Saturday, November 21, 2009

ONGOING COVERAGE: RIVER PARK SQUARE DEVELOPMENT

Cowles Co. opposed RPS papers' release

Jonathan Brunt and Erica F. Curless
Staff writers
January 11, 2008

The company that owns The Spokesman-Review fought last year against the release of hundreds of pages of documents generated in the lead-up to the River Park Square lawsuit settlement.

The confidential documents were released by city officials last week after a federal judge ordered them made public.

The city initially agreed to release the documents in 2006 as part of a settlement with Tim Connor and Larry Shook of the online site Camas. The documents had been sealed as part of the court record.

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But after the city asked permission to make the documents public, an attorney representing Cowles Co., which owns River Park Square and The Spokesman-Review, requested that the records remain sealed.

In April, attorney Leslie Weatherhead argued that releasing the records would break confidentiality agreements. He said Thursday that the argument was more about principle than because of any concerns about what would be released.

"While the materials are perhaps not of earthshaking interest to anybody, RPS believes that the integrity of the discovery and mediation processes are worth protecting," he wrote in a court motion. "Both will be impaired if a party is permitted to change the rules after the game is over."

But Breean Beggs, executive director of the Center for Justice, which represented Connor and Shook, said in an interview there is a substantial interest in releasing the information – earthshaking or not – because it was used to make an important settlement that will affect city finances for years. The public should be able to examine information used to make the decision, Beggs said.

"The public didn't get to know that and make their own judgment," Beggs said. The documents "have the facts, and not just the arguments."

The documents that were released were depositions taken from Spokane Chief Financial Officer Gavin Cooley in February 2005 and Cowles Co. Secretary-Treasurer Steve Rector in July 2003, along with several supporting records.

Much of the information in the recently released stack of documents was publicly known. For instance, a Dec. 1, 2004, memo from Cowles Co. and some other reports laying out the company's argument that River Park Square would likely declare bankruptcy if the lawsuit continued was obtained by The Spokesman-Review through a records request and reported on in 2005.

But the depositions had been sealed. Rector's deposition, in which he was questioned about the company's financial status, is more than 150 pages. Cooley's deposition is more than 130 pages. He was questioned about the city's settlement deal with River Park Square.

Shook said he has yet to take a long look at the documents, but so far doesn't see financial evidence for why the city settled with RPS developers.

"There has to be an arithmetic explanation," Shook said. "That's what my assumption was. My read is there is not arithmetic. It's purely the threat of bankruptcy and I think that is bogus."

Shook and Connor agreed to settle their public records lawsuit after Shook said City Attorney Jim Craven indicated during mediation talks that the depositions were more informative than a memo Cooley prepared for the City Council. The council reviewed the memo before voting to settle with the RPS developers. Shook now questions whether he was misled by the city.

Craven could not be reached for comment Thursday.

The protracted battle over River Park Square began in the mid-1990s, when the city partnered with the mall in a complicated arrangement in which the mall sold its expanded parking garage for $26 million to a nonprofit foundation. The foundation in turn leased the garage to a city-sponsored parking authority. Collections from the garage were supposed to pay all of the costs, but parking receipts covered about half of expenses, which included debt service on the $31.5 million bond issue.

As part of the deal, the city had agreed to loan money from its parking meter collections to make up for losses at the garage, but political support for the partnership shifted. Council members subsequently refused to loan money to the project, forcing the arrangement into court.

By the time the settlement was approved, Cowles Co. was arguing that River Park Square was in danger of bankruptcy.

Critics of the settlement, such as Shook, argue that Cowles Co. was twisting numbers and exaggerating its financial condition in attempt to force a deal.

Cooley said this week that he remains confident that bankruptcy was possible, if not likely.

"We viewed it very much as a real possibility for good reason," Cooley said.

As part of the settlement, Cowles Co. agreed to guarantee payment of a U.S. Department of Housing and Urban Development loan on the project and was given ownership of the mall's garage. The city remained responsible for repaying outstanding debt from buying garage bonds in 2004.

The city's remaining payments on its obligation go through 2027 and will cost between $1.4 million and $2.3 million each year.

Shook and Connor are waiting to get the memo written by Cooley about the settlement. That won't be released until a remaining River Park Square dispute between the city and Prudential Securities is resolved, Beggs said.

Beggs said the depositions' release raises questions about the newspaper's use of the same law firm – Witherspoon, Kelley, Davenport & Toole – for the newsroom and for River Park Square.

Last year, in a report on The Spokesman-Review's coverage of River Park Square matters, the Washington News Council recommended that the newsroom use different attorneys for its First Amendment legal work.

"The Spokesman-Review should find a separate law firm than the one used by the Cowles Co. generally," the News Council report says. "No matter how they might try to avoid conflicts, (attorney) Duane Swinton and the firm of Witherspoon, Kelley project the impression of a conflict of interest, particularly with respect to stories involving the Cowles Co.'s interests."

Swinton, primary attorney for the newspaper on openness matters, said the law firm did not have a conflict in the recent case because neither Spokesman-Review editors nor reporters notified him or the firm that they were interested in obtaining the documents.

"If the newspaper had come to us and said we want to get access to this, then we would have said we can't represent either side," Swinton said.

Swinton noted that it was another attorney at the firm – Weatherhead – who requested the continued confidentiality on behalf of River Park Square.

But Beggs said it's another example that at least gives an appearance of a conflict of interest. "One of the first steps you'd want to do is to make sure you have independent lawyers for each."

Spokesman-Review Editor Steven A. Smith said he stands by his decision not to implement the News Council recommendation. He said the newspaper couldn't get a better attorney for public access issues in Spokane, adding that Swinton in recent years has not worked on mall matters.

"Our attorney wasn't involved, so I don't see any conflict of interest," Smith said.

But Smith added that he supports the legal action that led to the documents' release.

"As a journalist, I wish the company had not sought to withhold the information," he said.

Cowles Co. CEO Betsy Cowles referred questions to River Park Square spokeswoman Jennifer West, who said the company argued to maintain secrecy on the records because the records contain some "sensitive, competitive retail industry information."

Cooley said he has no problem with the information being made public. What was released likely just backs up what city leaders said all along, he said.

"I don't remember walking out of the deposition thinking, 'Oh my,' in any way, shape or form," Cooley said. "There was nothing in that deposition that I felt was any kind of smoking gun."