Mediated talks about RPS garage could avert trial

Attorneys for the city of Spokane, River Park Square and others involved in a massive federal lawsuit over the mall’s garage held talks Thursday that could head off a trial in January.

The mediation session, proposed by the city, brought attorneys and some city officials to the federal court offices on the second floor of the downtown Post Office building for meetings with a pair of mediators.

Because of a gag order, participants would say little about the progress of talks or the issues being discussed, other than to express interest in settling the massive civil fraud case.

During a break in discussions, Mayor Jim West would say only that the city was listening to what other parties had to say.

Ladd Leavens, attorney for the mall developer, said much the same thing.

“Nobody’s thrown anything, and nobody’s stormed out,” said City Council President Dennis Hession.

Another mediation session is scheduled for today.

Lawyers for the different groups are working with a pair of mediators – one from Spokane, another from Seattle – who are talking with them individually and in different groupings.

The lawsuit involved the underperforming mall garage, which was sold by the mall’s developer to a private foundation for $26.5 million in the fall of 1999.

The foundation had sold bonds, backed by garage revenues, and planned to turn over the garage to the city when the notes were paid off in 20 years.

The mall development firms are affiliates of Cowles Publishing Co., which also owns The Spokesman-Review.

Soon after the garage opened, it was clear that it could not bring in enough revenue to cover the bond debt, plus the rent, operations and maintenance costs.

When the city refused to comply with a 1997 ordinance that had promised loans from its parking meter fund to cover rent and operations costs, the developer sued and a cascade of legal action began.

Eventually the investors who had bought the bonds sued the city, the developer and others involved in the project for fraud, saying they had been deliberately misled about the garage’s ability to make money.

Earlier this year, the city borrowed $34 million, bought out the bondholders and became the plaintiff in the lawsuit, assuming the investors claims against the other defendants.

Two of the defendants have already settled with the city, and city officials hope to get contributions from the other parties to avoid an expensive monthlong securities trial in January.

The mediation discussions Thursday were the first formal talks since those settlements were reached.