Spokane County will likely settle a dispute by accepting a piece of land from one developer and selling it to another.
At issue is the value of 12 acres that the soon-to-open Spokane Valley Mall needs for storm-water drainage.
The land is worth about $2 million, now that 1 million square feet of retail space is being built nearby, according to the county assessor’s office.
Before development was planned, the land was worth about $50,000.
The value of the land has created a dispute because Salt Lake City-based JP Realty, Inc., the mall developer, needs to use that property to drain storm water from the mall’s parking lot. It built the multimillion-dollar mall complex assuming it could use the land for that purpose.
However, the land belongs to developer R.A. Hanson. Several years ago, Hanson dedicated the land to the county for use as a park. The county later determined that it could not use the land as a park and wanted to return it to Hanson.
The two developers have not been able to decide how much JP Realty should pay Hanson. The county has been pushed into the position of intermediary because it does not want to allow the mall to open until the issue is resolved and someone has claimed ownership and liability for the storm-water drainage area.
The county also has an easement on the land to drain its storm water from Indiana Avenue, which is being extended just north of the mall.
The county has three options, said Public Works Director Dennis Scott.
It can return the land to Hanson and allow the two developers to fight it out. However, Scott said, no agreement has been reached yet, and the mall soon will be ready to open.
That option could lead to JP Realty filing a lawsuit against the county, claiming it was misled about whether it could use the land.
Under option No. 2, the county could keep control of the land and its easement, then work out a lease arrangement with JP Realty.
The third option is to accept the property from Hanson as a gift and sell it to JP Realty with the agreement that the county could still drain its storm water onto the property.
“All three of these options we’ve discussed ad nauseam for at least a year,” Scott said.
The third option is the one Commissioner Kate McCaslin said she’d like to follow. JP Realty, in a letter to Scott, said it would be willing to buy the property from the county for $100,000, which McCaslin said was a reasonable price.
JP Realty would pay taxes on the property at its assessed value of $2 million. The taxes add up to about $34,000 per year, according to the assessor’s office.
Commissioners Phil Harris and John Roskelley both agreed the third option is a reasonable solution to the problem.
“One hundred thousand would probably be a fair price if the county has a right until infinity to dump storm water on it,” Harris said. “‘I’m more probable than not to support that.”
Roskelley called the third option “a good compromise.” He worried, however, that Hanson could then claim a $2 million charitable donation on his federal tax return for his gift to the county.
“I’m a federal taxpayer, and he gave it to the county for park purposes,” Roskelley said. “Now it’s being used for storm water. If it had been 11 acres of park, I could care less.”
The commissioners plan to vote on the issue Tuesday.
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