July 13, 2013 in City

Ridpath’s fate hinges on condo bylaws suit

By The Spokesman-Review
 
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The closed Ridpath Hotel in downtown Spokane is at the center of legal disputes over exactly who owns the property. Legal rulings could determine whether it once again becomes a hotel or an apartment complex.
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The Ridpath’s future keeps bumping into its past.

This time, a bit of chicanery from five years ago has gotten tangled up in the competing efforts of two high-profile Spokane developers to bring the Ridpath back to life. Ron Wells wants to create an apartment tower at the Ridpath; Art Coffey wants to bring it back as a hotel. But neither owns all the pieces of the hotel. Now they’re on opposite sides of a lawsuit that aims to resolve exactly who owns what and what can be done there.

“This action is actually quite critical to how the Ridpath turns out and its use in the future,” said attorney Marshall Casey, who represents the owners of the restaurant space in the hotel, Club Envy LLC. “So we’re trying to push forward with all speed.”

Club Envy, along with Wells’ group, Ridpath Penthouse LLC, and a group called 515 Spokane Partners, are plaintiffs in the suit. Coffey’s Ridpath Revival LLC is a defendant, along with the defunct Ridpath Tower Condominium Association, and the Federal Deposit Insurance Corp., which has taken ownership of some hotel units.

The dispute is complicated, but boils down to this: Were two condo units purchased by Coffey formed illegally five years ago, and should that be reversed? And do the condo rules prevent Wells from putting apartments into the former hotel?

At issue is a set of condominium documents drafted in 2008 and modified later that year by Greg Jeffreys. Jeffreys, who is now jailed on a massive series of federal fraud charges unrelated to these transactions, was the main force behind the piecemeal condominium process at the hotel that has been a big obstacle to progress.

When he and the two other officers of the condo association modified the agreement in August 2008, they created additional condo units out of roof space, which shrank the voting rights of other members and gave away common property, all without notifying other members or holding a vote as required by law, the lawsuit alleges.

These rooftop units were purchased earlier this year by Coffey, who says he is trying to rally investors behind a proposal to reopen the Ridpath as a hotel. He purchased the last of Jeffreys’ units in the hotel shortly before Jeffreys was charged in federal court.

Neither Coffey nor his attorneys returned calls seeking comment. But if the lawsuit were successful, and the revised condominium rules were thrown out, Coffey’s rooftop units would presumably cease to exist. Which could be no small problem for him, given that he owns just one other unit, a small ground-floor space that used to house a coffee shop.

Meanwhile, the other high-profile proposal at the Ridpath is Wells’ plan to turn the hotel into apartments. He now owns most of the hotel units and has said he could proceed with his proposal even without Coffey’s units, given that he has a voting majority in the condo association. The condo declarations have a bearing on that plan, because they limit activity in large portions of the Ridpath to nonresidential uses. The lawsuit argues that the modified condo agreement should be thrown out and that the judge should rule the condo bylaws do not prevent using former hotel rooms as apartments.

Neither Wells nor his attorney would comment about the suit. As for the state of the project, Wells was optimistic, saying that he believes he will have financing in place by the end of September to move forward.

How the legal case plays into future developments at the Ridpath – or even how it plays into the chance that there will be future developments at the Ridpath – is hard to see.

Like most of the problems there, this one grows out of Jeffreys’ astonishingly cavalier approach to the laws, at least if the lawsuit’s allegations are correct.

The lawsuit takes us back to the pre-crash days of 2008, when the Ridpath was merely failing and not yet closed. Early that year, the hotel was owned by a single entity, Washvada Investments LLC; it was broken into 18 condo units early that year, though Washvada owned all the units. The officers of the condo association were Douglas DaSilva, Grant Person – and Jeffreys.

At that point, the suit alleges, neither Jeffreys nor Person owned any units. That, in itself, would violate the condo association’s bylaws, as well as state law. The condo declaration was revised in June 2008 to create a 19th unit of the restaurant space; all the voting members approved. A couple months later, it was revised again to create the rooftop units, perhaps for some future development. The rooftop spaces encompassed key heating and cooling equipment for the restaurant space.

According to the owners of Club Envy, as well as affidavits from DaSilva and Person, Jeffreys executed the second set of changes; there was no vote or notice to the other owners.

If that agreement is void, do Art Coffey’s rooftop units simply vanish? If it is not void, is Ron Wells prevented from putting apartments in the tower? The case and the number of parties with a financial stake suggest the resolution may well be found not in an up-or-down ruling, but in a settlement among the parties.

Will it clear the way for the next chapter? We can hope.

Shawn Vestal can be reached at (509) 459-5431 or shawnv@ spokesman.com. Follow him on Twitter at @vestal13.


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