August 20, 2006 in City

RPS suit returning city to court

By The Spokesman-Review
 

The city of Spokane faces the potential loss of hundreds of thousands of dollars for its refusal years ago to release public records associated with its failed involvement in River Park Square’s expansion in the late 1990s.

An independent journalist and online magazine are seeking damages, plus attorney fees, against the city in a long-running fight that has gone from Spokane County Superior Court to the state Supreme Court and back.

On Thursday, the City Council met in a closed-door executive session to consider a $350,000 settlement offer in the case brought by journalist Tim Connor, Camas Magazine and its publishers. Connor said the offer came from a mediation session earlier this month.

Council members reportedly rejected the settlement offer in favor of taking the dispute to trial, which is set for Oct. 16 before Judge Kathleen O’Connor.

Councilman Bob Apple confirmed that the council discussed a settlement, but declined to provide specifics because the discussion occurred in an executive session in which the public is excluded. Apple is required to maintain confidentiality about those meetings.

“It is my opinion the council may choose to fight this issue,” Apple said on Friday, but that the city could lose even more money under such a strategy.

Connor already has won $113,000 from the city in two related public records cases. The rejected mediation would have settled two other public records lawsuits brought against the city by Connor and Camas. “The trial is going to be a war,” Connor said in an interview last week.

He said about 80 documents are at issue in the trial. The city faces fines of up to $100 a day for not making them public under the state’s public records act.

The council signaled its intentions to fight last week when it voted to increase the amount of a legal contract with Laurel Siddoway, its special counsel for RPS. Council members voted to raise the contract for her work on the Connor case from $45,000 to $75,000.

Council members said they are concerned about setting a precedent for future open records cases.

Assistant City Attorney Milt Rowland filed a resolution with the city clerk on Thursday in anticipation of council acceptance of the settlement. Rowland pulled the resolution off the council agenda after the closed-door meeting in which the council is thought to have rejected the settlement.

The resolution said the claimants would likely incur attorney fees in excess of $200,000, which they are entitled to recover, making the settlement amount reasonable.

In addition to Connor, the resolution names the other claimants as Larry Shook and Judy Laddon, publishers of Camas Magazine, and Rhubarb Sky LLC.

The potential payment to Connor and the others comes on top of the millions of dollars of public money already spent on River Park Square.

The city in 2004 and 2005 settled most of a federal securities fraud lawsuit among the various public and private entities involved in the $31.5 million bond sale, proceeds from which were used to buy the mall garage. The settlement returned ownership of the garage to the mall company, an affiliate of Cowles Co., which also owns The Spokesman-Review.

The city is still pursuing an appeal against Prudential Securities, the bond underwriter, in an effort to force Prudential to mitigate the city’s losses.

Connor initially filed his request for public RPS records in 2000 but was denied the documents because the city argued they involved privileged attorney-client communications. More than 200 documents were involved in the request. All were eventually released, largely through separate lawsuits between the mall owner and the city and the city and its bond counsel.

One document, a confidential analysis by the city’s chief financial officer about the time of the settlement, has not been released and is subject to a separate public records case brought by Connor.

In an interview Thursday, Connor said the documents showed that city officials worked in secret to put together the RPS garage deal and a separate $22.65 million construction loan made to RPS through the city and the U.S. Department of Housing and Urban Development. The loan had been backed by the city’s annual community development block grants. The bonds were backed by parking meter money.

“This is a city that was practicing secret government when they did this deal,” he said.

In the settlement, Cowles Co. guaranteed repayment of the HUD loan.

Here’s how the deal was set up: In the mid-1990s, the city joined RPS in an intricate arrangement in which RPS sold an expanded mall parking garage for $26 million to a nonprofit foundation. The foundation in turn leased the garage to a city-sponsored parking authority. Parking collections from the garage were supposed to pay all of the costs, but insufficient parking receipts covered only about half of the expenses, which included debt service on the $31.5 million bond issue.

As part of the deal, the city had agreed to loan money from its parking meter collections to make up for losses at the garage, but political support for the project shifted during elections in 1997 and 1999. Council members subsequently refused to loan money to the project, forcing the arrangement into court.

Connor had been pursuing an online investigation into the deal when he and his associates entered into a lawsuit previously filed by Steve Eugster and his Spokane Research and Defense Fund over access to public records. Judge James Murphy, who is now retired, dismissed the suit and denied penalties, costs and attorney fees.

Connor and the others appealed and won before the Supreme Court in August 2005. The court ordered the case remanded back to Superior Court for trial on whether the documents in question were illegally withheld, and if so, how much in penalties, costs and attorney fees will be paid to Connor and the others.

According to the Supreme Court opinion, Connor has always asserted that the records were never privileged while the city has not admitted that it was mistaken in claiming that the documents were privileged.

“If Connor is correct, his right to inspect and copy the documents was improperly denied from the time of his request until disclosure. Penalties must be assessed accordingly,” the court ruled.

The court also said that allowing an agency to avoid attorney fees by disclosing documents after a plaintiff has been forced to sue for those documents would undercut the policy behind the public records act.

Councilman Apple said he wished the city had released the documents when they were requested to avoid what he called “a mess” between the city and Connor and Camas Magazine. “I don’t like any of it,” Apple said.


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