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Tuesday, March 30, 2004

Spokane

At a glance: Anatomy of a decision

The decision: The use in 1996 of an investment value -- a rarely used appraisal method -- to determine a price for the proposed garage.

  • Who made it: Spokane city officials told appraisers they decided to use that method at the urging -- some say the insistence -- of the mall's developer.
  • Why it became controversial: The investment appraisal produced a range of prices that were higher than other methods, which became the basis for a negotiated price of $26 million.
  • Critics said that was millions higher than the cost of building a garage or the fair market value of the facility. The extra money was a gift to the mall developer, they said.
  • What went wrong: The state Supreme Court eventually said the high price for the garage was not an illegal gift to the developer. The city gets the garage when the bonds are paid off, the court said, and has the power to set a value in line with its appraisals. But the high price tag on the garage required the sale of $31.5 million in bonds. Payments on those bonds started at $2.2 million a year, and eventually will grow to $3.4 million.
  • Although the garage was projected to make far more than that, those estimates were wrong. Last year, the garage collected less than $2.3 million in revenue.

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