City loses battle over meter funds

The city of Spokane appears to have lost its last chance to withhold a loan from its parking meter fund to pay some expenses for the River Park Square garage.

The state Supreme Court refused this week to hear the city’s appeal of lower courts’ orders that the loan be made under a 1997 ordinance.

A lawyer for the mall’s developer, River Park Square LLC, said the company was pleased the court upheld rulings that the city must “fulfill its promises and obligations” as part of the downtown redevelopment project.

“The developer has consistently performed as required concerning the downtown project, which has been a catalyst for the significant renaissance under way,” attorney Duane Swinton said Friday.

Mayor Jim West said the court’s decision doesn’t change the city’s current strategy to try to settle with some or all of the parties involved in garage litigation.

“It may lower some of the acrimony,” West said. He hadn’t seen the ruling Friday afternoon and didn’t know if there was any chance of another court review.

The financially strapped parking garage has been the source of a string of lawsuits, and the high court’s ruling is connected to one of the very first disputes.

Soon after the expanded parking garage opened in 1999, revenues were so low that the parking facility couldn’t pay its rent or operations and maintenance expenses. In early 2000, the Spokane Parking Public Development Authority, a city-created agency that oversees the operation of the garage, invoked the ordinance and asked the council for a loan to pay those expenses.

The 1997 City Council had passed the ordinance as an assurance to investors in bonds being sold by a private foundation to buy the garage from the mall developer. River Park Square is owned by affiliates of Cowles Publishing Co., which also owns The Spokesman-Review. Investors were promised the first call on parking revenues, so the parking meter money was offered as a backup for those other expenses.

At the time, the city had a consultant’s study that said the garage would earn more than enough to cover all those expenses. The ordinance doesn’t even spell out what interest, if any, the loan would have because some city officials believed that any shortage from one month would be small and repaid with revenue from the next month.

But by 2000, the mall had become a hot political controversy and the majority of the council had swung against many aspects of the complicated public-private partnership. A majority of the council refused to make the loan, saying there was no guarantee the struggling garage could ever pay it back.

The developer asked a court to order the city manager and city attorney to make the loan. A trial court granted that order, known as a writ of mandamus, but the Supreme Court later rejected it, saying only the council could be ordered to spend money from the city parking meter fund.

The developer eventually asked for a new order, this time one directing the council to make the loan. In March 2002, Superior Court Judge James Murphy agreed, but then-Mayor John Powers contended the reasoning was flawed.

The city appealed, the state court of appeals backed Murphy last fall, saying the city has “a duty” to make the loan. It also rejected challenges that the 1997 ordinance violated the state Open Public Meetings Act or the Ethics in Government Act.

Again the city appealed, and this time the Supreme Court denied the request without comment. In its earlier ruling, the high court had said the main problem was the naming of the wrong public officials to make the loan.

West, who was elected last November, said the case was already on appeal when he took office. “I didn’t step in to change that,” he said. “I just let it play out.”

Early in the case, the parking meter money was ordered held in an escrow account. That account holds about $7 million right now, and in the coming weeks the council will again be asked to approve a loan of that money to the parking authority. The agency would use it primarily to pay the developer, which has been operating the garage without payment since 1999.

Since the developer first asked for the writ, more than a dozen other lawsuits have been filed. Among them is a federal securities fraud suit filed by investors against the city, the developer and their advisers, lawyers and bond underwriters. To settle the federal suit, the city wants to sell its own bonds, buy out the current investors, then settle with defendants who are willing and take the others to trial. That trial is scheduled for Jan. 3.