River Park Square and City of Spokane Finalize Settlement

All of the required paperwork was finalized today, marking the closing of an agreement between the City of Spokane and River Park Square developer to end the five-year, complex legal dispute involving a public-private project that has revitalized downtown.  
 
The Spokane City Council approved an agreement in December to resolve all of the issues between the two parties.  Since then, several documents have been completed, including a guarantee from Cowles Publishing Company, the developer’s parent company, backed by a letter of credit from U.S. Bank to ensure payment of the City’s $22.65 million HUD loan.  

“The agreement is the result of significant public process, strong leadership and commitment by both parties involved to reach a fair, good-faith resolution and follow through on final details,” said Steve Rector, Chief Financial Officer for River Park Square’s development entities.  “Everything is complete and we can officially move forward as a community.”

Rector said that significant concessions were made by each party in reaching the agreement.  Terms include:

River Park Square has:  

• Ensured payment of the HUD loan through a guarantee of Cowles Publishing Company backed by a letter of credit. 
• Reimbursed the City $1.05 million used to pay past interest and principal on the HUD loan.
• Dropped all claims against the City in both state and federal courts.
• Foregone reimbursement of $8.3 million in past due ground rent and garage operating expenses

The City of Spokane has:

• Retained $8 million in parking meter revenue held in escrow: applied $2 million toward settlement of the federal action and deposited $6 million into a City controlled bank account used to repay the City’s HUD loan
• Dropped all claims against the developer in both state and federal courts
• Transfered title of the parking garage to Cowles Publishing Company

A summary of the agreement can be found at http://www.spokanecity.org/services/articles/?ArticleID=1140

Rector added it was a priority for the developer that the $22.65 million HUD loan would be repaid.   “We are taking responsibility to make sure the HUD loan gets paid,” he said.  “We’ve been concerned about the HUD loan and its relationship to community based programs from the beginning and now we can ensure that funding for needed community block programs will be protected.” 

River Park Square was redeveloped as a regional shopping, dining and entertainment center with the purpose of revitalizing a seriously declining urban core and serving as an economic catalyst to create jobs.  Federal litigation began in 2000 between the bondholders and numerous parties involved in the planning and development of the center when parking garage revenues did not meet projections.   While several defendants have settled, including the River Park Square development companies, two defendants remain in the case, currently scheduled for trial in April in Richland, Wash.    

Despite the issues, the urban retail center has succeeded in its vision to serve as an economic catalyst for downtown Spokane.  It has created over 1,100 jobs.  It has generated nearly $12 million in tax and fee revenue for the City of Spokane.  And, since 1999, it has helped spark more than $1.2 billion in new investment in the City’s urban core. 

“The developer is proud of River Park Square and its positive impacts,” Rector said.  “We look forward to investing in projects that support economic development, job creation and a bright future for Spokane.”