City budget could get boost from RPS deal
When all of the dollars involved in the failed River Park Square garage deal are finally counted, the city of Spokane should end up with $1.9 million in cash that could be applied to its general fund reserves.
The city’s chief financial officer on Monday gave City Council members a proposed budget that reconciles various remaining costs associated with closing the troubled garage deal.
In 1998, the city joined the owners of River Park Square mall in an elaborate arrangement to finance an expansion of the mall garage and turn over its operations to a city-sponsored agency. The deal broke down and lawsuits engulfed the project when the garage failed to meet revenue expectations. After years of legal battles, the city in 2004 agreed to repurchase $31.5 million in bonds sold in 1998 to finance the expanded garage.
Remaining settlement costs in the proposed budget were $32.3 million. Funds currently available to finance the settlement totaled $34.2 million, including money received from other parties involved in the transaction.
Mayor Jim West and council members said they want to use the leftover cash to boost the year-end balance in the city’s ailing general fund. The general fund finances police, fire, library, streets, parks, planning and other tax-funded services.
The general fund will be obligated through at least 2027 to pay off the portion of the settlement financed by a $25.6 million City Council-approved bond sale last month. Parking meter revenues will be used each year to make those payments, Chief Financial Officer Gavin Cooley said.
Still pending is a $1.8 million bill for unpaid property taxes, plus penalties and interest, which is owed to Spokane County. However, the amount is under dispute by the city, which has challenged the county’s valuation of the garage in Lincoln County Superior Court.
Cooley said the city hopes to reduce the property tax charge, and is negotiating a settlement with the county. Any reduction in the property tax bill would increase the leftover cash going into the general fund for use as a reserve, he said.
Also, the city still owes its consulting lawyers $1 million for their work arguing legal cases and negotiating the settlements among various parties involved in the garage transaction.
The mall is owned by real estate affiliates of Cowles Publishing Co., which also owns The Spokesman-Review.
Under the settlement, the garage and $6 million in cash were turned over to the mall owners in exchange for guarantees to repay a community development loan that was part of the financing for the mall renovation in the late 1990s. The cash was taken from an escrowed parking meter revenue fund, which was held to compensate the mall owner for losses it incurred while the garage was being operated by a public parking authority from 1999 through 2004. The original garage deal called for using parking meter money as a backup source of revenue if the deal faltered.
An exact tally of the cost of RPS to the city has not yet been made. For example, money spent on attorneys over the years is not included in the figures.