Wwp Put Up Cash For Garage To End Suit But Settlement Hinges On Davenport Owners Securing A Loan For Renovation

The deal Washington Water Power Co. struck with its downtown neighbors last week came at a steep price, as the utility bought its way out of a lawsuit and into a downtown parking garage.

To quell the furor over its underground oil spill, WWP agreed to pay the Davenport Hotel owners an undisclosed amount of cash to drop their lawsuit against the utility. Sources indicate the settlement was well over $1 million.

WWP also agreed to give the city up to $250,000 to revive plans for a long-sought parking garage, at First and Post, which would serve the Davenport and other neighborhood businesses.

These are the newest costs the utility faces in its efforts to clean up community relations and ground fouled by oil that leaked from the company’s defunct steam plant. WWP’s final cleanup bill is expected to be more than $10 million.

The new agreements were reached Friday after more than 50 hours of mediated negotiations between principals of WWP, the Davenport Hotel and Metropolitan Mortgage & Securities Co.

The deal - much of which is being kept secret by a confidentiality pact - is heralded by all sides as a way to revitalize a dormant downtown block and reopen the city’s landmark hotel.

Davenport owners now assert they can finish renovating the hotel by 1998. City officials say they can build a parking garage in one year.

“We’re very pleased with the outcome of the negotiations,” said WWP spokesman Rob Strenge.

But as more details surface this week, so do potential hitches.

Much of the agreement hinges on Sun International - the Hong Kong owners of the hotel - finding a bank that will loan the $20 million needed to finish the Davenport renovations.

WWP’s investment in the parking garage is contingent on that loan, something Sun International has had troubles securing since buying the hotel six years ago.

Without proof of the loan, the utility won’t give the cash needed to pay for a new parking study, design work and other requirements.

Dave Mandyke, of the city’s public works department, said the city essentially has to start over on a 427-space parking garage project. “We’re just about at ground zero,” he said. “It’s been so long.”

Mandyke said the city won’t likely try to finance the garage, estimated at costing more than $4 million, until the Davenport owners show proof of the loan and their detailed renovation plans.

“We’re not interested in building a garage until we have a hotel,” Mandyke said, but noted WWP’s involvement helps.

WWP has a vested interest in the garage now that it is beginning a joint venture to renovate the steam plant just south of the proposed project.

Another potential hitch in the agreement is that the cleanup plan remains unclear.

The state Department of Ecology plans to announce soon how it believes WWP should handle the spill, an estimated 75,000 gallons of thick oil leaked from the steam plant’s underground fuel tanks.

The public will have at least a month to comment on the plan.

WWP’s controversial cleanup proposal calls for containing the oil with an underground wall on First Avenue and monitoring the spill. Critics contend the oil will just find a way around the wall.

WWP apparently eased concerns about its plan last week by expanding the indemnification policy it offers surrounding property owners to protect their properties against contamination.

“We’re very happy,” said Bruce Blohowiak, an attorney for Metropolitan Mortgage, which owns the block west of the Davenport. “What’s good for the Davenport is good for Metropolitan. This is why we wanted to be involved.”

John Clute, Gonzaga University law dean, said he agreed to mediate the oil spill negotiations because of his concerns for Spokane’s future.

“If Spokane doesn’t have a strong downtown the whole area suffers,” he said. “That’s the only reason I accepted the assignment.”

Clute managed the negotiations by keeping the parties in three separate rooms and shuttling proposals back and forth.

“Nobody lost their cool with me,” Clute said. “The thing that impressed me was that all parties came to mediation with a very strong sense of one overriding goal: Everyone wanted the restoration of the Davenport Hotel.”

Neither the Davenport owners nor a WWP spokesman would say how much money the utility agreed to pay Sun International to drop its lawsuit.

WWP officials stress that none of the costs will be borne by ratepayers. The state Transportation and Utilities Commission also confirmed that WWP has not asked to raise rates to cover any spill-related costs.

Jeffry Ng, executive director of Sun International, would only say the settlement covers the hotel’s own drilling and research costs to determine the oil spill threat.

“Everyone compromised,” said Ng. “I’m very glad that in the end it turned out everyone could cooperate for the whole of downtown.”

, DataTimes