September 14, 2004 in City

New round of mediation set over parking garage

By The Spokesman-Review
 

Parties involved in a federal securities lawsuit over the River Park Square parking garage have agreed to a new round of mediation this fall, city officials said Monday.

Two mediators will work with the city, the owners of the downtown mall, attorneys, bond underwriters and others still embroiled in a lawsuit stemming from the public-private financing of the mall’s parking garage in 1998.

Council President Dennis Hession announced the new mediation during Monday night’s City Council meeting.

The subject arose during council discussion of a request from City Attorney Mike Connelly to hire an additional special counsel for River Park Square litigation.

The council voted 6-1 in favor of hiring a law firm that brought the original securities fraud lawsuit on behalf of parking garage bondholders in 2001 in federal court.

Councilwoman Cherie Rodgers voted against the contract with Davis & Ceriani P.C., of Denver, Colo. She said the city already has a special counsel for River Park Square and the additional legal help could cost as much as $200,000 through the end of 2004, and another $300,000 if the case goes to trial as scheduled in early January.

Randall and Danskin P.S., of Spokane, has been providing legal work for the city on the parking garage dispute.

Davis & Ceriani had represented the owners of tax-exempt bonds sold in 1998 to finance a public-private partnership to own and operate the mall’s parking garage, while providing cash to the developer in the renovation of the downtown mall. The lawsuit alleged that the bonds were sold without full disclosure of the financial risks or limitations that had been placed on parking receipts that affected performance of the garage.

The owner of the mall received $26 million from a private foundation that sold the bonds. The foundation in turn leased the garage to a public parking authority operating under the auspices of City Hall.

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

The City Council in April voted to use the city’s general fund borrowing authority to retire $31.5 million in garage bonds at a cost of $34 million. The action triggered settlements with two of the parties in the federal lawsuit, reducing the city’s share currently to about $31 million. But other parties, including the mall owner and the under- writing firm that sold the bonds, have yet to reach agreements with the city. The city has sought to take the claims of the bondholders into federal court to resolve the dispute.

Rodgers voted against the city’s move to buy out the bondholders in April.

In an interview following Monday’s meeting, Hession said the city had been pushing for a new round of mediation behind the scenes for some time. He said the fact that all the parties still involved in the dispute had agreed to the mediation was a positive sign.

“It is important for this community to get this resolved,” Hession said.

One of the mediators was identified as Jim Craven, a Spokane attorney. The sessions are scheduled for Oct. 7 and 8, likely in Spokane, Hession said.

Deputy Mayor Jack Lynch defended the hiring of Davis & Ceriani as necessary to give the city its strongest possible case in a dispute involving millions of dollars.

“If you weigh what’s at risk and what we are spending, I see it as an investment,” Lynch said.

Earlier this year, the city estimated its spending on legal costs had exceeded $2.5 million. The city and two other chief litigants have spent in excess of $11 million on legal costs.


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