Paying to park: The decisions and costs of River Park Square

In early 1996, the city of Spokane was thinking about buying a downtown parking garage and wanted to know how much money it would make over the next 20 years.

The problem was: The garage didn’t exist yet.

Neither did the kind of downtown in which the city hoped it would operate.

The River Park Square mall, built some 22 years earlier, had a garage with 750 parking spots. But that garage, like the mall, was headed for expansion as part of a $100 million renovation.

The mall developers, owned by Cowles Publishing Co., wanted the city to buy an expanded 1,304-stall garage as a way to raise money for the rest of the project. Under the proposal, the city would sell bonds to buy the garage and pay them off with parking revenue.

The city hired Walker Parking Consultants, a nationally recognized expert, to prepare a financial feasibility analysis for the bond sale.

That decision, made with relatively little fanfare, would lead to the current legal entanglements over the garage. It became the basis for projecting how much the garage was worth and how much money would be available to pay off the bonds that would be sold to buy the garage.

It is also at the center of a federal lawsuit over the garage.

“If the feasibility study had been done the way it was supposed to be done … it would have shown the project was not feasible,” Laurel Siddoway, the city’s special counsel for River Park Square litigation, said last month in court.

Lawyers representing groups suing the city and the developer now question whether Walker had a conflict of interest on the project. It had worked for the developer, which was trying to sell the garage, before and after working for the city, its potential buyer. Siddoway also questioned whether Walker and the developer hid some of their work from the city - an allegation attorneys for the developer strongly deny.

John Dorsett, the head of Walker’s team of analysts, said last year in his deposition for the federal fraud trial that he didn’t see a conflict at the time because he felt the city and the developer were jointly developing the mall project.

Competing averages

Walker’s parking analysts eventually projected that an expanded garage would collect more than $4 million in revenue during its first full year of operation, and that revenues would grow each succeeding year.

That figure was used in estimates that said the garage could cover bond payments, operations, maintenance and rent that the facility would pay for the land on which it was built.

The analysts projected that the 1,304-stall garage would be full, almost from the time a fully remodeled mall opened. They also figured weekday shoppers would pay $1.50 an hour to park. That represented a slight increase over the average posted fees for parking around the mall at the time, analysts said in their report.

But that was only true if one weighted the average heavily in favor of smaller, more expensive street-level lots, a close read of the report shows. The real average was closer to $1.

Walker’s average also underplayed the fact that in the mid-1990s, many daytime parking customers parked free for as long as three hours when a merchant validated their ticket.

Analysts projected that nearly half the revenue would come from nighttime restaurant and theater customers, who would pay the same as shoppers for parking in the garage. But that ignored another reality of Spokane parking in the mid-1990s - evening parking at the existing mall garage was free, as was parking for every other theater in the surrounding area.

Pete Fortin, at the time the city’s finance manager and point person on the mall renovation proposal, was worried about some parts of Walker’s analysis from the beginning, he said in a deposition for the upcoming federal fraud trial.

He knew that parking was a sore point in downtown Spokane, and that many people parked free in the Veterans Memorial Arena lot across the river and rode a shuttle bus downtown for a quarter.

‘Realm of possibility’

The origin of the $1.50-an-hour parking rate for the expanded garage eventually became a point of dispute among Walker, the developer and the city.

Fortin would later tell lawyers in his deposition that he thought the mall developer came up with the rate and that it was Walker’s job to analyze it. The city never independently assessed it, he said.

Developers contended the number came from Walker.

“That ($1.50 rate) would have been one of Walker’s assumptions,” Bob Robideaux, who at the time was the mall manager, told attorneys in his deposition last summer for the bondholders’ lawsuit.

Dorsett, the head of Walker’s team of parking consultants, told lawyers the rate was a mutual decision among the consultants, the city and the developer.

“When we did the report, $1.50 didn’t seem out of the realm of possibility,” Dorsett said.

The relationships among Walker, the city and the developer were extremely close in 1996. The city had hired Walker in 1990 to study the feasibility for a garage that was never built for the Davenport Hotel. Architects and consultants working on the mall renovation had hired Walker in 1995 to begin running revenue numbers for that project.

By February 1996, Walker was estimating revenue for the developer for a garage that at first charged $1.30 an hour, then $1.40 and finally $1.50 an hour. One of the notes on the estimates faxed back and forth asked Dorsett’s analysts to “see what was necessary to make the project work.”

Dorsett said he had no recollection of writing that on the work sheets. But when asked by city attorney Siddoway if he was trying to bring the revenue estimates up to a level that made the project work financially, he replied: “I may deduce that.”

Fortin said in his deposition he didn’t know Walker was doing that much work for the developer. Had he known, Fortin said, he would have been concerned “because we wanted an independent feasibility study of the project.”

But Dorsett said the report his company eventually produced was not a financial feasibility study, even though it eventually would be called that in the legal documents describing the $31.5 million in bonds sold to purchase the garage.

Walker’s contract with the city called for a feasibility study. But after consultants started working, Dorsett said, city officials told them not to worry about projecting interest rates for the bonds, a key element, he said, for any feasibility study.

Although one of Walker’s tasks was to say whether buying the garage was “a sound financial move,” the report actually says it will have “a positive cash flow” for at least the first 10 years - depending on the cost of financing and parking validation.

“There is nothing in the report that says the project is going to pay for itself,” Dorsett said in his deposition. “I think they already had their minds made up that this was a project they were going to do regardless of what our report said.”

Tuesday: The parties negotiate a price for the garage that critics say is millions too high.