As a multimillionaire developer, investor, hotel owner, computer-game company director, and private businessman, new mayor Paul Schell is working to distance himself from some of

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Million-dollar mayor

Paul Schell tries to disentangle himself and his city from the complex web of his financial interests.

As a multimillionaire developer, investor, hotel owner, computer-game company director, and private businessman, new mayor Paul Schell is working to distance himself from some of the potential financial conflicts he brought to City Hall. For example, when paying for public parking at Seattle Center, motorists are aided by parking equipment and money-collection services provided in part by one of Schell's many private concerns—Pacific Cascade Parking Equipment of Vancouver, Washington, a firm that has continued to do business with the city since its co-owner, director, and stockholder Schell took over as Seattle mayor in January.

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Such potential ethical conflicts caused the mayor on February 10 to pen a "Dear Friends" letter to some of his 10 private businesses and interests. In the letter, Schell is "asking that business entities in which I have some degree of ownership not accept as clients any City of Seattle departments, groups, or individuals acting in their capacity as city employees." Schell has also been restructuring his personal holdings. He recently sold off his hotel-management company and now operates three of his four San Juan­Whidbey Island inns through a new consulting firm. The mayor has also closed down his private Seattle real estate management and consulting office which he ran with his wife, apparently putting it on inactive status. And prior to winning election to City Hall last November, Schell sold off two luxury downtown condo units worth $700,000 (now a renter, he is the first mayor in modern memory not to own a home in Seattle).

Despite those portfolio shifts, Mayor Schell remains very much an active private businessman: In addition to the inns and parking supply firm, his financial interests include an Everett whale-watch excursion company, rental property on Whidbey Island, a variety of global stock interests, and a seat on the board of Bellevue computer-game company Sierra On-Line.

His two worlds have already softly collided. Schell's parking-equipment company earned almost $20,000 from a contract with the city last year providing parking and traffic services and supplies to Seattle Center. Though in his recent letter Schell asked, but did not insist, that his companies cease city business, his corporate partner at Pacific Cascade says he will sever the Seattle connection. The mayor "requested that we not do business with the city of Seattle during his tenure," explains company president Mark Curtis, who says he and Schell formed the company 11 years ago. "We will be happy to abide by his request." The company's four corporate officers include Mark Curtis, Pam Curtis, and Schell and his wife Pam Schell.

As co-owner of a parking business, the mayor is a kind of Joe Diamond in the rough, selling an assortment of supplies to government and commercial parking lot operators nationwide (and in fact competing with Seattle parking-lot mogul Joe Diamond and son Joel, whose company also sells parking equipment). Pacific Cascade's wholesale supplies include envelope drop boxes, ticketing equipment, speed bumps, impound tire boots, and control gates. They are sold through Schell's products division, The Parking Zone ("the most comprehensive source for quality parking and traffic supplies in the country," the company states in its sales literature).

Schell's firm provided $19,144 in parking services and equipment to the city last year and $1,109 worth in 1996. Beau Fong, Seattle Center spokesperson, says the city awarded a $17,203 contract last year for Pacific Cascade to provide Seattle Center with a Park Track System (providing parking revenue control), which included hand-held computers, lithium batteries, software, installation, and training. Seattle Center also later purchased $1,941 in additional equipment from the Schell firm last year. Pacific Cascade remains listed as an active city contractor, and has received one small payment from the city since Schell took over at City Hall.

Though it won't sell to the city in the future, Pacific Cascade says it has and will continue to do business with such firms as Diamond and Republic Parking, which contract with the city for parking services. That indirect link—Schell's firm supplying city contractors—is not seen as a conflict by the mayor's office, says mayoral press aide Victoria Schoenburg. Business partner Curtis says Schell "does not receive a salary and has never taken profits out of Pacific Cascade. His only compensation... has been modest quarterly directors fees for sitting on our board." Schell lists those directors fees as somewhere between $10,000 and $20,000 on his yet-to-be updated 1996 Port of Seattle disclosure form, filed as his temporary city disclosure statement with the Office of Ethics and Elections (the form requires officials to report a range and not a specific amount when describing fees and income). However, Schell also owns stock in Pacific Cascade, worth at a minimum $50,000—a figure that could be considerably higher and that increases with the company's success. Says Curtis: "Our company sales and earnings are a private matter and are not disclosed for competitive reasons."

Schell's $112,300-per-year job with the city could affect his other private businesses as well. His letter to his companies, done "to ensure compliance with all ethics rules," he says, likely means there'll be no official retreats by city employees at any of his privately owned lodges on Whidbey Island and at Friday Harbor (the lodges have hosted some city retreats in the past, along with business seminars held by such companies as Microsoft, AT&T Wireless, Safeco, and Washington Mutual). Schell has a corner on the upscale inn market in the islands with a 50 percent ownership of Friday Harbor House on San Juan Island and the Boatyard Inn in Langley, and full ownership of the Inn at Langley. He also has a partial interest (less than ten percent) in the Inn at Ludlow Bay in Port Ludlow, the biggest of the four inns with 34 rooms. Overnight rates run $100 to $200 during summer season ($450 for suites) at the inns, which Schell in the past has called moderate financial successes.

Three of the inns, originally managed by Schell's private management group, Cascadia Hospitality Management, are now run by Seattle's CRG Hospitality, which also operates the Bell Harbor Conference Center at the new Bell Street Pier under a six-year management and marketing contract with the Port of Seattle. CRG's parent, the politically well-connected seminar and consulting firm Columbia Resource Group, recently helped arrange the trip to China by Governor Gary Locke, and regularly contracts with government agencies. Schell sold off his Cascadia management firm last year to Kirkland-based Noble House Hotels & Resorts group, which took over his inns' management for several months. Then in February this year, Schell hired CRG for an undisclosed amount to take over the sales, marketing, and advertising for his inns. A two-term Seattle port commissioner until his election as mayor last fall, Schell was the commission's chair when CRG won the port bid to run Bell Harbor, Schell's pet waterfront project. CRG was among the businesses receiving Mayor Schell's personal "Dear Friends" letter, which stated it was being sent to entities in which he had a degree of ownership. But Schell "does not now nor never has had any financial interest in CRG," says spokesperson Schoenburg. "The purpose of sending the letter to CRG Hospitality was to let them know they should not engage in business with the city on behalf of the inns."

Related Links:

Paul Schell's page

http://www.ci.seattle.wa.us/mayor

The Parking Zone

http://www.parkingzone.com

 
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