March 1, 2005 in City

Judge OKs one use of meter funds

By The Spokesman-Review
 

Some $6 million in parking meter money the city of Spokane has been setting aside for nearly three years can be used for a key piece of the River Park Square garage settlement puzzle.

Spokane County Superior Court Judge Robert Austin ruled last week the city can use the money to shore up a federally guaranteed loan. It can’t be ordered to give any of the money to the downtown mall’s former manager, who has a $6.5 million court judgment against the mall owners, the Cowles development companies.

RWR Management can try to garnish any property or possession of the development companies, Austin said. It could also try to garnish any property that a city parking agency holds that belongs to the development companies.

But as to whether RWR can garnish the parking meter money, “the answer is no,” Austin said in a three-page ruling.

Austin’s ruling is one of the last obstacles in finalizing the city’s settlement with the Cowles development companies. The City Council received a closed-door briefing on it and other aspects of the case Monday afternoon.

Mayor Jim West later said the city is now seeking settlements totaling $6 million from the two remaining defendants in a federal lawsuit, the law firm of Perkins Coie, which served as the city’s bond counsel, and Prudential Securities, the underwriter for some $31.5 million in garage bonds.

If they agree to that amount and avoid the federal trial scheduled for April, the city would be left with a debt of about $21 million stemming from the failed garage deal.

Like most things involving legal battles over the River Park Square garage, the issues over the parking meter money are complicated and tied up in the history of the lawsuit-spawning project.

The original agreements from 1997 surrounding the mall renovation called for the city to loan money from its parking meter fund to the Spokane Parking Public Development Authority any time the garage couldn’t meet certain expenses. The garage had such rosy economic projections that city officials thought they might never have to make good on such a pledge. Soon after the garage opened in late 1999, however, it ran into financial difficulties. When the parking agency asked for a loan in 2000, the City Council refused, saying it might never be repaid.

The mall’s developer – which by that point was operating the garage without payment – sued the city for a court order to enforce the loan pledge. That triggered a barrage of lawsuits, including a massive federal fraud case which will go to trial in April unless the remaining defendants settle with the city.

In 2002, a Superior Court judge said the city was obligated to make the loan. Parking meter money was put into an escrow account to be available if the city lost its appeals, which it eventually did.

Last year the city offered to loan money to the parking agency, but the terms were so unfavorable the agency refused. So the money that motorists put into city parking meters, about $1.8 million per year, kept being deposited into bank accounts. It couldn’t be loaned for garage expenses, or transferred to the general fund for city expenses such as police, fire or roads.

In a separate lawsuit, the mall’s former manager, RWR Management, accused the mall development companies of not paying for all the company did on the renovation project. Last August, a Superior Court jury agreed, and awarded RWR $6.5 million in back pay and attorneys’ fees. The development companies are appealing that decision, but have refused to take out a non-refundable bond during the appeal, so RWR is seeking to collect the judgment by filing claims against the mall companies’ other assets.

The mall development companies are owned by Cowles Publishing Co., which also owns The Spokesman-Review.

Last December, the City Council approved a settlement with the developer that involves using the set-aside parking meter money to make sure a federally backed loan for the mall renovation is repaid. RWR said that money should be fair game for the claim it has against the development companies, but Austin disagreed.

The money isn’t going to the parking agency to pay any debts to the development companies, he said. It’s going to pay off the loan.


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