Developer In Public Office Profits From Clout

Copyright 1998, The Seattle Times Co.

Patrick McCourt pities the regular folks who stumble through a labyrinth of permits and regulations before they can develop property.

McCourt has mastered the path. As one of the most successful developers in one of the state's fastest-growing areas, he calls himself "the Thomas Edison of plats" - a self-made man who has succeeded on sweat, savvy and smarts.

But there's more to his formula: special relationships with public officials in Snohomish County, built on inside information, favors and his own conflicting roles.

McCourt is openly proud of his mastery of the system. In one case, documents and interviews show, he worked with a friend on the County Council to pull off a quick deal that netted him $650,000 in less than two months.

McCourt operates from a powerful base: a dual role as vice president of the Master Builders Association of King and Snohomish Counties and chairman of the Snohomish County Planning Commission. In the first position, he helps run one of Washington's most influential lobbying groups, working on behalf of more than 2,300 private builders and developers. In the second, he is charged with advising the County Council on land-use issues for the overall good of the 451,000 citizens of Snohomish County.

Critics - including other members of the Planning Commission - say McCourt's conflicting roles sometimes work to his benefit and the public's expense.

"Conflicts of interest?" said commission member Maura Goodwin. "That's all it's been for the past three years."

Mike Miles, former vice president for development for McCourt's Barclays North Inc., says McCourt told employees his position on the Planning Commission would "simplify the plat-review process" for his developments, the procedure to get permission to divide land into profitable lots. McCourt denies he ever said that.

The developer's influence doesn't end with monthly Planning Commission meetings. Records show how he works behind the scenes:

-- McCourt used his friendship with then-County Council Chairman Richard "Swede" Johnson to craft a deal in which he made $650,000 selling land to the county for a park. The land on Lake Goodwin, north of Everett, had been offered to the county by a former owner, but officials showed little interest until McCourt stepped in.

McCourt made a nearly 50 percent profit in 53 days.

One person who was with McCourt the day he telephoned Johnson at home to get the deal rolling recalls McCourt asking Johnson, bluntly, "How much money does the county have?"

-- McCourt financed a private business started by David McGuire, planning director for the city of Lake Stevens when McCourt was the biggest developer in town.

McGuire subsequently recommended that the city buy an area named Eagle Heights to turn into a park. A month later, McCourt bought that land for $335,000. The next month, he offered it to Lake Stevens for $475,000 and later sold it to the city for that amount.

-- McCourt organized a benefit auction for a charity in which Snohomish County Engineer Jack Bilsborough is the key leader. Soon after, Bilsborough started pressing other county officials to clear hurdles for a road and shopping center McCourt is building near Lake Stevens.

McCourt insists he and his company get no advantage from the favors he's done for public officials, or from his position on the Planning Commission. He has removed himself from voting on some matters in the Lake Stevens area, where he is based, but not on others. He says he disqualifies himself if he has a direct, immediate financial interest.

"I don't think it gives me any greater access than anyone who walks up to the counter and asks for records," he said.

He notes, accurately, that hurdles to some of his development plans have never been cleared. Yet, he admits, he knows the system inside out and says he pushes as hard as he can within the law.

And he often gets what he wants.


No one doubts Pat McCourt's abilities.

He was forged by a tough childhood: Abandoned by his parents, he was raised by a grandparent in Wisconsin. He left for Alaska as a teenager, put himself through high school, married and pushed his way into the real-estate business. His timing coincided with the North Slope oil boom of the late 1970s, and he was wildly successful.

McCourt's business partner in Alaska engaged in political back-scratching. Lucian Dancaescu admitted giving lucrative real-estate listings to an Anchorage assemblyman in exchange for legislation that helped a convenience-store chain he and McCourt owned. McCourt denied any knowledge or participation in the deal, which was found to violate city ethics rules.

In the early and mid-'80s, as Alaska's economy soured, so did McCourt's personal and financial fortunes. He lost his marriage and his company. In 1985, he married his former bookkeeper and in 1989 he moved to Lake Stevens to start a new life.

He's had phenomenal success, developing more than 2,000 residential lots and four commercial projects.

McCourt says he joined the Planning Commission in 1995 only after his top employees advised him he could use the unpaid position to learn more about planning, zoning and building regulations.

He wasn't the first developer on the commission. In the spring of 1997, six of its 11 members were directly involved in development.

"There was very definitely a conflict of interests," said Ray Gould, a former chairman of the commission and a retired paper-company engineer. "They were making decisions that directly benefited themselves personally."

Snohomish County law requires the council to find people with "a minimum potential for conflict of interest" to appoint to the Planning Commission.

State law makes it illegal to use information gained from a public position for "personal gain or benefit" or to "secure special privileges or exemptions."

Greg Williams, who was fired as planning director in September 1993, said the term "customer service" in the county's planning offices came to mean bending rules and doing favors for selected developers.

McCourt conceded that potential conflicts of interest arise but said it's up to the individual commissioner to handle them properly.

"That comes back to a character issue," he said.

Planning Commissioner Goodwin seconded McCourt's nomination as chairman last year.

"We had a builder bloc, and at least Pat was going to run the meeting in a way that would be orderly," she said.

Since learning details of McCourt's business deals, though, Goodwin says she's had enough.

"We have had too many secrets," Goodwin said. "I guess it's time for some of us to step forward and say: There's a problem here."


His critics are simply envious of his success, McCourt says, and he recently honed that argument to include a graphic illustration.

During an interview, urged on by an employee who told him to "draw the circles, Pat," McCourt jumped to his feet, grabbed a colored marker and began drawing concentric circles on a whiteboard. The smaller the circle, the larger his success. He explained that the further he went toward the center, the more enemies he made, with critics unfairly accusing him of getting favors from insiders.

"They think a guy picks up a phone and makes things happen. Well, excuuuuse me," he said, mockingly.

Yet an incident on April 20, 1996, indicates that sometimes that's exactly what happens.

Sitting in his office on a Saturday afternoon, McCourt telephoned his friend, County Council Chairman Johnson, at home.

McCourt had helped get Johnson elected in 1993, contributing to his campaign and persuading other developers and contractors to do the same. Johnson appointed McCourt to the Planning Commission, with confirmation from other County Council members.

Johnson said there was "a lot of camaraderie" between the two men, and that McCourt had even helped save his struggling marriage.

So when Pat McCourt called, Swede Johnson listened.

This time, McCourt told Johnson he had a 12-acre property he wanted to sell. He said it would make a perfect county park, right on beautiful Lake Goodwin.

He wanted to know how much money the county had to buy the land.

John Stokes, a real-estate broker, was with McCourt at the time. He was stunned by McCourt's tone and frankness over the phone.

"It was slick," he said. "There was no doubt about where this was going."

On the other end of the line, Johnson told McCourt there was money in a voter-approved bond fund that could pay for the land, and he had some ideas on how to get it. He told McCourt whom to contact.

McCourt faxed a memo to County Parks Director Ron Martin, saying: "Ron. There is a very narrow window of opportunity for parks and rec(reation) to acquire approximately 12.4 acres of water front on Lake Goodwin for a county park. Please call me immediately. I know where there is some public money for this."

Martin recalls that McCourt "was in a big hurry. He had several deadlines." At the same time, Martin said, the county felt the land was too valuable to pass up.

The deal was happening so fast, McCourt didn't even own the Lake Goodwin property at the time. His purchase wouldn't close for more than a week.


McCourt bought the land from the estate of Arthur Leonard, who had been working for years with Stokes (the broker who witnessed McCourt's call to Johnson), trying to develop it.

Stokes said they had spent hundreds of thousands of dollars but foundered because state and county officials blocked their efforts, citing environmental problems.

They then tried several times to sell the land to the county for a park.

Records show that Leonard offered it to the county in 1986, but then-County Executive Willis Tucker and other county officials weren't interested. The appraised value then was $365,000, though the owner wanted more.

In 1992, Stokes, working for Leonard's estate, offered it to the county again for $3.3 million. He said he also offered it verbally for $1.75 million in February 1996. Stokes said the verbal offer was made to Johnson in his office, but Johnson says he doesn't remember it.

Finally, Stokes and the estate agreed to sell the land to McCourt for $840,000. Additionally, McCourt spent $510,000 on the previous owner's and Stokes' outstanding debts on the property, and on closing costs - making his total outlay $1.35 million.

Six days after his phone call to Johnson, McCourt sent the council chairman a letter offering the land for $2 million and warning he might start building homes on it within three weeks if the county didn't buy it.

What McCourt didn't say was that Miles, his vice president, had already calculated that McCourt could make a lot more money selling the land to the county at his asking price than it could building homes on it. Though McCourt says today he could have made $850,000 developing the land, Miles said it was more in the vicinity of $250,000 to $300,000.

By law, the county cannot buy land without an appraisal, and the purchase price cannot be lower than the appraised value. The county might as well have forgone the expense of the appraisal, however, because the price never changed from McCourt's demand.

On May 3, only three days after McCourt closed his purchase of the land, the county Parks Department recommended purchasing it from him for $2 million, using money from the voter-approved Conservation Futures Property Tax Fund. To use that money, a county board had to first approve the Lake Goodwin property as a priority for purchase, which it did.

On May 13, McCourt sent a Redmond real-estate appraiser a letter stating, inaccurately, that he was paying nearly $1.8 million for the Lake Goodwin land. McCourt now admits the figure was a half-million less, $1.3 million.

On May 15, McCourt signed a real-estate purchase and sale agreement and sent it to the county, setting the price at $2 million.

On June 7, the county finance director approved the hiring of the Redmond appraiser - even though records show the appraisal was completed on June 6.

On June 12, the appraisal report was published, setting the value at $2 million.

On the same day, the County Council voted unanimously to buy the land at $2 million.

Stokes was amazed by McCourt's success. He'd become so frustrated fighting county officials over his efforts to develop the land, he had helped start a movement in 1992 to a carve out a new county, called Freedom, from the north half of Snohomish County.

McCourt "knows how to grease the wheels," Stokes said. "This thing is flying through the way I've never seen anything fly through."

At the time, McCourt boasted to friends about the deal. Asked for his thoughts now, he said: "No thoughts. I guess my response is: What are we in business for? To make money."


Though most of McCourt's profits come from developing homes, not selling park sites, he was involved in another park-property deal with Snohomish County four months later.

In October 1996, McCourt signed an agreement to buy a 15-acre parcel, known as Eagle Heights, from local Realtor Gary Mose and five other investors, for $335,000. McCourt told them he was going to develop the vacant land.

A month later, McCourt offered it to the city of Lake Stevens for $475,000 - a deal that was ultimately closed in June 1997, with money from the same park fund used for Lake Goodwin. Though the park is outside its boundaries, the city of Lake Stevens was involved because the park falls within its 12-square- mile urban-growth area.

The property was zoned for 32 condominium units, but the Lake Stevens City Council wanted to save the land for a park. Two eagles, dubbed "George and Martha" by local residents, nested there, and schoolkids were raising money to protect them.

McCourt said he could have made $350,000 to $450,000 developing the land. Instead, he said, he broke even or lost a little. He called it "a gracious gesture on my part to put the property in the hands of the community."

McCourt said additional expenses ate up any profit he might have made selling the land to the city. Lake Stevens City Treasurer Randall Krumm was assigned to check whether McCourt's report on expenses was accurate. Krumm said he couldn't determine if McCourt had spent the money on the Eagle Heights property or elsewhere, so city and county officials had to take McCourt's word for it.

Mose, the man who sold the land to McCourt, feels burned by the transaction. He thinks McCourt must have known at the time he bought the land that he would get a much higher price for it immediately if he sold it to the county.

"It stunk," Mose said. "We spent six or seven years with the county trying to get that property re-zoned, and we pretty much broke even. We were disappointed that after putting in all that time and money, someone else would come along and make a windfall profit - and off the taxpayers at that."

Karen Miller, the president of the citizens group that promoted the park, said the county could have bought the land a year earlier from the original owners for $100,000 less. She said the park fund was a "pot of gold," explaining, "The county was real liberal with this funding."


Like Lake Goodwin, the Eagle Heights transaction involved a public official who had an apparent conflict of interest with McCourt.

On Aug. 14, 1996, McCourt gave Lake Stevens City Planner David McGuire a check for $15,000 to invest in a computer business McGuire owned. McCourt insists the investment had nothing to do with McGuire's public role.

McGuire disclosed McCourt's investment in a letter to city Administrator Gary Long two weeks after he received the check. However, McCourt did not disclose his investment to the state Public Disclosure Commission, as the law requires of McCourt as a member of a public body.

Now, McCourt says he is filing an amended report with the PDC. "It was purely an oversight," he said.

Long said he removed McGuire from dealing directly with any city business that involved McCourt, including the Eagle Heights matter.

Records show, however, that on Sept. 9, 1996 - three weeks after he got the $15,000 - McGuire reviewed a list of possible park acquisitions with the Lake Stevens City Council and proposed that Eagle Heights be No. 1 priority. The council voted unanimously in favor of that proposal.

McGuire said he had passed along other people's recommendations, not his own.

Long said Lake Stevens officials had heard rumors of a possible conflict in the Lake Goodwin deal, so as an extra precaution he asked a state auditor to look over the Eagle Heights transaction. Based on statements from McGuire and then-senior planner Cliff Strong, Mary O'Day of the auditor's office concluded there was no conflict.

"I don't consider there to be a problem here because David (McGuire) was very straightforward with me," Long said. "I know McCourt well enough to know he would have made a good business investment. I know McGuire well enough to know that he would be honest and straightforward. He is an ethical man. So I didn't probe any further the terms of the arrangement."

McCourt's relationship with McGuire had implications beyond Eagle Heights. As planning director, McGuire oversaw a multitude of regulatory activities that affected McCourt's operations.

Though the boundaries of Lake Stevens are small - 2 square miles containing 5,600 people - the city is responsible by law for development activities in its urban-growth area, encompassing 12 square miles and 22,000 people. It's the fourth-fastest-growing area in the state, and McCourt is the biggest player.

"You can't do public or private development in this community without dealing with Pat (McCourt)," said Long.

Long said McGuire stayed away from regulatory activities affecting McCourt, leaving the work to senior planner Strong. However, McGuire was Strong's supervisor and the overall manager of planning for the city.

Near the end of '96, McCourt invested another $15,000 in McGuire's business, and McGuire left his city position. McCourt ended up investing a total of $40,000 and now owns 14 percent of the former planner's business. McGuire still serves as a consultant to Lake Stevens, applying for grants and negotiating with the county over the city's urban-growth plan - which could have a major impact on McCourt's holdings.


Other questions arise over McCourt's relationship with the Snohomish County Public Works Department. They focus on McCourt's dealings with County Engineer Jack Bilsborough.

Bilsborough is a board member of the Snohomish County Alliance for the Mentally Ill. Helping people with mental illness has been his passion since one son suffered severe head injuries in a motorcycle accident in 1981 and another exhibited signs of a debilitating mental illness weeks later. Since moving to Snohomish County in 1984, he's been the Alliance's most active member.

McCourt says he ran into Bilsborough on the street one day in late 1994 and offered to work on an auction for the Alliance. Since then, he has participated in three auctions, organizing the first two, raising money, donating goods and serving as an auctioneer.

McCourt said he conducts auctions for at least two other charities every year, and that his work for the Alliance has no ulterior motives. He said he has searched his conscience and cannot fathom why people question his connections.

Critics point out, though, that since McCourt got involved with the charity, Bilsborough has intervened with other county staff in ways that benefit McCourt. In particular, other county workers raised eyebrows over Bilsborough's positions concerning a shopping center and new road McCourt is building near Frontier Village on Highway 9.

Bilsborough insists he never set out to help McCourt personally. Everything he did, he said, was on behalf of the road McCourt is building, a short extension of Meridian Street. He said he's done the same for other developers on other projects. But Bilsborough acknowledged that in May, following the most recent charity auction, he recused himself from getting involved on another McCourt project.

The county needs the road for its arterial system, but doesn't have money to build it. The road will serve McCourt's shopping center, and if he waited for the county to build it, that might delay his project for years.

Under a contract signed by Bilsborough and McCourt last year, McCourt is building the $3 million road and the county is compensating him in total by forgiving fees on a number of his development projects in the area. The contract was unprecedented in size and scope but lawful in all respects, county officials said.

Bilsborough acknowledged he was heavily involved in key discussions that affected McCourt's compensation, "but my boss Peter Hahn made the final decision. I honestly did not make any final calculations." Hahn is the public works director.

Records show Bilsborough has leaned on other key officials on McCourt's behalf. In September 1997, when county staff was considering amendments and key wording that would affect McCourt's compensation, Bilsborough sent a memo to Land Use Records Supervisor Bill Ryan accusing him and others of being "nitpicky" and saying: "I'm convinced the developer has no desire to make a profit off of the county."

"I feel strongly that we are being unreasonable and self-defeating," he wrote.


Bilsborough also wound up on McCourt's side in a battle over wetlands at the shopping-center site.

The issue first arose with a previous owner, Arnold Pederson. By law, nothing can be built on a designated wetland, and county inspectors determined that wetlands covered nearly half the property.

"Imaginary wetlands," said Keith Biever, a real-estate agent representing Pederson.

Biever and Pederson complained so vociferously and publicly that Bilsborough wrote a memo to Deputy County Executive Joni Earl in January 1993 describing them as disgruntled and difficult.

Later that year, Biever and Pederson hired McCourt as a consultant to help them try to develop the land. Two years later, McCourt started the process to buy the land from them.

McCourt didn't win the battle over wetlands - a fact he emphasizes - but not for lack of trying by Bilsborough. The county engineer argued in staff meetings that the county's wetland biologist wasn't using good science, and that the wetlands were nowhere near as extensive as the biologist claimed.

"I got more involved in this one than others because (McCourt) ran into a hellacious problem," Bilsborough said.

Again, Bilsborough insisted his efforts weren't for McCourt but for the public interest in the road. He noted that McCourt threatened to back out of the project several times. After McCourt stood up at one meeting in April 1996 and said he'd had it, County Executive Bob Drewel and Bilsborough stepped in and mollified him.

County staff sometimes got touchy.

In the fall of '96, after McCourt had tried and failed to buy additional wetlands property from another seller within the boundaries of his project, the county bought it. Even the seller, Robert Berg, was surprised when a county agent showed up with an offer.

County Real-Property Administrator Deanna Clark-Willingham fired an e-mail to a staffer in September 1996, saying: "Could you please explain the purpose for acquiring the . . . Berg property. It doesn't show up on the plans, and I don't understand what we need it for."

Bilsborough shot back a testy memo defending the purchase, saying: "We are certainly not buying the property for a developer. If you feel you have a problem with this issue, let's talk!"

A year later, memos show county officials still considered the land to be useless to the county. One part of the property is now an essential pedestrian and emergency-vehicle access to McCourt's development.

In recent months, since The Seattle Times started asking officials in Snohomish County about their relationships with McCourt, things have changed a bit.

Suddenly, McCourt says, he's finding the going tougher.

"I feel like I am more in a glass house . . ." he said. "Everything I do is scrutinized.

"It's hard for me to get a return call from the county because of you guys."

Eric Nalder's phone message number is 206-464-2056. His e-mail address is: Duff Wilson's phone message number is 206-464-2288. His e-mail address is: