No End In Sight For Garage Standoff Negotiated Settlement Appears To Be Long Shot As Political, Fiscal Concerns Leave Both Sides Firmly Entrenched

Negotiations resumed Thursday between the city of Spokane and the developers of River Park Square, but it’s not clear if the two sides can agree on the shape of the peace-talk table, much less reach an accord.

Three months after the city was asked for $450,000 to support the downtown mall’s struggling garage, two months after the City Council voted against it and three weeks after a judge ordered the city to loan the money, the sides are once again looking for a negotiated solution.

But over that span of time, enough events, issues and discord have built up between the parties that the chance of a settlement seems more distant than ever.

The obstacles to a timely agreement include:

The personalities

After Monday’s acrimonious council meeting, it’s evident some members of the divided City Council can barely stand one another, much less work together to bridge the impasse.

Once the subject of River Park Square was raised, the meeting broke down as the two sides of the council traded barbs and insults.

While it’s possible much of Monday’s debate was posturing for the public, it’s also apparent that council members are entrenched in their positions. To abandon those positions for the sake of a compromise could be humiliating, particularly if it allowed one side to claim victory.

Some council members have another reason for digging in: the upcoming elections. While only Mayor John Talbott has declared his candidacy for strong mayor, a number of council members are considering running for council president. With the River Park Square garage a certain campaign issue, possible candidates may be reluctant to show weakness.

A judge’s decisions

Superior Court Judge Michael Donohue has issued two rulings, both favoring the developers.

In a May 24 ruling, Donohue agreed with the developers’ interpretation of the 1997 City Council ordinance that pledged city parking meter money to support the garage in the event that garage revenue didn’t meet expenses.

The city argued, through Seattle attorney O. Yale Lewis Jr., that the ordinance did not specify how the money was to be loaned, or how it was to be repaid. In Lewis’ interpretation, the ordinance allowed the City Council to use discretion in making the loan if it could not be paid back.

Donohue differed and said the ordinance gave the City Council no choice.

Last week, Donohue again sided with the developers when he said he could not stay his motion.

Instead, the city can ask an appellate court, either the state Court of Appeals or the state Supreme Court, for a stay.

If the city doesn’t loan the money or get a stay, it could be back before Donohue for a contempt hearing June 27.

Given their success in court, the developers may have less reason to settle. If the Supreme Court - which the city has asked to hear the case - upholds Donohue, then the developers could have everything they asked for in the first place.

One pressure the developers are feeling is time. It could be months or even years before the courts are done with the case. Because the developers are using their own money to support the garage, the longer they wait, the greater their cost.

River Park Square is being developed by an affiliate of Cowles Publishing, which owns The Spokesman-Review.

The allegations

If the legal rulings are giving the developers encouragement, recent allegations that the city acted improperly in structuring the deal are emboldening members of the council majority.

In reports on KXLY-TV and in the online Camas Magazine, the city is charged with using irregular practices that favored the developers.

Most notably, the reports say the developers insisted on an unusual type of appraisal for the garage that generated a higher selling price than a more conventional appraisal.

The reports also suggest that the proceeds of bonds sold to buy the garage may have been used for projects other than River Park Square, which the developers have denied.

At Monday night’s council meeting, council members Steve Eugster, Cherie Rodgers and Steve Corker all mentioned the news reports as documentation of the impropriety of the River Park Square garage deal. Corker has asked City Manager Hank Miggins to investigate the charges.

If there was something amiss, it would vindicate the long-held position of the council majority and possibly get the city off the hook for parking meter revenue.

The deal

In retrospect, the garage financial deal is unbalanced, with expenses far outpacing revenues. What can be done about it is another issue.

While a short-term solution may be attainable - Corker and mall manager Bob Robideaux reached one that the council rejected last month - a long-term fix will be harder to find.

Members of the City Council on both sides of the issue agree that a solution is needed for the 20-year life of the deal.

At the core of the problem is the amount in bonds sold to finance the garage purchase: $31 million. The bond buyers are depending on garage revenue to cover their investment.

Any restructuring of the deal to lessen the amount of debt that the garage revenue is expected to cover would probably require the buy-back of the bonds from the developers. Given the garage’s current troubles, it’s hard to imagine a new investor who would be tempted to buy back the bonds.