A decision by Spokane County Superior Court Judge Kenneth Kato paves the way for the city to release about $400,000 that has been collected to spruce up the image of an 80-block downtown area.
Assessing downtown property owners and businesses a fee to support a Parking and Business Improvement Area is valid and constitutional, Kato ruled Friday.
Under the program, the city last year began collecting $650,000 annually from 800 property and business owners within an area bordered by Division and Walnut streets, the railroad viaduct and the north bank of the Spokane River. Fees ranged from $120 to $38,000.
The city had planned to disburse the money to the Downtown Spokane Partnership, an organization hired to manage the improvement area. But city officials held up the funds after Spokane attorney Stephen Eugster filed a lawsuit challenging the improvement area’s validity.
“This was an incredibly strong decision,” partnership President Karen Valvano said Monday in announcing Kato’s ruling. “There was a lot at stake. There was quite a lot of money sitting out there that we haven’t been able to use.”
Valvano estimated that the city is holding $400,000 in escrow for the improvement area. Assistant city attorney Stanley Schwartz said the money will be released shortly.
But Eugster said he will appeal Kato’s decision and ask for a state Supreme Court ruling. He wants the higher court to overturn Kato’s decision that Washington law permits a Parking and Business Improvement Area to “tax” real estate.
“The judge is wrong,” Eugster said. “The statute doesn’t say what he says it says. It’s a question of law and interpretation, and I think he is, in some ways, creating new law.”
Kato agreed with Eugster on one point - that the improvement area cannot exempt Riverfront Park from an assessment. Valvano said the improvement area’s ratepayer board will decide how to assess the 100-acre city park without overcharging taxpayers.
Eugster filed the complaint in June after the City Council unanimously approved the improvement area. It is similar to a local improvement district which allows business and property owners to charge themselves for public improvements and special projects.
Eugster filed the suit on behalf of his partnership, Mound Hardware, which owns the building where Eugster practices law. The suit named the city and Downtown Spokane Partnership as defendants.
The partnership is a non-profit group governed by downtown business leaders. Stacey Cowles, publisher of the Spokesman-Review, is chairman.
Valvano said the improvement area desperately needs the money to hire a full staff, launch a coordinated parking validation program and market downtown as a center for shopping and business services. A separate $200,000 contract with the city will fund maintenance crews and a team of unarmed security “ambassadors” to assist tourists and deter crime.
Eugster said he believes the improvement area is a subsidy for major downtown department stores and their landlords and will do little to benefit hundreds of businesses on the fringe of the area’s boundaries.
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