by Ted S. McGregor, Jr.

Monday night's City Council meeting will likely go down as a handful of others have: as a turning point in the twisting saga of River Park Square and its troubled parking garage. At issue was whether to loan $800,000 to the Public Parking Development Authority (PDA), the entity charged with operating the garage -- and the entity on the hook for its mounting bills. The loan would have allowed the PDA to make its Aug. 1 payment without tapping its reserve, which triggers a host of disclosure requirements that could draw even more attention to the failing garage and its financing.

The meeting was filled with the kind of political drama, complete with a cliffhanger ending of sorts, that those who follow the story have come to expect every time a major decision is to be made. After a five-hour meeting, the loan proposal passed the City Council with four votes, but it was vetoed Tuesday morning by Mayor John Powers. It would take five votes to overturn the veto.

The first revelation came as Terry Novak, chairman of the PDA, presented his proposal for a loan. Under his plan, the city's healthy Solid Waste Fund would loan the garage the $800,000, which would be paid back by March. Powers had called upon the PDA to offer a loan with security, or collateral, so the city could be certain it would be paid back. Novak offered up the developer's concession to allow the city to move up the who-gets-paid-with-garage-revenues-first list to second place, behind only the bondholders, for 60 days. This would allow the garage to pay the loan back, but without improved performance, even the 60 days wouldn't appear to be enough to pay back the entire $800,000. The PDA was to get parking meter funds to cover its shortfalls, but that money has been withheld while the city pursues changing the terms of the original deal.

Novak's own team admitted that the move just buys time, and the PDA's volunteer accountant, Dan Cenis, told the council not to make the loan unless it was part of or led to a global settlement. The PDA's pro bono attorney Jim King agreed.

"Someone could claim you're digging a hole -- yes you are," said Novak, "but this is the lesser of two evils. A cloud over the city is also a cloud over the county, the school district and the airport."

Novak raised the possibility that a failure to make the loan would cause the city's already damaged bond rating to drop again, adding hundreds of thousands of dollars to future bond issues, like a street repair bond that may be in the works -- and that it could damage other groups, too.

Powers addressed the council, prefacing his comments by saying, "I believe this must be solved fully, fairly and finally." Then he outlined his reasons for opposing the loan. Primarily, he doesn't believe the payments are the responsibility of the city at all. He also said it would be financially irresponsible to make a loan that local banks wouldn't make, and that didn't have adequate collateral pledged for repayment.

Public testimony continued, but unlike previous River Park Square-focused City Council meetings, the developer was not represented. Two citizens did speak in favor of the PDA's proposal, but there was no overwhelming turnout of downtown boosters as has been seen in past meetings.

President of West Coast Hospitality Don Barbieri supported making the loan, saying the excessive focus on the garage is keeping the community from the more urgent task of attacking poverty. He also wondered what kind of message the city's behavior sends to businesses looking to locate here or do business here. "We need to show that when we make a deal, we back it up."

Chris Marr, speaking for the Spokane Area Chamber of Commerce, echoed that message, saying Spokane's recent progress is put at risk by the unraveling of the garage project and the city's image on Wall Street.

The rest of the testimony went against the plan; some of it was illuminating, some puzzling and some just plain entertaining. Former council candidate David Bray opposed it, saying, "I never thought I'd say this, but I agree with Mayor Powers."

Mark Schwartz, a former bond attorney from Pennsylvania who has become a kind of folk hero in some circles for his work on the issue, came before the council, this time representing no one but himself. He likened the plan before the council to a Band-Aid, then corrected himself, offering instead the analogy of "putting a piece of tissue paper on a volcano."

But he also took the opportunity to point fingers at three council members for their January, 1997, vote to start the project (although Rob Higgins was not on the council at that time). "You're not here because of lawyers," he told them, "you're here because you disregarded facts."

One woman marched through page after page of tirades, with words like "vampires" and phrases like "down-in-the basement meetings" punctuating her many points. Every time Council President Rob Higgins tried to cut her off, she raised her hand to shush him, soldiering her way through her sheaf of papers. Another man seemed to be arguing for water conservation as much as anything when he made the simple but thought-provoking statement, "Flush a toilet, pay a River Park Square attorney."

But the highlight was the ever-aggrieved Jimmy Marks, who wanted to remind the council of his pending curse on the city, but he also managed a fairly lucid point when he said, "If you give this loan, I want one, too. Where do I make my application?"

When discussion moved to the council dais, Steve Eugster took his turn. Exhibiting all his classic traits -- passion, indignation, sarcasm -- he argued that the city cannot make the loan because it is no loan. It's a gift, he claimed, since the PDA is bankrupt and has no prospects for paying any loan back. "We have committed the people of this community to an undertaking that we simply cannot afford," he said.

Cherie Rodgers, also against the loan, took issue with the developer's figure that claims $6.1 million in direct tax benefits to the city as a result of the overall project.

Steve Corker, also against it, said he would rather take a hit to the bond rating than continue to prop up the PDA, which by his calculation could add up to much more money than what the costs of a lowered bond rating would be -- if it is lowered at all.

Higgins defended the loan, and asked his colleagues to consider the bigger picture. "This project is more than just a garage; its contribution to the tax base is a net gain."

Roberta Greene said the Mayor's plan to seek mediation is not working since the other parties in the litigation are not coming to the table. Instead, a solution must come from continuing negotiations that she and others have started with the developer. Making the loan, she argued, would keep that dialogue alive.

Phyllis Holmes called for a refinancing of the bonds, saying that the problem may be eliminated by extending the term of the bonds from 20 years to 30 years. She emphasized that action is needed now. "What do you want your leaders to do, wail and moan or fix it?"

Then all eyes fell to Dean Lynch, who has maintained a studied independence throughout his short public life. It was just that quality that allowed him to make it onto the council as a replacement earlier this year; he's running for a full term this fall. As he began to talk, his comments betrayed no evidence of how he would vote. Finally, he revealed that coming into the meeting he was 75 percent sure he'd vote against the loan, as it was not a bankable loan. But after hearing the testimony, and with some pressure off since he suspected Powers would veto the council action, he supported the loan anyway, saying it would be a show of good faith in the continuing negotiations.

It was not entirely clear, however, if the loan is a major concern for the developer, who had been more focused on the HUD loan funds that the city was holding back from them. That was until Friday, when Judge Tari Eitzen awarded the nearly $1 million to the developer.

Since Powers vetoed the loan, the remaining questions are whether the city's bond rating will take a hit as a result of the PDA having to tap its reserve fund to pay the bondholders, and if the developer will continue to negotiate a global solution to the problem. Powers has written a detailed letter to bond rating executives in San Francisco, essentially lobbying against another drop in the rating. But as for the continuing of negotiations, that appears to be in the hands of some council members -- still including Dean Lynch since his vote in the affirmative on Monday night -- and the developer.

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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...