January 8, 1998 in City

Eugster Sues For Copy Of Redevelopment Deal Lawyers For River Park Square, City Say Information Is Confidential

By The Spokesman-Review

Spokane attorney Steve Eugster took aim at the River Park Square project again Wednesday, filing a lawsuit against the city designed to shake loose records related to the downtown redevelopment plan.

The project’s cornerstone is a Nordstrom department store. Eugster wants a copy of the draft lease agreement between Nordstrom and the developers, which they plan to use as security for a proposed $22.65 million loan. Those dollars would come from the U.S. Department of Housing and Urban Development, which would loan the money to the city.

The loan has received preliminary approval from HUD but hasn’t been awarded.

“What (City Manager Bill) Pupo wants to do is conduct the government of the city of Spokane in private for his special interest,” Eugster said. “How can the public be sure they’re getting what they bargained for?”

City officials say they don’t have a copy of the lease. Even if they did, they say, the document is exempt from state public disclosure laws.

“He’s seeking proprietary and confidential information,” said Stan Schwartz, assistant city attorney.

Releasing details contained in the lease would put the shopping center’s developers at a “competitive disadvantage,” said Duane Swinton, an attorney for the developers of River Park Square.

“That’s confidential between the landlord and the tenant,” Swinton said, adding that the city and HUD representatives have reviewed the document thoroughly.

The $100 million redevelopment of the shopping mall also will include a multiplex cinema, expanded parking and numerous shops and restaurants.

While the specifics are being negotiated, the developers plan to use the Nordstrom lease and building as security for the $22.65 million loan, Schwartz said. That means if the developers default, the city could take possession of the building and attached lease to make payments on the HUD loan.

If the project fails and the city defaults on the loan, Spokane Community Development Block Grant money would be used for repayment. City officials have sworn that will never happen.

“The city is going to take a security interest in the lease, and in order to evaluate the worth of that interest, one has to know what that interest is,” Eugster said. “How can they keep the interest secret when they’re giving the public an interest in it?”

Swinton and Schwartz said that Eugster has tried unsuccessfully to get access to the Nordstrom lease before.

On behalf of Spokane residents Richard Adams, John Talbott and Margaret Leonard, Eugster filed a lawsuit last year challenging the city’s involvement in the development. Superior Court Judge Kathleen O’Conner decided the city acted appropriately, a decision that later was upheld by the state Supreme Court.

O’Conner’s decision also dealt with Eugster’s request for a study that included a summary of the Nordstrom lease, Swinton said, adding that O’Conner concluded the documents were exempt from public disclosure. “He’s asking for the same thing in a different format.”

River Park Square is owned by Citizens Realty Co. and Lincoln Investment Co., affiliates of Cowles Publishing Co., owner of The Spokesman-Review.

, DataTimes

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