the email.
Reached by phone Friday morning, Sit declined to comment.
Downtown Seattle Association officials say the delinquencies by Selig and other district members don’t threaten district operations.
Although DSA projects that expenses for the 2023-24 budget year will top projected revenues by around $2.2 million, additional expenses will be covered by reserves that accumulated in the pandemic due in part to reduced services.
During the pandemic, “the city collected a higher percentage of assessment revenue than what we projected and now we’re putting those dollars to use to further downtown recovery,” DSA spokesperson James Sido said Friday.
Horvath, who has been pushing the city to go after delinquent district assessments, thinks the city’s response thus far is a disheartening reminder of the privilege that often comes with size.
The assessment “isn’t supposed to be optional,” Horvath says. The fact that a large company like Selig’s simply isn’t paying it is “incredibly unfair for a number of smaller property owners” who “don’t have the wherewithal of Selig Properties” but dutifully pay their assessments each year, he says.
“It just seems like another case where … the big fish win and the minnows do what they’re told,” Horvath says.
