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Suit Seeks To Block Redevelopment Grant, Loan Eugster Against Taking Federal Money For Private-Public Downtown Project

Attorney Steve Eugster filed yet another lawsuit against the city of Spokane on Friday, this time targeting plans for a downtown redevelopment project.

Eugster asks in a Superior Court lawsuit that the city not be allowed to accept a $1 million grant and $23.8 million loan from the U.S. Department of Housing and Urban Development.

The attorney charges the city’s plans to dedicate the federal money to a project that will nearly double the size of River Park Square violate the state’s constitution.

“The city is using public funds for private purposes,” Eugster said. “It’s unfortunate they can’t understand that’s illegal.”

This lawsuit is the second Eugster has filed against the city in less than two weeks - bringing to five the total number of legal battles the attorney is waging with the city.

Duane Swinton, attorney for the project’s proponents, called the latest lawsuit “completely without merit and frivolous.

“The city is completely free to accept these funds,” said Swinton, adding that Seattle and Tacoma last year received HUD grants and loans for similar projects.

City Manager Roger Crum said he hadn’t seen a copy of the lawsuit and couldn’t comment on it. City Attorney James Sloane was out of town.

The city learned Thursday it would receive a $1 million economic development grant from HUD.

A statement from HUD mistakenly stated the city also had received a $23.8 million loan. Although the HUD grant money is directly tied to the loan, the city’s completed application has not been sent to the federal agency.

“That press release was not accurate,” said Jack Peters, HUD’s director of community planning and development in Seattle.

The city can’t even accept the grant unless it gets a loan from HUD, said Allen Schmeltzer of the city’s community development department.

Money from the grant will be used to pay the first year’s interest on the federally guaranteed loan, as well as reduce the annual principal payments each year thereafter.

Both the grant and the loan will be used to build a bigger Nordstrom store - part of a larger plan by River Park Square’s owners to nearly double the downtown’s mall size.

About $45 million in private money will be used to build a movie theater, food court, glass-enclosed Post Street atrium and space for local retailers and national chains.

The public-private partnership is headed by Citizens Realty Co. and Lincoln Investments Co., owners of River Park Square and affiliates of Cowles Publishing Co., which owns The Spokesman-Review.

Eugster filed a lawsuit against the city last week aimed at blocking a downtown improvement district. He also is in the midst of two lawsuits over the proposed Lincoln Street Bridge and one suit regarding access to downtown skywalks.

Councilman Orville Barnes called the most recent lawsuit “expected.”

“I think it’s too bad Steve has taken it upon himself to be the protector of all Spokane,” Barnes said.

Councilman Joel Crosby said he once thought of Eugster as a constructive critic but now considers him a “menace.”

“This kind of irrational action on his part is not only potentially destructive to the community but raises serious questions about his motives and judgment,” Crosby said.

Eugster said he’s driven by a need to do what he thinks is right.

, DataTimes

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