Developer vowed to fight disclosure of secret offer
Public never told about guarantee on parking revenue

Jim Camden
Staff writer

Jed Conklin - The Spokesman-Review Movie patrons wait to have their parking validated at River Park Square.

When the River Park Square garage deal was in danger of unraveling, the mall's developer made a secret, backup offer to tie it back together.

If AMC Theatres didn't open its multiplex movie house in the upper floors of the mall, the developer promised the potential buyers and operators of the garage to make up the lost garage revenue until a new tenant could be found.

But officials from River Park Square LLC were afraid that any mention of that promise would weaken their hand in negotiations with AMC, according to documents being compiled for an upcoming trial. So they made a secret deal with the garage's potential buyer and operator.

The development arm of Cowles Publishing Co. -- owner of The Spokesman-Review as well as KHQ-TV and other news outlets -- promised to fight any demand by the public or news media to see its confidential pledge.

It also agreed to pay the fines if the Spokane Parking Public Development Authority was judged to have broken the state's Open Records Law.

The dispute in the summer of 1999 between the mall developer and AMC delayed the sale of the garage to the Spokane Downtown Foundation, and even prompted a suggestion by the foundation's lawyer that the previously negotiated sale price be dropped.

The mall developers believed an agreement could be struck with AMC, given enough time. To keep the purchase on track, mall officials offered the foundation a backup guarantee:

If AMC pulled out of the mall or closed its doors before February 2000, the development firm would pay the share of revenue the Walker report had projected would come from theater customers. That amounted to a guarantee worth as much as $2 million a year.

But there was a condition. The few people on the foundation and parking authority boards who knew about the guarantee had to keep it secret.

“I had a concern that public disclosure would have a negative impact on our ability to deal with AMC,” Duane Swinton, the mall developer's attorney, said in a deposition last year.

Swinton is also the attorney for The Spokesman-Review and one of the state's top experts on public records. He said recently he didn't see a conflict of interest in his two roles, but critics later would.

The Spokane attorney is among dozens of people involved in the project required to give sworn statements last year in preparation for a federal lawsuit filed by garage bondholders against the city, the developer and their consultants and advisers.

The case file also includes notes from a closed-door session of the parking authority, showing that members talked about ways to keep problems about the garage and the guarantee from the public, the press and attorney Steve Eugster, who at the time was a long-standing critic of the project but had not yet been elected to the City Council.

Although the parking authority was meeting in closed-door or executive sessions on the garage dispute, it was a public agency governed by the state's Open Meetings and Public Records laws. That meant any member of the public or the news media could ask to see a document like the pledge. Denying such a request could lead to a court fight.

At foundation attorney Mike Ormsby's urging, the developer offered a written guarantee to pay the cost of fighting any request to see the pledge. If the parking authority lost a court battle and was fined for violating the public records law, the developer agreed to pay the fine.

Swinton said the agreement did pose a potential for a conflict of interest between his roles as the newspaper's attorney and the developer's attorney. But it never came to an actual conflict, he said recently.

If reporters had found out about the developer's pledge or the confidentiality agreement before a contract was signed with AMC, and asked him for help in securing it, he would have told them to seek outside legal advice, he said.

If they had found out about it after the mall and the theater chain signed a lease, he probably would have released the documents, he said.

Swinton said he did not give those documents or any information about the project to the newspaper. He did answer questions about the project, particularly about issues that came up from his discussions with city officials or testimony before the City Council.

Because of that, Swinton believes he was “never truly in a conflict position.”

“I didn't do reviews of stories on River Park Square, either for the publisher or the newsroom,” he said. Publisher Stacey Cowles is the president of the publishing company and vice president of subsidiaries and affiliates that own the mall. “The tug of war would have been inherent within the company, the newsroom versus the developer,” Swinton said.

Cowles said in a recent interview that he knew generally about discussions to keep AMC from pulling out of the mall in 1999. But he said he didn't know that Swinton had promised the developer would fight requests to release any documents about the backup agreement and pay any fine the PDA might have been assessed.

“There's an obvious conflict there,” Cowles said. Had any Spokesman-Review reporters found out about the agreement, the paper would have hired a new attorney and gone to court to get the documents released, he said.

Steve Blewett, director of journalism at Eastern Washington University, has studied the newspaper's coverage of River Park Square and believes Swinton's representation of the mall and the paper created “an impossible situation.” That was particularly true, he said, when the mall, through Swinton, fought efforts to make public a lease being used as collateral for the loan from the Department of Housing and Urban Development.

The newspaper never joined the fight by project critics to make the city release that lease. A state appeals court eventually ruled the lease was public as soon as the city received money from the loan.

Swinton still believes certain sensitive business information should be exempt from public release. But he said no one at the newspaper ever asked for his opinion on the lease; if they had, he'd have told them to consult another attorney.

But if he had it to do over again, he never would have handled the court action on keeping the lease private. “I would have had someone else do that,” he said recently.

Cowles said the publishing company should have given more thought to the potential conflicts the partnership with the city could create. Its real estate operations regularly rely on confidential information in negotiations, and its news operations regularly fight for public records from government.

“We obviously felt there was nothing we were doing that was against the government. If our judgment was clouded, and I think it was, that's why,” he said. “You know what the road to hell is paved with. Good-intentioned people can end up with a nightmare on their hands.”