The Spokane City Council put approval of a federal loan for the River Park Square project on a fast track Monday, vowing to hold two public hearings this week and vote on the issue by early next week.
With Councilman Orville Barnes saying it is time to “fish or cut bait,” he and other council members voted 5-2 to let the downtown shopping center’s developers know by March 30 whether the $22.65 million loan has their approval.
“We have had a great deal of time to have the public comment on this,” Barnes said.
“We are not acting in great haste.”
“It’s time to … move on with the project, to make a decision,” said Councilman Rob Higgins. “It’s good for our community, good for downtown.”
Councilwoman Cherie Rogers joined Mayor John Talbott in voting against the rapid time line, saying the public needs more time to review the final loan documents.
“I don’t favor this,” Rodgers said. “This is not enough time for the public.”
The council’s vote next week may come before the city gets final word from the U.S. Department of Housing and Urban Development on the loan’s status.
While HUD has given the loan preliminary approval, a final decision isn’t expected until late this week or early next. HUD could make changes in the loan documents or approve the current draft.
The $100 million redevelopment of River Park Square includes a new Nordstrom store, a multiplex, expanded parking and numerous shops and restaurants.
The proposed public-private partnership calls for HUD to loan the city $22.65 million, which then would be loaned to River Park Square’s developers.
During past meetings, council members and City Manager Bill Pupo have said the city would wait at least two weeks after HUD’s final approval before voting on the loan.
But the developer’s construction schedule makes that impossible, Pupo said.
“We’re looking at construction deadlines, financing, opening dates and so forth,” Pupo said. He said any major changes proposed by HUD to the current loan documents would have to be approved by the council.
“In the past, the developer has been faced with deadlines which they have managed to extend,” Barnes said. “But now they are faced with a time line that we need to understand.”
Barnes noted the council has discussed the issue at 15 public meetings since the project earned preliminary approval in April 1995. The developer also has held at least 15 public meetings, he said.
In fact, Nordstrom is set to take over construction of its new store April 1, said Betsy Cowles, president of the two companies that own River Park Square.
“We can’t go ahead unless we know (the loan) is in place,” Cowles said, adding the developers also need to hear from HUD by then. “Each day makes a difference.”
Assistant City Attorney Stan Schwartz gave the council an overview of the loan mechanics.
Three factors will go toward paying the annual $2.5 million debt service on the the federal loan, Schwartz said. Those include: the base and percentage rents paid by Nordstrom, a $500,000 annual corporate guarantee from the developers, and 41 percent of the annual lease payments made to the developer for the land beneath the parking garage.
The collateral backing the loan must equal 125 percent of the loan’s principal amount, Schwartz said.
The collateral will include: a $1.05 million reserve account set up by the developer, the Nordstrom building and lease, the 41 percent of ground lease payments for the parking garage, and the $500,000 corporate guarantee.
If the project should fail and the city defaults on the loan, Spokane Community Development Block Grant money would be used for repayment. No city ever has used its block grant money to repay a loan.
“This is a complicated transaction,” Schwartz said, adding it was a challenge to make sure there was adequate revenue and collateral to support the loan.
“I do believe we have met that challenge,” he said.
River Park Square is owned by Citizens Realty Co. and Lincoln Investment Co., affiliates of Cowles Publishing Co., which owns The Spokesman-Review.
, DataTimes MEMO: This sidebar appeared with the story: PUBLIC HEARING The council plans to hold a public hearing Thursday from 5 to 7 p.m. in the council chambers at City Hall, 808 W. Spokane Falls Blvd. A second public hearing is Saturday from 2 to 6 p.m. in the council chambers. Council members plan to discuss the loan documents and vote Monday.
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