by Ted S. McGregor Jr.
Back in 2000, candidate John Powers struck a chord with a frustrated electorate: He could untangle the River Park Square mess, he said on the campaign trail, through mediation. It seemed so obvious; why hadn't anybody thought of it before? Trouble was that when 2003 rolled around and it was time to get reelected, he hadn't delivered on what was taken by many as a campaign promise.
Undaunted, candidate Tom Grant appears to be following in Powers' footsteps; over the past six weeks, he has been peddling a simple, "elegant" solution to the River Park Square problem. Trouble is, some attorneys say his solution is a long shot -- but that may not stop voters from taking him at his word, as many did when Powers' offered his own promise of closure.
Meanwhile, Jim West is keeping his distance from the issue, perhaps recognizing it as a double-edged sword. Jack Geraghty may have lost his reelection bid for being too supportive of River Park Square, while John Talbott lost to Powers, in part, for being too critical of it.
While the trial date in the federal case is set for April -- just a few months after the new mayor takes office -- Grant's solution requires action in a separate venue: state court. In fact, Grant wants the state Supreme Court to reopen the case it heard in 1997 on the issue of whether the city's participation in the garage deal was really a gift of public funds to a private entity, which is forbidden by the state constitution. The court ruled that it was not, because after the bonds are paid off, the city would get the parking garage. A lot has changed since then -- today, the garage is insolvent -- but that's where the Supreme Court left things.
Grant, however, believes that new evidence has emerged -- evidence, he says, city officials probably knew when the case was first heard -- proving the city council had the intent to donate money to the mall developer, Spokane's Cowles family. Because of that new evidence, Grant says the Supreme Court should overturn its previous decision, declaring the "secret" deal unconstitutional. This would undo some of the transactions surrounding the garage, and, in his view, would lead to the bondholders being repaid and the rest of the parties divvying up the remainder of the expenses. End of controversy.
It sounds good, but in interviews with lawyers both familiar with the case and how the Supreme Court works, including one former state Supreme Court justice, the chances of any of it happening are pegged at slim. To begin with, time is not on Grant's side, with the federal trial looming. That federal trial could solve many of the issues surrounding the garage, making a Supreme Court decision relevant to case law, but nearly moot to the resolution of the garage case. Grant admits time is short: "I will have a narrow window to pursue this," he says. But one attorney interviewed for this story, who has argued before the Supreme Court, says the court manages its own schedule and can make time if it wants to.
But just getting the Supreme Court to reopen a case it already ruled on is a high hurdle. Many criteria for reopening a case expire after a year; one of the remaining reasons is if the city could convince the justices that fraud was involved -- something Grant says he does not plan to argue. For example, says the former Supreme Court justice, if new evidence shows that city officials and the developer conspired to get money from the bond markets, knowing they would not be able to pay the money back, that might be grounds to reopen the case. Grant, who is not a lawyer, says he would not make such a charge: "The case in the Supreme Court does not involve a charge of fraud," he says, "because you don't have to [commit] fraud to do something unconstitutional." Instead, Grant would argue that the Supreme Court was defrauded because important evidence may have been withheld from the court when it first heard the case. And wouldn't the court want to -- or doesn't it have an obligation to -- correct that mistake?
"That's an absolute non-starter," says City Councilman Steve Eugster, who was involved in both of the River Park Square cases that the Supreme Court heard. "You're just not going to get [that case] reopened."
But another attorney familiar with the case disagrees: "I think the court would do it; I think it's more likely than they'd reopen the case. Given the attention the case has received, even nationally, I would think that the court would want to take a look at it."
Why? One of the reasons the court could reopen the case is to "correct a mistake." (Some attorneys, however, believe that criterion expired a year after the 1997 decision.) To convince the court a mistake was made, new depositions would be provided to the court proving that public officials knew they were paying more than the garage was worth. The attorney sympathetic to Grant's approach says that if city attorneys kept information from the court back in 1997, that would be enough to reopen the case.
Complicating that argument, however, is the fact that many reports, including appraisals and the Coopers and Lybrand report, were provided to the Supreme court, and they outline the use of the controversial investment appraisal method. In other words, in 1997, documents told the court that the price was inflated and ruled the way it did anyway.
A lot of people believe, and it will be argued in federal court, that the city paid too much for the garage. In recent years, more and more evidence has emerged to back up that claim. Grant pegs that figure at $10 million too much. But how those dollars are characterized is the question. Were they, as Grant says, an outright gift to the developer? Or were they the product of tough negotiations by a canny seller? If city officials truly believed the garage could pay its debts, would that still constitute a gift?
"I believe the state court can take part of these problems off our hands," says Grant, "and that would be a very good thing."
The former justice says it's unlikely that question will be answered -- especially before the federal case starts. Short of proving fraud related to the transaction itself, he says the court would be unlikely to reopen the case -- and it doesn't have to say why.
And there's good reason to stay away from arguing fraud, as convincing the court that former city officials were involved in such behavior would be an admission of the city's guilt. And if the city admits its guilt in arguments before the state Supreme Court, the plaintiffs and other defendants in federal court could simply file for summary judgment against the city. To the other attorneys, such a development would be "like a gift coming down from the heavens," said the former Supreme Court justice.
Finally, if the timing can be overcome and if the court can be persuaded to reopen the case without arguing fraud, and if it rules in the city's favor -- if all that happens, it's not altogether clear what would happen next. Grant writes that "Developer Betsy Cowles would get the garage back. Her company would have to return $26 million to the bondholders." To that, our sources say "maybe." If the deal were really undone, perhaps only the city's guarantee would vanish -- leaving the garage in the hands of the Downtown Spokane Foundation. Undoing the garage deal could lead to an elegant settlement, or it could lead to round two of legal Armageddon. Nobody really knows.
So where did this bold new plan come from? When Grant spoke to us in mid-August, he didn't mention it. But a few days later, his plan was in circulation. Grant says it is his own concept, but that he has vetted it with many people. He wouldn't name who vetted the idea, but he did not rule out Yale Lewis, the city's former River Park Square counsel, who has contributed to Grant's campaign; Tim Connor and Larry Shook, the men behind Camas magazine, which Grant relied upon frequently in his own reporting on River Park Square; and Mark Schwartz, the activist and former bond lawyer from Pennsylvania who has testified against the garage deal in Spokane.
So could Yale Lewis replace Laurel Siddoway as the city's special counsel if Grant is elected? "I have no expectations of changing horses in the middle of the stream," says Grant. "But you have to keep your options open" -- adding that, "[Lewis] at least has a track record of success -- he might be consulted by the city in the future, but I've made no promises to anyone."
Pending City Council approval, the new mayor could replace Siddoway come January, but our legal experts say her replacement would be in a tough spot. With just a few months to go, the new lawyers would have to get up to speed on the case and readjust the strategy according to the new mayor's preference. Currently, discovery in the case is over, major briefs have been filed, all the witness depositions have been taken and expert witness depositions are nearing completion. As one attorney put it, replacing counsel at the last minute does happen, but for the attorney "it's like being asked to finish painting a picture, but you only are given one brush and three colors."
If elected, Grant says he would hire someone to look over Siddoway's work, and from there he would decide if her strategy was sound. Siddoway, also counsel for the KXLY Broadcast Group, already represents Grant in a separate matter, a defamation suit stemming from a story he did while working at KXLY. Siddoway has prevailed so far in that suit, but it is under appeal.
While he intends to pursue his plan if it is deemed workable, Grant says he is open to any and all ideas for a solution. Overall, he says, his plan is offered to provide specifics for voters to ponder -- something he believes elections should feature. "If I don't come into with ideas that can be acted upon," he says, "then what am I really offering to this city?"
Grant also believes of the two candidates, he has a better understanding of the issues surrounding the garage problem. "If my opponent is allowed to say nothing about this issue, we are all at risk of losing," Grant wrote in a letter to The Inlander. "At this point, voters have scant choice about which strategy to choose, because only one candidate has a strategy."
If West's strategy is to say as little as possible on the matter, it might just work -- after all, he has no specific plan for us to critique as we've done here. But when pressed, he does outline an approach.
To start with, West says he is skeptical of Grant's quick fix: "There's no silver bullet," he says. "If there was, we would have stumbled on it by now."
West says if elected he would convene a panel of law school professors from Gonzaga, Seattle University and the University of Washington to take a look at Siddoway's strategy. If that is to his satisfaction, he says she could remain as the city's special counsel. But after that, he'd like to take one last shot at mediation, just before trial -- "but failing that," he says, "we'll be in court. My preference would be that last shot at mediation would work, but I'm not going to let my administration be consumed by River Park Square."
Some believe West is too close to the Cowles to negotiate a tough settlement -- he's been endorsed by the newspaper repeatedly and has received campaign contributions from family members. When asked if he would roll over to their demands, he says, "No -- I'll represent the interests of the taxpayers."
He says he is interested in getting the matter behind the city, adding that he would make sure that something like it would "never happen again."
Grant, too, looks forward to getting it over with -- which is one of the main reasons he likes the state Supreme Court solution. He says unlike federal court, where appeals may go on for years, the Supreme Court decision would be final. "We need to make it possible for something good to come out of that... whatever that was."