Hud Grants Downtown Redevelopment Loan Getting Low-Interest Loan Of $22.65 Million Removes Major Hurdle For Project

Spokane will receive a $22.65 million federal loan to help redevelop River Park Square downtown, city officials learned Monday.

Getting the low-interest loan removes a major hurdle in the controversial $100 million project.

But the loan from the U.S. Department of Housing and Urban Development is $1.1 million less than developers requested.

Still, developers hailed the loan as a critical step in the project, which includes a shopping mall, a new Nordstrom store, a parking garage and a multiplex movie theater.

“It’s just one more success. It proves the project is viable and the right thing to do. We’re just knocking things off one step at a time,” said Betsy Cowles, president of both companies that own River Park Square.

Cowles thanked U.S. Sens. Patty Murray and Slade Gorton and U.S. Rep. George Nethercutt for their efforts in securing the loan.

Murray, who toured the site last month, said she was pleased the city had made its case.

“HUD only approves these loans if they meet very specific criteria and obviously are going to be good for economic development in downtown corridors,” she said.

HUD’s official notification says the federal agency will loan $22.65 million to the City of Spokane. The loan is legal under federal law “which permits special economic development activities,” the notice says.

“More specifically, the City will loan the (federal) funds to a for-profit business to finance development of a retail shopping complex,” the notice says. “Part of the complex will be occupied by a Nordstrom department store.”

The HUD loan guarantee requires that the project create or retain 700 jobs, a statement released by the developers said.

Developers contend the project will create as many as four times that number of jobs. A 1995 economic study they commissioned said the project would create 2,800 jobs, and generate $2.5 million in city taxes and $50 million in wages.

Critics, however, called the loan an inappropriate use of public money.

“I think it’s unfortunate that our federal government sees fit to spend limited federal resources on private projects for people who can afford to engage in them on their own,” said Steve Eugster, who has sued the city over the project several times. “The government should use that money to see that the poor in this county have jobs and places to live.”

If the project fails and the city defaults on the loan, Spokane’s Community Development Block Grant money will be docked for repayment. City officials have sworn that will never happen.

Laurent Poole, executive vice president of NorthTown Mall owner Sabey Corp., a critic of the project, downplayed the loan approval. He said it’s standard for every application that meets federal guidelines.

The developers now must prove the project will earn enough to pay back the loan, Poole said.

“They have to see leases in place and that this will have the wherewithal to pay (the loan) back,” Poole said. “These things can take months. This is not a ‘tomorrow’ kind of thing.”

Indeed, aside from the Eddie Bauer store now under construction, developers have not made any lease announcements. They still are waiting for a state Supreme Court decision on a lawsuit challenging the city’s role in the project.

City officials applauded the loan approval, but said much work remains.

They said the loan will be repaid through three sources: Nordstrom’s lease, which has not been signed yet; contributions from other downtown property owners; and rent the city’s public development authority will pay to the developers’ nonprofit corporation.

Part of the city’s role in the project was to create a public development authority that would lease the River Park Square garage and the land beneath it from the nonprofit corporation.

The HUD loan is less than expected because it’s calculated based on the community development money a city receives each year. The amount Spokane has received has declined, reducing the loan amount. Aside from saying they’ll have to tighten the budget, developers haven’t disclosed how the shortfall will be made up.

City officials were more certain where the money will come from.

“That’s got to come from the developers,” said City Councilman Orville Barnes.

, DataTimes