by Ted S. McGregor, Jr.

Visitors to downtown Spokane can't miss the fact that the River Park Square project appears to be moving ahead. The block that housed Rainier Bank, Payless, The Gap, Anderson and Emami and others over its brief 23 years has been brought to the ground. And the stretch of Post Street between Spokane Falls Blvd. and Main Street has been closed to auto traffic permanently.

But for those wishing to imagine what is to come, there is more waiting. Despite these bold steps, no signed leases with future tenants have been announced, the public-private financing package is still under review by the federal Department of Housing and Urban Development (HUD) and, developers say, the city's apperent wavering support for the Lincoln Street Bridge may threaten the whole project.

"The bridge is really important for the long-term access in and out of downtown, " says Betsy Cowles, president of River Park Square, "not just for River Park Square, but for all of downtown. "

After initially keeping quiet on the issue, the developers have been lobbying for the bridge in recent weeks, as support on the council has seemed to wane. Now that the city will put off the bridge decision until a financial report has been prepared, the developers may have time to make a case for the bridge. Unlike other aspects of the project, the need for the bridge as it relates to the retail project has not been studied -- perhaps because of the abrupt nature of the issue's reemergence. But as the debate over the bridge has increased, even city officials have started to point to the potential "economic development " component of the planned $40 million span.

While bridge opponents are proposing alternatives, Cowles (who also cites the expansion of Riverfront Park as a reason she likes the bridge) says other alternatives would leave them in the lurch.

"It's an eleventh hour change that would have a dramatic effect, " says Cowles, suggesting that the entire project could be jeopardized. "We've spent millions getting to where we are, and we have zero flexibility today to change the design of the garage. "

As designed, the single entrance/exit to the garage will be on Spokane Falls Blvd. just across from City Hall. Critics have said that the design doesn't work with the bridge either, since traffic from the garage will back up into the garage and onto the street behind the streetlight at Lincoln and Spokane Falls Blvd, creating the very kind of air quality/traffic problem the bridge project was undertaken to alleviate. Cowles says the rebuilding of the Post Street Bridge would not be sufficient to service the mall.

Critics are also concerned about the effect of a high-speed, four-lane corridor through downtown. It's one of those conundrums of the '90s; as urban planners stress making downtown a place to walk, market researchers who specialize in retail say a destination must be accessible and visitors have to be able to park their cars. Cowles says the national consultants being hired by the city to write a downtown plan could help Spokane strike the right balance by maximizing the pedestrian-friendliness of the district while allowing for the better access the bridge offers.

Before the recent events surrounding the bridge, the outlook was as smooth as it's been since the project began in 1995. The city election that focused on the project as a major issue is past, and just last month they overcame a major legal challenge.

"We're feeling very good, " says Cowles. "We're in the last phases of finalizing the financing, and we're very close to being able to make announcements. "

The Washington State Supreme Court ruled last month that the Spokane City Council was within the law when it acted on the developer's proposal last January as an "emergency, " which kept the matter from a public vote.

With the legal issue behind them, the city and the developers must now get HUD to approve their financing package. To move that process along, three local finance experts -- Kent Hickman, Clarence Barnes and Carl Bozman, all professors at Gonzaga University's School of Business -- were hired to apply the financing package to a set of guidelines developed by HUD specifically to analyze credit being offered to secure the Section 108 loans being used by cities across America. HUD officials in Seattle have received the report and have started reviewing it, says Mike Adolfae, Spokane's director of Community Development.

"If you look at the guidelines -- which were written by Price Waterhouse -- it's like going to a bank and asking to borrow money, " says Adolfae.

The 23-page document is heavy in debt coverage ratios, collateral and other financial terminology, but what HUD wants to know is whether the overall plan is strong enough to allow for the repayment of the loan. HUD doesn't want to see cities make mistakes and jeopardize their Community Development Grant money -- the final guarantee on any HUD loan. HUD conducts such analyses, but offers cities the option to hire their own experts, as Spokane did. Hickman, Barnes and Bozman started their report by saying: "No member of the team is aware of any personal or economic interest in the project which would influence the team's analysis. "

HUD will review the report and, if everything meets with their approval, issue the Section 108 loan. If, however, they have more questions, they can ask for clarifications or even changes to the financing structure. It's unclear if HUD's Seattle office is being more critical in reviewing the Spokane loan after what happened in Seattle. At the request of a citizens' group there, the HUD Inspector General conducted an investigation into whether any wrongdoing accompanied the issuing of a HUD loan for a downtown redevelopment project there. The Inspector General's report was issued last month, and Seattle officials were cleared of any wrongdoing. Even though some HUD rules applying to the Seattle case may change, the IG's report outlines how HUD has been pressured by Congress in recent years to loosen its rules regarding Section 108 loans.

Nonetheless, after reading the Hickman, Barnes and Bozman report, it's easy to see some of the areas HUD may scrutinize about the Spokane project.

One area is the parking garage and whether it will generate enough income to pay off the loan. If the garage revenues lag, the city's parking meter revenues may be tapped to pay the loan -- a scenario city officials and developers have long said will not come to pass. But the report to HUD raises the issue. If the 12-plex movie theater is expected to account for half of the garage's traffic -- as the Walker Parking Study suggests -- then it is "a critical element to garage revenues and, therefore, to the payment of the ground lease. " The report worries, however, that the increasing competition in the local movie theater business will put even more pressure on the theater to pay the garage's way.

And who really pays for parking at the theater raises another issue, one that was first raised in the Coopers and Lybrand study that was delivered only hours before the City Council voted on the much-debated emergency ordinance. Since it's unrealistic to expect people to pay to park at a movie theater in this community, Coopers and Lybrand wondered whether there was a parking validation program. Yes, Spokane has one, they were told. Good -- but, the Coopers and Lybrand report pointed out, the Walker Parking Study does not take into consideration the effect of a validation program on the garage's income.

The Hickman, Barnes and Bozman report raises this issue again as a question that needs to be addressed. According to their report, they were told by Project Manager Bob Robideaux that "the project's proposed validation program will be revenue-neutral to the garage as the difference between the retailer's reimbursement to the program (70 & cent; per 2-hour validation and scheduled to increase) and the garage's normal charge ($3.00 for 2 hours) will be made up through other sources. "

The report doesn't spell out what those other sources are, but it does reveal that the developers have agreed to fund the debt service reserve account -- the fund from which the actual loan payments will come -- to the tune of $1.15 million.

The other weakness identified by the report is that "no independent feasibility study of the entire scope of the interrelated project components has been conducted. "

Whether HUD could go as far as asking for such a comprehensive, time-consuming study remains to be seen, but the developers and the city hope to hear back from the agency in January. Hickman, Barnes and Bozman do point out that several studies of the various parts of the project have been conducted, which may be enough for HUD.

Despite the controversies, some behind and some still ahead, like the suddenly unresolved Lincoln Street Bridge issue, Cowles says the project is still on schedule to open in August, 1999. And she hopes that early next year she can start giving Spokanites a peek at what's to replace that rubble-strewn lot by announcing leases with tenants River Park Square already has letters of commitment from, including Nordstrom.

"The lineup that we have is really exciting, " says Cowles. "We have a lot of new people coming here for the first time, shops you'd only find in downtown Seattle or Portland. "

Bloomsday 2020 @ Spokane

Through Sept. 27
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About The Author

Ted S. McGregor Jr.

Ted S. McGregor, Jr. grew up in Spokane and attended Gonzaga Prep high school and the University of the Washington. While studying for his Master's in journalism at the University of Missouri, he completed a professional project on starting a weekly newspaper in Spokane. In 1993, he turned that project into reality...