Bonds that settle RPS approved

The Spokane City Council may have cast its last vote on the River Park Square controversy, approving Monday night some $25.2 million in bonds to pay for the settlement of a federal lawsuit over the mall’s garage.

“This is my final vote on River Park Square,” City Councilwoman Cherie Rodgers said as she cast the lone vote against the bond package. “Nobody’s going to be held accountable. The taxpayers are going to foot the bill.”

The council also approved some voluntary fees on new houses and business structures that will help pay for the costs of road improvements to handle the extra traffic they will generate. The fees, which vary in different parts of the city, will remain in place while the city holds meetings on a more permanent system.

The bonds for the River Park Square settlement were part of a total of some $39.5 million in bonds the city sold on the financial markets earlier in the day. Because that total includes the River Park Square costs and some other bonds that are taxable, along some other city projects that are not taxable, financial advisers came up with a complicated repayment structure that saves the city about $30,000 over the 20 years the bonds are repaid by paying the highest-interest notes first.

Some bonds also replace older financial notes that had higher interest rates. Overall, the city will save about $720,000 over the life of the bonds.

“You’re borrowing at a very favorable rate,” Gavin Cooley, the city’s chief financial officer, told the council.

But Rodgers pointed out that even at the low rates, the interest is expensive. One series of bonds, worth $5 million, costs the city more than $6 million in interest. The interest on the $25.2 million for the River Park Square settlement totals more than $15 million.

“That’s taxpayers’ money that could have been spent on streets,” she said.

Cooley acknowledged that if the city had the money to pay for any of the projects, which also include the Riverfront Park Gondola renovation and other park expenses, the overall cost would be less.

“There’s no question if we could pay cash today … we’d save a great amount of money,” he said. But because the city has to borrow, the goal was to get the lowest rate.

The city needed to repay a short-term note it obtained last year when it settled the lawsuit filed by investors in River Park Square garage bonds. At the time, the city, the mall’s developer, other agencies involved with the garage, along with their lawyers and consultants were facing a federal securities fraud lawsuit.

The mall is owned by affiliates of Cowles Publishing Co., which also owns The Spokesman-Review.

Some of the former co-defendants are paying the city a total of about $11.2 million to be rid of the lawsuit. The mall developer gave the city firm guarantees on repaying the federal loan to protect the block grant and put about $6 million of the parking meter money it claimed into an account to pay off the loan. The city gave the developer title to the garage, got control of its parking meter fund, and kept about $2 million in meter money that had been held in escrow because of the dispute.

The annual cost of the bonds to pay off the settlement is covered by the parking meter revenues, Cooley said.

On the impact fees, the council agreed to set up a temporary system of allowing developers to choose to avoid a potentially expensive traffic impact analysis by paying a set amount for new buildings they construct. The city is divided into geographic areas with differing fees, so the base fees will range from $606 in the Northeast area to $1,724 in the Southwest area, and the fee for single family homes will vary from $612 to $1,741 across those areas. Other types of buildings have different fees.

The fees will be in place for about six months, while the city works on a more permanent system with developers, neighborhood groups and other “stakeholders.”

The concept of fees got mixed reviews from developers and neighborhood representatives, although both sides supported them in general.

David Bauer, executive officer of the Spokane Homebuilders Association, said his group was concerned with a perception that developments don’t already pay their fair share, and wants strict accounting of the money collected. But David Baker, a developer who has been working for more than 15 years on the Beacon Hill project in northeast Spokane, welcomed the fees as a way to get his project moving.

Craig Culbertson of the Indian Trail Neighborhood Council said residents weren’t consulted on the temporary system. He called impact fees a necessary step, but added “we believe they are way too low.”