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Mall garage was tax exempt

Fri., June 29, 2007

The River Park Square parking garage was exempt from property taxes while it was operated by a city-created agency, a Washington state appeals court panel agreed this week.

A three-judge panel unanimously upheld a 2005 ruling by Whitman County Superior Court David Frazier, who said the city of Spokane didn’t owe Spokane County nearly $1.8 million in back taxes on the garage from the time it was part of a contentious public-private partnership.

Because the original plan for the garage called for the city to own it when the bonds used to purchase it were paid off, it should be considered a public entity that is exempt from property tax, the appeals court said. A notice from the Internal Revenue Service questioning the garage’s tax-exempt status for federal purposes doesn’t change that, the appeals court said, because that notice was preliminary, the city appealed it and there is no final determination in the record.

The garage and the agreements between the city and the River Park Square developers were the focus of a string of lawsuits in state and federal court. The mall was developed and is owned by companies that are subsidiaries or affiliates of Cowles Co., which also owns The Spokesman-Review.

In their decision, the appeals court also rejected an appeal for attorneys’ fees from former City Councilman Steve Eugster, who filed one of the lawsuits over the tax status of the garage. Eugster’s organization, the Spokane Research and Defense Fund, filed the suit voluntarily and the city would have filed its action even if the group had not, the panel ruled.

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