Attorney Suing City Over Garage But Officials Say There’s Nothing Illegal About City’s Involvement In Downtown Project, Call Lawsuit Premature

Attorney Stephen Eugster sued the city of Spokane on Tuesday, claiming the city’s participation in a large downtown redevelopment project is illegal.

Eugster said the city’s plan to buy the River Park Square parking garage violates city and state laws and is an illegal gift of taxpayer money to private developers.

The lawsuit seeks to prevent the City Council from taking further action on the project.

“The people of the city of Spokane are being deceived,” he said. “It’s so blatantly wrong that anybody should be able to see it.”

City attorneys said nothing about the city’s role in the project is illegal. The lawsuit is premature, they said, because no action has been taken.

The council held a public hearing about the project last Thursday, but isn’t expected to vote until Monday at the earliest.

“He’s asking the court to ask the City Council not to do something when we’re not sure what the City Council is going to do,” said Stan Schwartz, assistant city attorney. “He’s jumped the gun.”

Eugster represents Citizens for Leaders with Ethics and Accountability Now! (CLEAN), Coalition for a New Spokane, and Spokane Research and Defense Fund. All three are non-profit organizations that represent city of Spokane taxpayers.

CLEAN also is the plaintiff in a lawsuit seeking to prevent taxpayer money from being spent on a new Mariners’ baseball stadium in Seattle.

Eugster’s lawsuit says the city violated the law by not having a comprehensive parking plan before considering the project, not complying with state environmental laws, bypassing the competitive bidding process and attempting to circumvent the citizens’ right of referendum by labeling the deal an emergency.

The city is considering buying River Park Square’s parking garage from its owners, Citizens Realty Co. and Lincoln Investment Co., affiliates of Cowles Publishing Co., owner of The Spokesman-Review.

The garage would be part of a $100 million redevelopment that includes a new Nordstrom store, a 24-screen cinema, and numerous shops and restaurants. The developers have said the project would die without the city’s participation.

Under the proposed deal, the city would buy the garage for $29.8 million using revenue bonds, paid off with parking fees. No tax money would be used.

The city also would rent the ground the garage sits on for $610,000 per year for 20 years. That amount would be adjusted for inflation every three years. Only revenues generated by the garage would be used to pay the rent.

The garage’s purchase price was determined by three appraisals, two commissioned by the city and one by the developers. The appraisals are based on the amount of money the garage would earn in the future.

Eugster said determining a price that way adds up to a gift for the developers.

“No government entity can pay for more than it’s worth. They can’t give funds away,” he said. “The difference between what they pay and the market price is a gift.”

Betsy Cowles, president of Citizens and Lincoln, disputed the assertion that the city’s participation would be a gift to the developer.

“The construction budget for remodeling the existing garage and building the expansion is $20 million,” she said.

In addition, Cowles said the replacement cost for the existing garage that would be part of the deal ranges from $13.7 to $18.8 million in 1998 dollars.

The existing garage was built in 1973, and has a taxable assessed value of about $2.3 million.

Schwartz said the City Council has not decided how it will set the purchase price. Eugster “is assuming things which may or may not come true,” Schwartz said.

The remodeled and expanded parking structure would be sold to the city in 1999. It includes the renovated garage and a seven-floor addition.

Cowles hadn’t seen Eugster’s lawsuit and said she couldn’t judge its impact on the redevelopment project.

“Our position is strong on all legal grounds,” Cowles said. “We think we’ve done our homework.”

, DataTimes ILLUSTRATION: Color Photo