Was it Conspiracy

by William Stimson & r & With virtually all the documents finally open to public scrutiny, the only question not yet answered about River Park Square is the big one. Was it, when all is said and done, a conspiracy against the wishes of Spokane citizens? Or was it understandable political improvisation that would have worked except for the meddling of Steve Eugster and others?


The best argument on the "creative politics" side is a walk through downtown Spokane. Ten years ago, the city council was looking at an almost moribund city center. Then the council boldly joined in River Park Square -- and look at downtown today.


The other side of the argument, the conspiracy theory, is freshly laid out in the August-September issue of Washington Law and Politics, a journal for lawyers published in Seattle.


The article is written by Tim Connor, reporter for Camas magazine, the basement-office online publication that is largely responsible for revealing the inner workings of River Park Square. Connor's article traces the thinking of O. Yale Lewis, the Seattle attorney who filed a lawsuit on behalf of Spokane in 2000 alleging conspiracy by developer Betsy Cowles and parking consultants to "divert public funds for private use" through the expanded parking garage.


Lewis was no naysayer. In fact, he came to the situation with a certain sophistication about urban politics. He had been involved in a number of creative downtown projects in Seattle and had written much of the legislation behind the resuscitation of the Pike Place Market.


But from the very beginning, Connor reports, Lewis saw something strange about the Spokane deal. Spokane citizens were paying $31,000 per parking space in the RPS garage. It was like hearing someone had paid $50,000 for a Chevrolet: Even without knowing any details, you had to be suspicious. When he looked at the income projections for the garage, he discovered those were inflated, too.


With the City Council's approval -- this was the council under Mayor John Talbott -- he filed his conspiracy suit. But that was only a few months before the first election under Spokane's new "strong mayor" charter. John Powers was elected mayor, and very quickly he decided to drop the "conspiracy" accusation from the suits.


Lewis also advocated suing the Spokane Downtown Foundation (SDF) -- the odd stand-in for the city as owner of the garage -- for failing its "fiduciary duty" in selling questionable bonds. It was at about that point when he began to discover Spokane's complicated political situation. He was surprised to find that, though the SDF board represented the city, it was formed by Betsy Cowles. Also, one of its members, David Broom, was a law partner of the new mayor, John Powers. And the foundation's attorney for the SDF was Mike Ormsby, who was treasurer for the John Powers mayoral campaign.


Lewis soon learned that Powers was not interested in pursuing the conspiracy angle, and he was replaced by Laurel Siddoway.


Meanwhile, the buyers of Spokane's garage bonds also began to realize the bonds were not what they were represented to be. Bond attorneys took up where Lewis had left off with the conspiracy legal strategy. Against such a case, Spokane had virtually no defense; the bonds were over-sold losers. So the city bought them back (and will be paying for them for decades).


The whole deal had collapsed and someone was going to have to bear the cost. Yet another mayor, James West, and a mostly new City Council struck a pose of hard-nosed bargaining. They went to court with a claim that the bonds for the garage had been misrepresented, so the developer should take on most of the financial responsibility for them.


They were frustrated, too, by yet another curiosity of the River Park Square deal. Quite aside from the bond sale that had gone awry, Betsy Cowles had borrowed $22 million in federal funds to put into the development. In this transaction, the city acted as middleman, borrowing the money under its privileges as a municipality and turning it over to Cowles to put in the mall.


What no one knew until late in the game, Connor writes, is that the city had no way to demand repayment of that HUD loan. The City Council of 1997 had tried but failed to get any sort of loan security. "Cowles' hard bargaining on the loan security," writes Connor in his article, "and the city's capitulation to her demands, was one of the most carefully guarded secrets of the transaction."


Here is a perfect example of why the 1997 council dared not be too candid about the RPS deal. Betsy Cowles would not guarantee the loan, period, and if the city didn't like it, the whole deal was off. Theoretically, if Spokane were another city, Mayor Jack Geraghty could have said in a press conference that, by the way, the city had to give up security on the loan to make the deal go forward. But in Spokane such truthfulness would have spelled the end of the deal.


Seven years later, that secret accommodation made all the difference in negotiations. If the city pushed Cowles too hard on the bonds, Cowles could simply walk away from the HUD loan. That's how the "no tax money involved" parking garage ended up costing Spokane taxpayers some $20 million.


So did River Park Square constitute a conspiracy? Of course. When an inner circle consorts to circumvent generally understood rules and wishes, it's fair to call it a conspiracy. Whatever good the machinations of the 1997 council brought about, it doesn't change the fact that they didn't have any right to do it that way.


But the state of politics in Spokane in 1997 was such that conspiracy was about the only political tool available.