June 7, 2008 in City

City’s RPS strategy faces familiar critic

By The Spokesman-Review
 

The Seattle attorney who originally represented the city of Spokane in the contentious River Park Square issue is accusing his successor of misleading council members with a failed legal strategy that’s costing taxpayers millions of dollars.

O. Yale Lewis stopped representing the city in 2001 after a dispute over his fees.

Lewis mailed more than 50 documents to Spokane Mayor Mary Verner earlier this year on the matter and said he did so in response to a Web site maintained by Laurel Siddoway, the attorney who led the case after Lewis.

Last month, Verner and former City Attorney Jim Craven flew to Seattle to meet with Lewis. Verner has declined to give details about the meeting.

The downtown shopping mall was redeveloped in a public-private partnership in the 1990s, but the financing landed the city in court with the developer and spawned a series of lawsuits. River Park Square is owned by the Cowles Co., which also owns The Spokesman-Review.

Siddoway said Friday she had heard about Verner’s meeting with Lewis, but was unaware of Lewis’ letter. She said city officials have not expressed concerns about her work.

“Mr. Lewis has not been involved in the case for many years,” Siddoway said. “I obviously disagree with (him) but have no further comment on his observations.”

Late last week, the city released a small portion of the documents Lewis presented to Verner in response to a records request filed by The Spokesman-Review in April. But city legal staff declined to release 50 letters between attorneys and city staff, saying the letters are legally exempt from release because of attorney-client privilege.

Lewis’ letter to Verner says he believes the mayor will be “shocked by how apparent it was from the outset” that the strategy used by former Mayor John Powers and Siddoway “would ultimately implode with devastating impact on Spokane taxpayers.” He also wrote that the documents indicate that he was not replaced because of the fee dispute.

Only two Spokane City Council members have been given copies of the new documents, and they disagree about their importance. Councilman Steve Corker says he found no smoking gun in the papers. But Councilman Bob Apple said that Lewis’ packet suggests some city officials acted inappropriately to undermine the city’s case.

Lewis did not return calls seeking comment.

The new wrinkle in the dispute, which was settled in 2004, comes as Verner says she will ask the City Council to create new rules in hopes of preventing a similar controversy.

Verner said a lot of the headaches in River Park Square could have been avoided if the city had required Cowles Co. to guarantee payment on the bonds used to build the downtown mall’s parking garage.

“What I want to have is a provision in the Spokane municipal code that would require that a letter of credit be posted in a similar financial arrangement, or wherever there might be city assets or city resources at stake,” she said.

Corker, a critic of the original River Park Square deal but a supporter of the city’s 2004 settlement of the main dispute, said Verner’s idea makes sense.

“If that would bring closure to the matter, I definitely would support it,” Corker said.

But former City Councilman Steve Eugster, who also opposed the city’s involvement in the mall, said Verner’s proposal strikes him as politics.

“I can assure you that Mary Verner doesn’t have a clue as to the complexity of these financial transactions,” Eugster said.

During last fall’s mayoral campaign, Verner said she would consider consulting with Lewis, the city’s original special counsel on River Park Square.

“I’m really reluctant to scrape open a healing wound,” Verner told The Spokesman-Review in November. “It would have to be for something productive that would be beneficial to the taxpayers.”

In an interview last week, Verner declined to say if she is considering new lawsuits based on the information provided by Lewis.

Acting City Attorney Pat Dalton said he doesn’t anticipate new lawsuits. Dalton took over for Craven at the end of March, but Craven has continued to do some legal work for the city.

Differing views

Apple and Corker were given copies of the documents that included letters not turned over to the newspaper. Apple and Corker said they were advised by city legal staff not to turn over the documents to anyone. Corker said that on the advice of his personal attorney he gave his copies to the legal department. Apple declined to say if he still has his copies.

Corker said Thursday that he read the packet but does not believe the information he saw would force the city to reopen River Park Square legal fights.

“I supported the (2004) settlement and I continue to support it today,” Corker said.

Apple, however, said Lewis’ packet indicates the attorney has more information about the case that would prove some city officials and elected leaders acted “not to protect the public, but to protect a few people who had done some bad things.” In his letter to Verner, Lewis asked for city permission to hand over the full packet to Corker, former City Councilwoman Cherie Rodgers and former Mayor John Talbott. City attorneys decided against providing all the records to Rodgers and Talbott.

Asked why Apple and Corker received copies, Dalton said: “I asked that very question when I discovered that myself.”

Rodgers not included

Dalton said the city didn’t release all the documents to protect its right of attorney-client privilege and prevent further lawsuits.

Rodgers filed a records request for the information in April. She argues that because she was a City Council member while Lewis was working for the city, the city can’t use attorney-client privilege to prevent her from getting the documents. She was the client and should have been shown the letters then, she said. Craven noted that Rodgers is no longer on City Council.

“Do you stay (a client) forever because you were on the City Council?” Craven said.

Rodgers said Craven told her in a phone conversation the city would not give her the full packet.

“He said it’s no big deal, it’s just two attorneys trying to figure out who’s the smartest,” Rodgers said. “I said, ‘Now you just make me more curious than ever.’ ”

Said Craven, “It’s obvious to everyone, and it always has been, that there were two strategic visions by the lawyers who represented the city.”

The protracted battle over River Park Square began in the mid-1990s, when the city partnered with the mall in a complicated arrangement in which the mall sold its expanded parking garage for $26 million to a nonprofit foundation. The foundation in turn leased the garage to a city-sponsored parking authority. Collections from the garage were supposed to pay all of the costs, but parking receipts covered only about half of expenses, which included debt service on a $31.5 million bond issue.

The Spokane City Council agreed to settle lawsuits between the city and River Park Square in 2004, but other suits continued until earlier this year, when a judge ruled against the city in its attempt to sue Prudential Securities Inc., the Seattle firm that served as underwriter for the bonds.

As part of the 2004 settlement, Cowles Co. agreed to guarantee payment of a U.S. Department of Housing and Urban Development loan on the project and was given ownership of the mall’s garage. The city remained responsible for repaying the $43.4 million outstanding debt from buying garage bonds in 2004.

The city’s remaining payments on its obligation go through 2027 and will cost between $1.4 million and $2.3 million each year.

Rodgers and Tim Connor, of the Web magazine Camas, submitted documents to U.S. Attorney for Eastern Washington Jim McDevitt in August hoping for a federal grand jury probe into whether people involved in the mall project violated federal corruption laws, according to previous Spokesman-Review coverage.

McDevitt recused himself from the matter because of his former position with a law firm that worked on River Park Square issues. An investigation is being handled by the U.S. attorney’s office in Western Washington.

Rodgers, who recently filed a bar complaint against Siddoway for her handling of the case, said she has been interviewed by federal investigators as part of the new investigation. She is confident that she will someday view the letters withheld by the city. “If it takes everything, every day for the rest of my life, I will see what is in the rest of these letters,” she said.


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