Negotiations over I-90 parking lots stuck on legal technicality

As Washington and the city of Spokane negotiate who should control revenue from parking lots beneath Interstate 90, state officials say the root of the impasse is in the state constitution.

With a 50-year lease slated to expire in May, the future of the lots remains unclear.

The state granted the city a lease to oversee and maintain the lots beneath downtown Spokane’s I-90 overpass in 1971. In turn, the city leases the 12 lots to schools and private businesses. In recent years at least, the city has made a marginal profit on the lots.

But entering negotiations on the first new lease in decades, state officials insisted that, legally, they’re required to pull at least some of the profit the city of Spokane earns on the lots into the state Motor Vehicle Fund.

“Things have changed in 50 years,” said Jason Huotari, property management supervisor for DOT’s Eastern Region. “By law, we’re required to collect revenue from highway assets for non-highway use functions…what the city is doing is a non-highway use function.”

Some costs can be written off, Huotari said, but not all.

Not collecting funds from the lots would be a violation of the 18th amendment of the Washington State Constitution, the DOT’s attorneys have argued, pointing to a 1975 analysis by the Attorney General’s Office. Under the current lease, the city doesn’t pay the state anything, which isn’t legal by today’s standards, Huotari said.

The city has aimed for what it believes to be a compromise.

Last week, city officials unveiled a five-year, $300,000 plan to the Spokane City Council to spend down its profits and make several improvements to the lots, including reconverting an abandoned skate park into a usable parking lot for vehicles.

The city has invested in projects at the parking lots and public property near the overpass before – including beautification projects near I-90 entrance ramps – but never programmatically.

The state supports the concept, but still questions its legality, and Huotari said the compromise language proposed by the city “kind of mucks thing up for us if we come under an audit.”

“Their idea, I think, is great. We would love for it to work. But it’s just, can we make it work legally? That’s what’s in question,” Huotari said.

Ultimately, the city’s interim asset manager David Steele told the City Council last week, “there’s no incentive for the city to do a tremendous amount of work and bear the brunt of all the phone calls if (the state) will not agree that these dollars need to stay in the system.”

Revenue from the parking lots are kept in an account separate from the city’s other funds.

The city made about a $40,000 profit on managing the lots in 2020, the fifth straight year it ended in the black after losses in 2013, 2014, and 2015.

Should the state be left to manage the lots itself, Huotari said the it would likely issue a request for proposals and tap a private company to manage them. The company would share a percentage of its profit with the state.

If negotiations fall apart, Steele told the council that the city would likely invest its remaining funds elsewhere.