Garage Ownership Should Be Held By One Entity, Mayor Says Way To Solve Dispute, Talbott Says

The city should buy the River Park Square garage and the land it sits on, or the mall’s developer should own both as a way to solve the ongoing dispute over the facility, Mayor John Talbott said Monday.

“The ownership needs to be in the hands of one entity, either the developer or the city, and we feel that must include the land as part of the ownership package,” he said.

At a morning news conference, Talbott highlighted parts of a July 18 proposal to the developer of the mall, the city’s most recent in discussions over the garage.

“Those offers have been on the table for some time,” he said.

But attorneys for River Park Square LLC, the mall’s owner, said the city’s July 18 proposal is short on details, such as a proposed price for the land on which the garage sits.

“We asked for specifics and never heard back,” said attorney Les Weatherhead. “It all depends on the numbers.”

The city’s proposal says only that it would buy the property at “fair market value.” Talbott declined to name a price Monday, saying that the city would look at sales prices for other downtown land and negotiate a price.

“I’m not going to negotiate that here in the press,” he said.

The mayor also released a series of letters dating back to February between attorneys for the city and the mall’s owner. The mall is owned by a subsidiary of Cowles Publishing Co., which also owns The Spokesman-Review.

The letters show the city and the mall developer are far apart on their proposals to resolve the problems over the garage, which is not bringing in enough revenue to cover bonds, rent and operation expenses.

The garage is currently owned by the Downtown Spokane Foundation, which sold bonds to pay for the garage. Under the current arrangement the structure will eventually belong to the city. The land beneath it would always be owned by the developer.

In its most recent proposal, the developer wants the city to pay it a portion of funds being held until the mall is completed. The developer would be allowed to retain eight months of rent from the mall’s main tenant Nordstrom, pay relocation costs for businesses that were forced to move and cover half of the revenue shortages for the next four years, up to a set amount that would decline each year. All agreements involving the garage, including the ordinance that requires the city to loan money from its parking meter fund, would remain in effect.

“The developer’s position has been to talk about a business solution rather than the restructuring of the deal,” said Duane Swinton, an attorney for River Park Square. “The city’s position has been to restructure the deal.”

The city’s latest proposal would have the city purchasing the garage’s outstanding bonds at “market prices” - essentially owning the garage - and covering up to half of the garage’s operating costs. If the city owns the garage, the developer would be given two years to buy the structure for $26 million or sell the land beneath it for fair-market value.

If the developer didn’t choose to do either, the city would have the same option for two years.

“If you’re going to have ownership, you’re going to have to have the land, too,” Talbott said Monday.

If the city were to buy the garage and the land, citizens would have a chance to vote on the proposal, he said.

Councilwoman Phyllis Holmes said later she was skeptical about any plan that involved city bonds, in light of the recent lowering of the city’s bond rating.

The bond ratings were lowered by two national services that cited the city’s failure to uphold an agreement to loan parking meter revenue to the garage if the money was needed.

“The city can’t afford to buy any bonds,” she said. “The city isn’t going to be borrowing money for a long time.”

Talbott said the city was interested in negotiation, and if that doesn’t work, submitting the dispute to a mediator.

“It’s been our feeling they’ve been more interested in the litigation side rather than the negotiation side,” Swinton replied.

Each side has filed lawsuits over the garage. A hearing on a judge’s order for the city to loan the garage money from its parking meter fund is scheduled for Wednesday.