NICHOLAS K. GERANIOS Associated Press Writer | Posted: Wednesday, April 27, 2005 12:00 am
SPOKANE, Wash. (AP) - The long-running civic nightmare of River Park Square may finally be over, now that city officials have announced a deal with a law firm to end a trial under way in the Tri-Cities.
The Spokane City Council was scheduling a special meeting to decide whether to accept a $4.25 million cash payment from Perkins Coie LLP of Seattle, the city's bond counsel in the project.
That could end nearly all litigation over the downtown shopping mall - a dispute that has consumed local government for five years and destroyed the political careers of three mayors.
"This issue has plagued our community for far too long," Mayor James West said Tuesday.
Robert E. Giles, managing partner of Perkins Coie, issued a written statement saying: "This has been a long and costly process for all involved. I'm glad we were able to agree on a resolution so we can all move on with no need for further expensive litigation."
The city sued Perkins Coie and lawyer Roy Koegen for legal malpractice, contending that bad advice from them led to the city's problems over the mall's parking garage, the focus of the litigation.
The deal means the city will have paid $32.6 million since last April to settle fraud claims by bond investors while collecting $11.2 million in settlements from former co-defendants.
River Park Square, anchored by a Nordstrom store, is a $110 million shopping mall and entertainment complex built with public and private money to help revitalize the downtown core.
Conflict over the complicated deal pitted the wealthy Cowles family, owner of the mall, against critics who said it was an inappropriate use of public funds intended for urban renewal.
Numerous lawsuits were filed, and city officials estimate that $20 million was spent on attorney fees in the past five years.
A series of settlements in recent months cleared up many of the disputes, leaving only the city against Perkins Coie when the trial started this week in federal court in the Tri-Cities, where the case was moved because of extensive news coverage in Spokane.
The city could still appeal an earlier decision that allowed Prudential, the underwriter on the original RPS bonds, to pay nothing toward the settlement of the case.
City officials took major steps a year ago to resolve the case by buying back the original bonds for about $32.6 million. The city also secured repayment of a $23 million federal loan for the project with a letter of credit from the developer. The city will sell bonds to pay off the remaining debt.
"This is a fair and reasonable settlement that would bring closure to a long-standing issue," said Gavin Cooley, the city's chief financial officer.
He said Standard & Poors recently raised the city's bond rating from a BBB to a AA-, a five-step increase which has already saved the city $300,000 in borrowing costs.
The parking garage, connected to City Hall by an elevated walkway, was built with a combination of public and private money and was supposed to be backed by parking meter revenues. When garage revenues fell short of expectations, the council refused to spend the meter money, resulting in lawsuits in state court in 1990.
Meanwhile, investors who bought about $31 million in garage construction bonds sued in federal court, alleging fraud and misrepresentation.