News Hole

by Tim Connor


Mary Verner's is the newest face on the 2004 Spokane City Council. At 12:13 on Saturday afternoon, she was eloquent. She was also visibly angry.


"I don't personally know Betsy Cowles or any of the developers' agents," she began. "I do know something about the developers as revealed in their litigation strategy."


The River Park Square public/private partnership, she opined, was designed as "an inescapable web" that the city would never be able to get out of if things didn't go as planned. "And we're there today in that web."


Verner continued for 10 minutes, alternating between defiance and resignation. When she used terms like "reprehensible" to describe Cowles's conduct, she would make a point of looking out in the audience in the direction of the small group of RPS lawyers and p.r. people huddled near the back of the room. As she related how she had "agonized" over the moral consequences of the council's decision, her voice cracked and tears nearly flowed. She even compared Spokane and the River Park Square conflict to the nation's quagmire in Vietnam.


"I think the city's share of the pain is excessive, but I don't know how to stop the bleeding without bringing this to a close." Having reached that conclusion, Verner said she would vote with "great regret" for settlement.


Verner's account of how the deal got settled is one reason Saturday's meeting confronted the city's newspaper of record with a queasy test. After a promising effort last spring to come to grips with bias and lack of scrutiny in its past River Park Square coverage, the reporters and editors of the Review had a choice. They could thoroughly report on the dramatic conflicts that led to the proposal and the vote, or they could downplay them. They reverted to form. They chose to look away.


Parts of Saturday's meeting were tedious, but there really was a great story there. Mary Verner's moment of truth was just part of what was missing. Her views were literally confined to one sentence in a story that ran 36 column inches.





There are many other examples, but the bigger picture is what's important. In most ways, the city hated to fight over River Park Square. The city's legal expenses, alone, are well into the millions of dollars. The political infighting was bloody, and the hours of study and hand-wringing (mostly off limits to the public) were agonizing. The only reason the city put itself through the legal trouble was to salvage what was fair for taxpayers.


The stated objective was to get roughly half the money needed to settle the garage problem from the city's former partner, Betsy Cowles, and the limited-liability companies put together for the mall. But it's hard to imagine the city's share will be anything less than $20 million -- and it could easily be close to $25 million. Given what the city said it was trying to get just six months ago, this a shockingly bad deal.


So what happened?


One reason, the one Verner was clearly seething about, was the threat that the RPS limited-liability companies would declare bankruptcy. Thus, even if a federal jury had found some liability for RPS in the garage trial, the city might be unable to collect.


Yet the real driver to get this deal done was an outcome that both the city and the Cowles family wanted to avoid -- the potential loss of upwards of $10 million in future federal block grant money for Spokane's poorest neighborhoods. The loss of the grant dollars would have been painful to the city, but the reasons for the missing money would have brought an annual and unbearable shame to the city, the Cowles family and its newspaper.


The reason goes back to a 1996 memo in which Cowles laid out the "ground rules" for the project. Rule 1 was that "the only collateral available will be the assets" of the LLCs, "not Cowles Publishing Co."


According to federal guidelines, the city was supposed to have obtained an unconditional letter of credit from the Cowles family to collateralize the $22.65 million loan it made to RPS in 1998. HUD's security for the loan was the city's block grant funds, some $1.5 million of which have already been lost to repay the foundering RPS loan.


It is now well documented that the city's efforts to obtain the letter of credit were rebuffed by Cowles and her negotiators, but that a corps of RPS boosters on the Spokane city council chose to go ahead anyway. They agreed to make the unsecured loan and publicly misrepresented the collateral package.


It is now also a matter of record that confidential memos in which city lawyers documented their concerns about going forward without adequate loan security from the Cowles were leaked to the Spokesman-Review and the Wall Street Journal. Only the Journal published excerpts from the documents. When new mayor John Talbott raised questions about the loan security in early 1998, he was assailed by five members of the council and smeared by the Spokesman-Review as a "civic terrorist."





I feel like I have a gun to my head," Al French said Saturday. It was a remarkable statement, because as a community activist, French testified in favor of city support for the RPS project. "I was a supporter of public/private partnerships," he said Saturday. "I am not now."


Nothing about what French said could be read Sunday. Perhaps the S-R thought it did service to French with the article's sweeping observation that even council supporters of the settlement found it an "unsatisfying" conclusion.


"Unsatisfying?" Again, what French actually said is that he felt he was voting with a gun to his head.


Sunday's article was a new installment of the newspaper's same old story. Even if Saturday's meeting succeeds in putting an infamous parking garage deal "behind us," Sunday's paper was just a grim reminder that nothing really changed at all.





Tim Connor has won several national and regional awards for his reporting on Spokane's involvement in the River Park Square project.





Publication date: 12/16/04