The Decline and Fall of Seattle

It was perhaps a measure of how far Seattle has fallen--from its place deep in America’s restless heart, a city of snowy mountains and inland seas to which the disillusioned, ambitious, bored and broke from the rest of the country flocked in the 1990s--to where it is now, which is a city under siege. Or maybe Seattle, with its average 3 feet a year of precipitation, has always expected the sky to deliver bad things. But when a bag full of cremated human remains dropped onto Safeco Field one recent day, hardly anybody thought twice.

There it was, right before 45,000 people were scheduled to show up for the Mariners series against the Orioles, and--plop!--the bag hit with a thud, spewing the white powder of a baseball fan who had always wanted to spend eternity in the outfield. A hazardous materials team speedily swept up the remains before the crowd showed up. The aircraft charter company apologized for the bungled drop. But for the public at large, no apology seemed to be expected. OK, a dead man hits Safeco Field, seemed to be the thinking of most Seattleites. What next? (Some, of course, thought a mere body bag dropping out of the sky was too simple an explanation, considering the succession of plagues that have hit this city over the last year or two. These voices pointed toward something more sinister. Bill Hoff of South Seattle, in an e-mail alert, said it was more believable to presume the city was being secretly poisoned: “I would not advise anyone to move to Seattle. We are being slowly killed . . . .”)

All this in a place that is home to three of the world’s 10 richest men, a lively arts scene, an inviting coffeehouse on every corner, and two spectacular snow-capped mountain ranges as cheap scenic backdrops. Just six years ago, Newsweek put then-Slate magazine editor Michael Kinsley on its cover, dressed in a raincoat for his move to the Pacific Northwest. “Swimming to Seattle: Everybody Else Is Moving There,” the cover said. “Should you?”

Seattle had clean air, raucous little music clubs that nurtured bands such as Nirvana and Pearl Jam, good schools (the superintendent, John Stanford, was a former Army general who said things like, “Every child will read,” and then gave the ax to principals whose students didn’t), and a dot-com boom that was sprouting millionaires out of the Microsoft mothership like cotton off a dandelion. It had Starbucks, Eddie Bauer, Nordstrom and Immunex, not to mention Boeing. It had a new symphony hall and a central library, city hall and opera house under construction, two new major league sports stadiums, new museums and theaters--$800 million in new civic building during the latter half of the magic ‘90s.

So when did it all start going wrong? Kurt Cobain, the legendary lead singer of Nirvana, died in 1994, leaving 7,000 stunned mourners gathered at Seattle Center. Not long after that, grunge, the most phenomenal alternative music scene since the British invasion of the 1960s, was pronounced dead in Seattle.

Five years later, a city that had always seen itself as a petri dish of protest movements saw its police department pick up black helmets and tear gas rifles and shut down most of downtown during the World Trade Organization riots. Then the millennium celebration at the Space Needle had to be called off while the rest of the world was partying because an Algerian national was caught at the ferry terminal with enough explosives to blow the structure into the stratosphere. The city revved up for a big Mardi Gras party in 2001, but that turned into a riot too (while then-Mayor Paul Schell, it was frequently noted in the papers, was home sleeping).

The next day, there was a magnitude 6.8 earthquake. A federal judge ruled that Microsoft had grown too powerful and threatened its sole dominion over Windows, the most successful computer-operating system ever conceived. The dot-coms dot-bombed, and Seattle furniture stores, which once couldn’t keep Aeron desk chairs in stock at $699 apiece, by last year were giving away office furniture in the parking lots.

A woman tried to throw herself off the Ship Canal bridge, while commuters in a town once named America’s politest by etiquette expert Marjabelle Young Stewart cheered her on. “Jump, bitch, jump!” yelled one bystander. John Stanford got cancer and died.

Boeing, a company that has been virtually synonymous with Seattle since the first commercial plane took flight in 1919, pulled up stakes and moved its headquarters to Chicago last September. “John, why didn’t you call?” a stunned Paul Schell asked John Warner, a Boeing senior vice president. The answer was obvious. Not plagues, really. Just that it was over. Boeing had a whole world out there, and Seattle was in its rearview mirror. Whatever the magical ingredients were that made the sun shine on Seattle for so long, it had started raining again.

Now, as the rest of the country sees what looks like the tail end of the recession, Seattle and the Pacific Northwest are stuck in the worst economic downturn in 20 years, with the highest unemployment in the country. There are dark predictions that Boeing, which has shed 18,700 workers in the Puget Sound region, could be looking at even more layoffs. State government this year closed a $1.6-billion budget shortfall with smoke and mirrors and is looking at another big gap next year.

The city is awash in unemployed machinists, engineers and the human driftwood of the dot-com implosion--those who weren’t around long enough to make a killing before the market crashed. Some seem dazed, not old enough to have seen a recession before, not sure where all the money went. Many can be found pulling espressos these days, or hitting the trails around Mt. Rainier with their also-unemployed friends. “There are only so many ‘Seinfeld’ episodes you can watch and DVDs you can rent,” a former AOL Time Warner employee explains.

The post-dot-com scene in Seattle was richly captured not long ago in a poem, “WebVanish,” that showed up on Postget.com, a Web site for techies looking to network. The author, JeffRD, was chronicling the demise of Webvan. The Internet grocer had bought out the Seattle area’s HomeGrocer.com, burned through hundreds of millions of dollars and then, last July, filed for bankruptcy and sold off its assets. The Redmond, Wash., auction at Webvan’s distribution center--32 office chairs, 100 Compaq computers, 246 hand-held scanners--was similar to other sell-offs across the city during the past two years. The poem got a flood of responses, including from people who were reminded of T.S. Eliot and his “Waste Land” after the Great War.

A first auction lot comes into view.

The closed circuit security system--lifeless CRT windows unplugged from their lifeless world . . .

Fleets of round and oval tables jostle like bumper cars at an abandoned carnival . . .

Row after row of chairs without wheels . . . nowhere to be found in this collection. A closer look. Each chair bears a lot number. They’ll auction the chairs out from under you if you aren’t careful.

Back downstairs.

A can of Webvan pens--I’ll take one as a souvenir. I don’t know what a billion dollars looks like, but I’ve seen its carcass.

My Seattle story started half a world away, in Jerusalem. I was at a cocktail party talking to Doug Struck, then the Middle East correspondent for the Baltimore Sun, whose wife, Kathleen, was headed for Puget Sound to buy property on an island near Seattle. It had always been a dream of theirs to live on an island in Puget Sound.

Wait a minute, I said, clutching my wine glass in a panic. That’s not your dream. That’s my dream. You are absolutely not going to live on an island in Puget Sound before I am. I bolted from the Middle East, and five months later was installed in an old farmhouse on Bainbridge Island--half an hour’s commute from Seattle by ferry--and in the Los Angeles Times’ Seattle office, 10 floors above Elliott Bay.

It was 1995, and Seattle was riding high. Huge chunks of rural Bainbridge--the place that helped inspire David Guterson’s “Snow Falling on Cedars”--were being cleared for new cul-de-sacs and rows of $460,000 houses with home offices and mini-gyms, snatched up by young Microsoft families who often paid cash.

My husband and I were working to pay off our mortgage (he got hired at Boeing as an engineer). Everyone else, it seemed, was either stuck in 18-hour-a-day work mode or apologizing for having banked their million and expressing sympathy that I couldn’t make it to play group with my kids.

Next door, a half-million-dollar cottage with an expansive view of Port Madison was sold to Aileen Agricola, a 35-year-old high-tech refugee who had put away a comfortable stock portfolio working for a Bay Area software company. She was through with working for the moment. She would study for her master gardener’s credential and tend the flowers outside the door. She would buy a cafe and sell espresso and ice cream, start a film discussion group on its comfortable sofas. She would dabble at designing Web pages, if she had the inclination, but she wouldn’t need to.

“It was just a romantic dream--coming to Seattle, finding a cafe, finding a beautiful house and beautiful surroundings and still having a foot in the software industry,” she says.

Then came April 14, 2000, when the Nasdaq fell 355 points, its worst one-day point loss in history. Microsoft chairman William Gates III lost $10 billion that week. Agricola saw her Seattle dream start taking on water. The cafe was leaking money--not enough people had time or money to sit around drinking coffee anymore. The dream house still had a mortgage, and it appeared that Agricola was going to have to get on the ferry, put her resume under her arm and--horror of horrors--find a job.

Along, as it turned out, with about 25,000 other newly unemployed techies. Agricola, a woman who had engineered huge software deals all over the world, was competing with 20-somethings who barely knew how to write html coding, and they were both at the back of a long line.

It wasn’t as if I couldn’t sympathize. Boeing had ramped down, and my husband was collecting unemployment and working on the yard all day. I would call Agricola on Saturday nights to ask her to come watch a movie. “I can’t, I’m busy,” she’d say. What are you doing, I’d ask. “Laying on the couch.”

There was a great deal of shared misery. Amazon.com was shipping out workers faster than books. Companies such as AT&T; Broadband, Nextel, Egghead.com and Kozmo.com were rushing to downsize, and a city that only a few months before had been awash in cash and stock options was left staring like deer in headlights at stock prices on the computer screens.

Not all of the losses were on paper. Devin Hermanson, 36, had been in on the beginning of Freeshop, an online direct-marketing business that matched free samples, catalogs and magazines with potential customers. The Web site grew to become the 10th most trafficked online commerce site, but later fell on hard times. Hermanson broke out on his own two years ago, taking hundreds

of thousands of dollars worth of stock in Freeshop and starting a new company, goNextdoor.com, with a friend. It was a great idea, putting customers in touch with businesses and services in their own neighborhoods. But the company incorporated on April 14, 2000--the day of the Nasdaq crash. Coincidence? Bad luck? Plague?

Hermanson and his partner had a meeting scheduled that night with a man they believed would invest in their company. As it turned out, much of what the man might have invested had evaporated several hours earlier. “When we got there, his wife was there and he wasn’t, and his wife warned us that he was in a really bad mood,” Hermanson recalls.

Hermanson was in worse shape. He had exercised his Freeshop stock options the day before the crash, meaning he had to pay taxes on stock valued at hundreds of thousands of dollars when the market price a day later was next to nothing. Bottom line: he owed $80,000 in cash on $3,000 worth of stock.

Hermanson kept goNextdoor.com running on his credit cards, but eventually they ran out too (he had a credit card declined while on a date). He threw in the towel and later landed a spot as a customer relations manager with Netstock, an online brokerage. That lasted until May, when he got laid off.

“I have friends who have been unemployed for two years. I’ve seen people leave town. I’ve seen people become depressed. I think there’s a lot of Prozac out there right now,” Hermanson says. “But I’ve also seen some really wonderful things happening, in terms of just people supporting each other.

“During the boom years, this strange correlation was drawn between net worth and brilliance. There was a really strange ego-inflation thing happening. And the deflation happened, and I’ve seen a lot of humility. People have been rediscovering some parts of themselves that kind of got lost a bit when people thought they were going to be competing against each other in next year’s yacht races. People have become a little bit more down to earth.”

David Brewster, former publisher of Seattle Weekly who now heads the Town Hall concert and lecture program, says everyone has had a reality check. “We were Brigadoon, and now we’re being taken down a few pegs. One of the problems is the city remains very ambivalent about its own bigness. A place like Portland is not ambivalent. It comes down on the small-is-better side of things. Well, thinking big was the big idea in Seattle. All through the ‘90s we thought big. World-beating companies, major league culture, restaurants, sports. If I were to define Seattle at all when it was in that Brigadoon period, it was the dream of living in a livable city, a humanly scaled city, and yet having a globally significant job.

“Before, it was always, if you want to be big time, you have to live in god-awful New York. If you want to live in a quality-of-life place and have a good place to raise your kids, you move to a small town. Seattle was, guess what, folks, you can have it all. [I could] be Rob Glaser [CEO of RealNetworks], jumping on planes to world capitals, and when I get back we’ll go to the Seattle Film Festival. We’ll go biking together.”

Despite the boom, Seattle always seemed of two minds on the new economy. With its blue-collar Boeing roots, its long line of stern Scandinavian loggers and fishermen, its suspicion of ostentation, the city spent the ‘90s getting used to the new big thinkers--people like Glaser, Howard Schultz at Starbucks and Jeff Bezos at Amazon.com--embracing them, really, while wondering if it should be holding its nose. Seattleites looked a little aghast at the weird, rainbow-colored rock ‘n’ roll museum built by billionaire Microsoft co-founder Paul Allen at Seattle Center and designed by architect Frank Gehry in a shape reminiscent of a smashed guitar. (Local columnist Ron C. Judd likened it to “The Wreck of the Partridge Family Bus.”)

New Seattle money gravitates toward the eastern suburbs. It lives in neighborhoods like Medina, on Lake Washington’s Gold Coast, where Bill Gates erected his 65,000-square-foot residential compound and former Microsoft president Jon Shirley recently built his two-bedroom, 23,000-square-foot home and personal art gallery. New Seattle is what had yachts on back order and made the Steinway distributorship the biggest in the country.

Old Seattle lives in the stately rough-timber houses on Capitol Hill or First Hill. Old Seattle is embarrassed by ostentation, wears Eddie Bauer fleece when shopping, wouldn’t be caught dead in a Porsche.

Priscilla Bullitt Collins, 71, is Old Seattle, part of the city’s powerful Bullitt broadcasting family and chairwoman of the $103-million Bullitt Foundation--a scion of Seattle aristocracy. She gave the famous old Stimson-Green Mansion for public use and lives in a tiny condominium in a graceful old building nearby. It has no dining room (“A dining room is just a place to collect papers,” she says) and the coffee table is cluttered with books.

Collins’ fortune dates back to her grandfather, C.D. Stimson, who built a shingle mill in Seattle during the Klondike Gold Rush, got rich, and then parlayed that into an even bigger fortune in downtown Seattle real estate. Her mother, Dorothy Stimson Bullitt--a single mother of three after her husband’s death--made a new fortune building a Seattle broadcasting empire.

“There are a lot of billionaires in this town these days,” Collins says. “I don’t know many of them, but I know their mothers. I know Mrs. McCaw, I know Mrs. Gates, I know Mrs. Allen. A lot of these 26-year-olds that have millions and millions of dollars, they’re afraid--afraid of losing it. I tell these people, you lose, you go out and do it again. You’re 28. And I was told that wasn’t the point. I asked some people, why are these young people so scared? They told me, well, they’re scared of losing it because they think they can’t make it over again. They’re afraid that it will be exposed that it was all just dumb luck.”

For those who remember Seattle before everybody got rich, it was about time to put on the the brakes anyway. The prosperity of the ‘90s saw housing prices go up by a third and the freeways slow to a crawl-- earning Seattle the distinction of having the second-worst traffic in the country. A city once known for “the bluest skies you’ve ever seen” was ranked this spring in the bottom 5% of the country for toxic air pollution. Orcas have begun dying in Puget Sound.

In March, a young advertising copywriter who goes by the screen name Steele launched a Web site, Seattles--ks.com, as a meeting ground for people who think the city falls short of its hype. “We had a huge boom in the ‘90s,” he says. “We really had a tremendous opportunity with all kinds of tax money coming in. What did we do with it? We had meetings and committees.” (Steele uses only his screen name on the site because he still holds out hope of getting work in this town.)

By last month, the site had more than 2,000 postings. Traffic, not surprisingly, often tops the list. The average Seattle commuter spends 30 minutes getting to work. Voters approved $3.9 billion in 1996 to build a light rail system, but after years of dithering over the route, not a single track has been laid and the price has gone up by $1 billion.

The state has done little to build new highways to accommodate the 484,700 new people who moved into Puget Sound in the 1990s, in part because it would cost upward of $50 billion to do it right. The idea of Washington farmers and longtime Seattleites paying more to make room for newcomers helped ignite the beginnings of a taxpayer revolt. In 1999, voters ap-proved an initiative--I-695--that slashed the traditional source of highway construction funding, the motor vehicle excise tax. The second shoe dropped last November, with the passage of a ballot measure that limits property tax growth to 1% a year, unless authorized by voters. The two measures, with the third whammy of the recession, have left the state in a funding gridlock the likes of which it has never seen.

Three times last year, Democratic Gov. Gary Locke called the Legislature into special session to try to come up with a transportation funding package. Three times the Legislature failed to act. The best they could do was schedule a vote for November asking citizens to approve $7.7 billion in new revenues, including a hefty hike in the gas tax, for transportation projects. It is a pittance compared to the money needed for roads, almost everyone agrees it won’t eliminate congestion, and hardly anybody thinks it will pass.

People wonder why the politicians didn’t solve the transportation problem while the state was flush with cash. Steele and others believe the inertia is why Paul Schell got booted from office last year, the first incumbent mayor defeated in 45 years. It wasn’t the WTO, necessarily; it wasn’t that Boeing left town on Schell’s watch; it wasn’t the economy. It was that the city could have done something, it had all the makings, it coulda been a contender! And it spent the ‘90s talking and dreaming.

It was all summed up last summer when the soft-spoken, philosophical former mayor was confronted at a community festival by African American activist Omari Tahir-Garrett, who was protesting the police department’s treatment of blacks.

Witnesses said Tahir-Garrett bonked Schell in the face with a megaphone. (Tahir-Garrett denies it, and his first trial ended with a hung jury.) The 64-year-old mayor had a broken nose and a crushed eye socket, and wore a black eye that served as a constant reminder of the encounter. “I always thought if he would have ducked when that guy punched him and [he’d] punched him back, he would have been reelected,” Steele says. “Instead, he took the shot and went down.”

Of course, it wasn’t just the mayor and the Microserfs who got knocked out by the recession. Regular Old Seattle got sucker-punched too. Boeing’s departure and the downsizing after Sept. 11 left 16,800 people out of work by midyear. These were workers with no stock options, Steinway pianos or Belltown condos to sell. Many had worked in the cavernous 747 assembly plant for much of their adult lives. Now they don’t know what to do.

During previous Boeing busts, they could lie low and collect unemployment, or find another temporary job until Boeing ramped up again. But the latest Boeing moves don’t seem part of the usual boom-and-bust cycle that has been an integral feature of the Seattle economy.

When Boeing decamped for Chicago, leaving only its commercial airplane division behind, it would have been great if the only reasons were bad traffic and high taxes in Seattle, something the city theoretically could fix. The reality was much worse: Boeing was feeling its way into the new global economy, an arena in which there are no hometowns, no loyalties, a world in which aircraft tails can be built in Korea and wings in China, and all of them assembled in a place like Seattle. Suddenly, it’s no longer a given that Boeing’s new sonic cruiser--which everyone for years had assumed would be the next bonanza--will be built in Seattle at all.

The company has been upbeat, pledging its commitment to the Boeing 747, which is under increasing threat from newer, bigger Airbus planes. Boeing Vice President Bob Watt, a fixture on the Seattle scene who headed the Chamber of Commerce before joining the company last year, says Seattle is not as dependent on Boeing as it once was. The economy has diversified mightily. Biotech is thriving, as is software, leaving aside the dot- coms. Microsoft hired about 5,000 new workers during the past year.

“People are cynical,” Watt says. “They’re not as sure as they once were that we’re going to be able to do something. But the reality is, we are in a much better position to do something about it than we ever have been before. Part of our DNA is we know that we can pull through those hard periods and we can pull through stronger and better and different.”

That’s the way the city leadership sees it. “We’ve got a long way to go, but we need to do it and we will,” says Mayor Greg Nickels. “This slowdown in the economy might be the perfect time to begin that work, create some jobs in building light rail and other infrastructure pieces. The second thing is, even though we’ve had that dot-

com crash, obviously technology and the knowledge industry is going to be with us for the long term. We need to position Seattle to be able to compete for its share and more of that sector as it rebounds.”

Schell believes Seattle, with its strong ties to Pacific Rim nations, its busy seaport, its wealth of intellectual capital, is poised to join the kind of second tier of global cities--Berlin, Sidney, Milan and Barcelona are others, he says--that will become the important “next step” leaders of the global economy. “You don’t have to be an L.A. or a Mexico City or a Rio anymore,” says Schell. “Paris and Rome are losing out to Lyon and Barcelona, where the economy and the ideas are happening.”

Schell gets impatient when people accuse the city of failing to seize the moment of the ‘90s. “I think I counted up almost $800 million in civic investments. One hell of a lot of stuff got done. And the local papers were worried about, well, the mayor didn’t attend the riot at 1 in the morning at Mardi Gras. I was supposed to be directing traffic, I guess. And, gee, we were embarrassed at the WTO because the police had to use tear gas. I mean, give me a break!”

But even Schell believes that by the end of the decade, the town needed a timeout. “What was happening in the ‘90s, it was not sustainable psychologically. There were too many people getting too rich, too fast, and honestly believing they earned it. Our . . . daughter had a friend who started working as a secretary at Amazon, and she ended up being worth $4 or $5 million. And she was explaining to her dad, well, I worked really hard, Dad, for that $5 million.” Schell, who made his millions developing downtown real estate, shakes his head--it’s that Old Seattle, New Seattle thing again.

“It’s much better to be based on reality, and a growth that’s long-term and sustainable,” he says. “Boeing will probably never go back to 125,000 employees. The future growth will come from the Microsofts, tourism, trade. We can maintain a smart city, so that Boeing thinks it’s important to keep its research and development here, the intellectual capital will reside here, and we do that by creating a place where smart people want to live.”

There are those who will say that the entrepreneurial boom in the ‘90s left a trail of corpses, and they will be right, but it is perhaps in the fecund nature of the rain and the trees here that the Seattle phenomenon was not mere transition but transformation. It was Starbucks’ vision of an Italian-style coffeehouse where people could meet and sip espresso that changed the face of many street corners in urban America. RealNetworks’ delivery of instant multimedia to computer screens changed the nature of radio and television. Craig McCaw created the cellular phone industry here from scratch, Aldus invented desktop publishing, Costco brought wholesaling to the consumer, Nordstrom brought practical shoes and solicitous service back to the department store.

The very nature of philanthropy was transformed here, as dozens of the software millionaires left their old jobs and took on new ones, setting up fair-trade coffee enterprises to finance religious ministries in Central America, digitally recording classic art and the disappearing ethnic music of the world, gathering money from their friends to buy and preserve tens of thousands of acres of threatened wilderness. Paul Brainerd and his wife, Debbi, used their money from Aldus to build a $50-million environmental learning center on 255 acres of Bainbridge Island, where schoolchildren can explore intact ecosystems in the middle of an urban environment, aided by an array of technology.

In 1994, Bill Gates launched the Bill & Melinda Gates Foundation, the largest philanthropic foundation in history with assets of more than $24 billion. They aim at nothing less than bridging the gap in human health between rich countries and poor ones, in addition to providing massive infusions of cash into public schools and libraries, minority scholarships and other endeavors.

“The dramatic growth in personal wealth has been pretty extraordinary in terms of distinguishing us from most other cities,” says Gates’ father, William Gates Sr., who heads the foundation. He admits he spent several years reminding his son that he had a responsibility to give back some of the money he was making. “The statement that would come back was, the most important thing for this town is for me to make that company succeed,” Gates says. “What do you say to that? He was right. It was really just a matter of priorities and time commitment. The evidence of the enormous willingness of these people [to give back] is already quite phenomenal.”

Yes, Seattle got the comeuppance many people thought it deserved, but the impression lingers that somebody is already figuring a way out of it, somebody who got laid off and had a great idea while kayaking yesterday morning.

“Seattle has no Civil War, it has no historic Hispanic culture, it’s just a lot of people from the great American heartland who moved out here and did well, and it’s a city that has no particular vision of where it’s going,” says former Seattle Weekly publisher David Brewster. “It’s just like Gatsby in that respect. It’s in the constant process of reinventing itself.

“It welcomes all these people with all these weird, unsettling ideas--like, ‘Why should people buy books in bookstores?’ In Boston, they would be told, ‘Because they always have been. That’s just the way it is.’ Or, ‘Why should people sit in a classroom when they can get the same information on a computer?’ To understand the nature of this city, it is that nothing is sacred.”

Aileen Agricola, my neighbor, got out of her depression and started volunteering last year at the Environmental Learning Center, filing, answering phones, making coffee. Nobody seemed to know, or much care, that only a few years ago she was closing multimillion-dollar business deals. They all had pasts too. This was now. In May, the center hired her to manage its database systems--a job that would barely pay the mortgage and keep the cafe from sinking into ruin.

“It’s the job of my dreams,” she says, and she isn’t kidding.

*

Kim Murphy is The Times’ Seattle bureau chief. She last wrote for the magazine about a U.S. Army Ranger mission in Afghanistan.