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A TNT article reveals details about the meeting between the ‘Tacoma Partnership’ and Russell consultants regarding their potential move in five years. The title of the article is telling,”Will Russell catch Tacoma’s Hail Mary pass?”

The first thing I noticed in the article is that the writer, Dan Voelpel, is probably shilling for the local politicians, comparing them to the heroes of an old western movie:

This Magnificent Seven, led by U.S. Rep. Norm Dicks, D-Belfair, represented a new affiliation that calls itself the Tacoma Partnership. They arrived early on this crisp morning for a 9 a.m. meeting.

The Magnificent Seven of the 1960 motion picture of the same name came together as underdog gunslingers aiming to save a poor Mexican farming village from 100 banditos who wanted to steal its food stocks.

Aside for the blatent butt-kissing by the writer, I think he tried to reverse the roles. He’s putting Russell and their consultants in the role of the banditos and making these politicians the heroes. But Russell isn’t robbing anyone. They have a business decision to make.

In my view, it’s the politicians who are stealing from the poor farming village by using our tax dollars, to the tune of $140 million or more (not all coming from local taxes), to fulfill their pie-in-the-sky pipe-dream of an ‘International Financial Services Area’ (IFSA) in downtown Tacoma.

Now the part that gave me a chuckle:

But as the seven walked into the first-floor conference room next to the Russell cafeteria, they encountered an unexpected surprise – two hired guns, real estate power brokers with deep ties to the Seattle corporate and political elite.

On the Russell Investments side of the table sat Craig Kinzer, president of Kinzer Real Estate Services, and David Victor, co-founder and principal of The Seneca Group. Both companies share an office suite on the 15th floor of Safeco Center, an office tower at Second Avenue and Seneca Street in downtown Seattle.

Their presence didn’t look like a good sign for the future of Russell in Tacoma.

If left to speculate, the presence of Kinzer and Victor looked like Russell executives wanted the most prestigious and knowledgeable team to find a new corporate headquarters in the market it knows more intimately than any other – Seattle.

The munificent seven, after robbing the city’s coffers of the villagers’ hard-earned tax dollars, find themselves out-gunned by the new sheriffs in town.

Now here’s the weird part. I think the munificent seven and the city council need some training in art of negotiation.

First they ignored a world class investment management company in their own town for decades by not employing their services, more recently claiming that they were trying to build a financial district around this company, using it as an ‘anchor’.

In a Dec. 23, 2007 article in the TNT, “Tacoma tries to retain Russell”

“We are currently in a full-court press to find a way to keep Russell as part of the Tacoma experience,” Mayor Bill Baarsma said. “I can’t think of anything more important as far as the continued viability of downtown.”

One big, controversial step came in October. The city’s retirement system board and the City Council voted to invest $25 million of its $1.1 billion pension fund with Russell.

For years, Russell executives pushed the City of Tacoma’s employee pension system to invest part – or all – of its funds in Russell products.

But whenever the retirement system issued requests for proposals from investment companies, no investment packages in Russell’s product line matched the city’s specifications.

‘IT WAS AN IRRITANT’

Pat Pabst, director of the retirement system, has said the board must follow its fiduciary responsibility to objectively invest rather than subjectively steer investments to a local company.

That irked Ueland and other Russell executives. In a 2004 interview, Ueland produced a single piece of paper with two pie charts. One chart showed the actual growth in the city’s pension fund. The other showed the greater growth the fund would have enjoyed had the city invested with Russell.

In addition, Ueland said then, he routinely took ribbings from his industry colleagues because the premier pension investment company in the world couldn’t even get its own local government to invest $1 with it.

“It was an irritant. I know it was,” Baarsma said. “I had conversations with them about it.”

Now, the question remains, “Will the pension investment influence Russell’s decision?”

Ueland said he appreciates the city’s investment.

“Even $25 million is still a big number to us,” he said, but he added that the company won’t make a location decision based on who invests with it.

An irritant? That’s an understatement.

Not a single dollar for all of those years. Then they think that throwing ~2% of their pension fund to Russell will have an influence? Russell manages $200 billion in assets and advises customers on nearly $2 trillion in investments. What’s $25 million to them? Well, it’s about .01% of the total assets that Russell manages. If the Russell CEO was ‘irked’, this isn’t likely to be enough to resolve anything.

Who wouldn’t want to move after being treated like that.

Then, as soon as Russell announced that they are considering a move, these politicians made a very public pledge to do whatever it takes to keep them in downtown Tacoma. What a stupid move. It’s like walking up to a used car salesman and saying, “I’ll pay whatever you ask for this car,” then trying to haggle.

Next they pull out all the stops in a high-profile effort to put an offer together. This further weakens their position at the negotiating table. “Project Destiny”? More like “Project Density,” referring, of course, to their heads.

Now they make all of the details of their offer public during negotiations. Bear in mind that this is an offer put together with federal and state funds (in addition to local funds). What would you bet that the others at the table are digging into the details of Tacoma’s offer to see if they can use any of it to sweeten their own deals?

This is one of the worst negotiations I’ve ever seen. If they really want to keep Russell in Tacoma they’re going about it all wrong.

Unless… maybe they weren’t really negotiating with Russell at all. They’ve shown they’re not in favor of government transparency. History has shown they really don’t care about Russell (until Russell threatens to leave). As for saving the downtown, most of the state and federal programs that are in the offer have been there for a while, the only recent one being one of the smaller pieces ($700,000 from the governor in an election year).

All of these politicians are aware of what happened to Gary Locke when he lost Boeing. He didn’t even bother running for reelection. How can this city council and mayor spin this as being anything but their own failure?

So, maybe, instead of making Russell a top priority they were actually making their PR image a priority. Maybe they’ve been negotiating with voters all along. That would mean they aren’t actually imcompetent twits who can’t do anything right. They were actually being shrewd in making the whole deal high-profile and transparent. They wanted the voters to see how hard they’re working for the economic well-being of this city.

Let’s see if that idea holds up to scrutiny.

So no wonder that Congressman Dicks – a linebacker and offensive guard on the University of Washington’s 1961 Rose Bowl team – led the charge.

“This is my No. 1 priority,” Dicks told the Russell team, which included CEO Craig Ueland, CFO Hal Strong, Director of Corporate Services Gretchen Benzin and Government and Community Relations Director Pauline Akiyama.

Ending the war in Iraq? Solving the housing mortgage crisis? Saving The Boeing Co.’s bid for Air Force refueling tankers? No, Dicks most wants to keep Russell in Tacoma.

His promise included using his committee assignments, contacts and influence to secure between $15.9 million and $20.9 million from various federal agencies through 2012 to help build the transportation, parking, sustainable development and streetscape needs in Tacoma’s new International Financial Services Area. [emphasis added]

So, whatever piece of the estimated $77 million that Russell generates in Tacoma’s economy is more important than the billions that are going into these other issues. Even though only a portion of that amount goes to taxes, Dicks is willing to help throw $140 million to keep them here. Those are very interesting priorities.

After looking at all of this, I’m wondering if this was a serious attempt to keep Russell here, or if they knew the handwriting was on the wall and they’re just trying to keep the pipe-dream alive before it dies with Russell’s decision to move somewhere else. It’s as if they’re trying to put a new foundation under their pipe-dream so that when Russell leaves the whole idea doesn’t crumble to the ground.

Now here’s another problem they have to deal with. If Russell stays, the two deals on the table are from out-of-town developers. There’s a group of good ol’ boys in Tacoma that have long been resisting anyone from the outside gaining a foothold on their turf. Now, in order to save their turf, they might have to let another player onto their field. I wonder how the old boys club feels about a Seattle developer becoming the biggest game in Tacoma?

So where do the city stand with Russell?

They don’t know details of any other offer on the table. They don’t know if anyone else made the short-list. They don’t know what criteria that Russell executives are using to make their decision. Yet they put together a deal and tipped their hand and showed all of their competitors the details of their offer.

This entry was posted on Tuesday, April 8th, 2008 at 12:14 pm and is filed under BlogNetNews.com, Business, Campaign 2008, FeedTacoma.com, Tacoma Contradictions, Tacoma Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.