November 17, 2004 in City

Council OKs loan of parking meter money

By The Spokesman-Review
 

The Spokane City Council has authorized a loan agreement making $7.8 million in city parking meter revenue available to pay debts of an agency that had been operating the financially troubled River Park Square parking garage.

The loan was ordered by the Court of Appeals more than a year ago as the result of lengthy litigation over the finances of the public-private garage.

A previous loan offer of $3.4 million was rejected by the Spokane Parking Public Development, which had been leasing the garage under terms of a 1997 ordinance that established garage financing.

Monday’s loan offer includes parking meter revenue set aside through July 8 as backup funding for garage operations. The owner of the mall about that time took possession of the garage because lease payments were in default. Land under the garage is owned by the mall, which is now operating the garage. Councilwoman Cherie Rodgers said earlier that the PDA is $11 million in debt.

Before the city loans out the money, it is requiring that the title to the garage be handed over to the city, which earlier this year paid off investors who had purchased $31.5 million in municipal bonds in 1998 to raise money for eventual garage acquisition by the city.

The city is separately seeking contributions to the retired bond debt from the mall owner and other parties, who the city argues must share responsibility for the failed transaction.

A securities fraud trial, initially brought by bondholders, is pending in federal court in January with the city as plaintiff.

The loan agreement also seeks to recover money that has been diverted from the city’s community development program for neighborhoods. The developer previously agreed to turn over 41 percent of its ground lease payments to repay a $22.6 million federal loan, which went for mall construction and was backed up by the city’s annual federal grant money.

Since the PDA has been unable to pay its ground lease, the developer’s loan payments have gone into arrears, resulting in a reduction of neighborhood grant funds to make up the loss.

River Park Square is owned by companies affiliated with Cowles Publishing Co., which also owns The Spokesman-Review.


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