Not Getting What You Wish For

by Robert Herold


Now deep into litigation, and with conspiracy theories continuing to swirl, I believe that evidence is piling up that the debacle known as the River Park Square public-private partnership has a more benign, but no less damaging, explanation. From the very start, what plagued this project most was the kind of blind wishful thinking enabled by pure hubris. After all, analysis and reflection cannot be trusted when they get in the way of making our wishes come true.


Now that the city's federal Community Block Development Grants appear to be in real trouble, the HUD loan is a good place to start to look for evidence of this theory. Recall the hoopla that surrounded the July 29, 1997, Spokesman-Review headline: HUD GRANTS DOWNTOWN REDEVELOPMENT LOAN; GETTING LOW-INTEREST LOAN OF $22.65 MILLION REMOVES MAJOR HURDLE FOR PROJECT.


Wow! How did we get them to approve that much? Must be a hell of a project!


All the boosters queued up to blow the air of hubris and wishful thinking into what would become a really, really big balloon. Captain of the bellows Betsy Cowles was quoted as saying, "It's just one more success. It proves it is viable and the right thing to do. We're just knocking things off one step at a time." She then went on to thank U.S. Senators Murray and Gorton, along with Rep. Nethercutt "for their efforts in securing the loan." We also learned that "Murray came to town and toured the site and said she was pleased the city had made its case."


Would such important persons have lent their support if we didn't have a darn good project? Would Senator Murray have come all the way to Spokane? Actually, neither HUD approval nor all that high-level support amounted to a hill of beans. If the city was willing to pledge its CDBG allocation to secure the loan, there was no real competitive process -- either the application fit the parameters or it didn't. And if the city involved said it was okay, as Spokane did, HUD wouldn't sweat the details. This loan program, after all, was designed for projects like River Park Square.





But rather than accept the banal truth of the matter, we engaged in chest-pounding, which, in this instance, trapped us inside an endless eddy of circular logic that landed all parties in federal court just a few years later.


First, with the newspaper's help, we accepted an bogus premise: Securing that HUD loan was a big deal. Then we used that premise to reach a false conclusion: Securing that HUD loan proves we had a project that, in the words of Betsy Cowles, "will knock your socks off." Anything that contradicted this orthodoxy was rejected as a bad case of naysaying.


Thus, for example, Laurent Poole, executive vice president of NorthTown Mall and a critic of the project, had to be dismissed out of hand when he downplayed the 1997 loan approval by pointing out that "it's standard for every application that meets federal guidelines." We couldn't even consider Poole's assessment, for to do so would have placed our circular logic at risk. Of course, as we know now, Poole had it exactly right.


Enough council members voted to support the loan application, even in the face of studies that raised questions about the project's viability. And why? Because they had bought into the circular logic and believed that HUD would approve the loan only if it found the project to be worthy. But HUD, as its 1998 audit of the deal makes clear, was never going to save Spokane from itself; it only made certain the project had the necessary collateral and met the guidelines. That study conducted by three Gonzaga University business professors based on HUD guidelines? That was just for the city's own information in determining whether it should put its CDBG money at risk. Like Coopers and Lybrand before them, those GU professors had serious questions about the project's very foundations -- questions that were never answered by public officials. Ensuring the project's viability was always the city's responsibility, not HUD's. So were the all the risks.





This is pretty obvious by now, but when they were faced with legitimate questions from the experts they hired, from citizens and from business owners, city council members really should have sought a detailed market analysis to ensure that the HUD loan could be repaid. They should have demanded justification for moving the Nordstrom Rack (the real people magnet) to NorthTown and should have made certain that all parking validation problems were resolved. But our circular reasoning permitted no such inquiry. Apparently sockless, our council members bought the PR and didn't read the fine print. As a result, we now find ourselves in what looms as a major bind.


August 2004: Pencil that date in. According to the city's calculations, that's when -- if nothing changes -- Spokane's CDBG money will start to be garnished by the federal government. Money used to fund services and projects in some of the city's poorest neighborhoods may be held back to make good on the city's commitment in the parking garage deal. Back in 1997, that was the eventuality that would never, ever come to pass, we were told by any number of people involved in the deal.


Well, sometimes wishes do come true, but this time we got a nightmare instead.