Powers can't get sides to settle
Agreement ending garage dispute eludes first strong mayor

Jim Camden
Staff writer

Brian Plonka - The Spokesman-Review John Powers, embracing his wife, Bonnie, after winning election as Spokane's first strong mayor, had high hopes of ending the garage dispute through mediation.

The number of lawsuits over the River Park Square garage was growing at the start of 2001, when John Powers took office.

A bankruptcy attorney who beat Mayor John Talbott for the first crack at Spokane's new strong mayor job, Powers had promised at one point during the campaign to bring the warring factions to a bargaining table in 60 days, and into binding arbitration in 90.

The city's time and energy were being consumed by River Park Square litigation, he said.

Shortly after taking office, he hired a new attorney, Laurel Siddoway, to handle the city's River Park Square cases. Siddoway said she hoped the case could be settled by April.

The city had another lawsuit to contend with in April, instead. But Powers and Siddoway hoped that would provide a road to negotiation.

Investors who bought some $31.5 million in garage bonds in 1998 were suing for fraud almost everyone connected with the mall and the poorly performing garage.

That wasn't a surprise to Powers or his staff. Investors had signaled a lawsuit was coming in February when they filed a claim against the city.

But some members of the City Council were surprised at Powers' positive response to the new lawsuit.

He issued an upbeat press release and held a news conference, saying the new suit would help consolidate cases and conserve city resources. Federal courts have better disclosure rules for shaking loose documents, he said. Most important, federal judges have more power to order settlement talks.

The same day, the city filed an answer to the bondholders and cross-claims against some of its co-defendants -- the mall's developer, the parking consultants and its legal advisers.

"My hope is this federal filing will renew serious settlement discussions," Powers said.

Mayor's mediation mantra

But a mediated settlement proved elusive for Powers, just as it did for city officials before him.

One settlement proposal had foundered in May 1999, before Powers was elected. A deal brokered by then-Councilman Steve Corker, the mall's manager, Bob Robideaux, and local labor leader John Leinen failed on a quirk of scheduling.

The proposal came up for a vote when Councilwoman Roberta Greene, a supporter of the project, was out of town. Minus its seventh member, the council split 3-3, and the proposal needed majority approval.

The council made another offer that June, which the developer rejected, and the council rejected the developer's counter.

At that point, Powers' predecessor John Talbott, and Siddoway's predecessor Yale Lewis, suggested possible mediators but the mall's attorney, Les Weatherhead, said the groups were too far apart to even sit down.

River Park Square occupied a significant portion of the debate between Powers and Talbott that fall, but little progress was made toward a settlement.

Two months after the bondholders suit was filed, council members Greene and Phyllis Holmes began meeting with Betsy Cowles, the chairman of Cowles Publishing Co. and president of its affiliates that own the mall. The publishing company also owns The Spokesman-Review.

They worked out the beginning of a settlement, which involved loaning money from the city's parking meter fund, which four years earlier had been set up as a backup for certain garage expenses if parking revenue fell short. The council's April 2000 refusal to loan that money had started the onslaught of litigation.

But the council in 2001 had a new member, and voted 4-3 to approve a loan from the parking meter fund. Powers vetoed it, repeating the concerns of the previous council majority, that the loan might never be repaid.

"This is a loan that would not have been banked anywhere else in town," he said at the time, and called for formal arbitration.

Powers continued a mediation mantra for the next year as new lawsuits were filed and old lawsuits wound through state and federal court.

He brought a former state Supreme Court justice to talk with the council in the summer of 2001 and won a council resolution that fall asking the federal court to order mediation.

"How long have I called for all parties to come to the mediation table?" he said one day in March 2002 as a gaggle of lawyers left a garage litigation hearing in Spokane County Superior Court.

Weatherhead, the developer's attorney, offered his stock response: "When the city has someone empowered to negotiate, we'll meet."

Talks kept out of the public eye

Anything that Powers proposed could be turned down by the council, he said, and Powers had already vetoed one proposal the council had passed.

But by June 2002 -- approximately halfway into Powers' term as mayor -- all the parties in the federal bondholders suit said they'd be willing to try mediation. U.S. District Judge Edward Shea told them to figure a time and sit down with U.S. Distict Judge Lonny Suko.

A month later, some 20 attorneys crowded into the well of a borrowed courtroom above the downtown Post Office, to start mediation. Meetings have continued outside the public eye, but Suko has ordered all the attorneys not to talk about them.

Powers called that first meeting before Suko an important step, but had given up making predictions on when a solution would come.

"This is a complex dispute, and the citizens of Spokane need to understand that it might not be resolved quickly or easily," he said.

Or maybe, at all.

With just over two weeks before the federal trial starts in Richland, mediation has still not produced a settlement among people who generally agree that a trial could be far more expensive.

City officials discussed possible settlement proposals this week in closed-door sessions.

In describing the framework of one proposal, Mayor Jim West said the city may sell some $39 million worth of councilmanic bonds, and use that money to buy up the 1998 bonds issued by the Spokane Downtown Foundation. That could prompt other defendants in the federal securities case to offer money toward a settlement that would cancel the trial, he said. If not, the city might be able to switch from being a defendant to the plaintiff and use the trial to force a settlement with the other defendants.

This proposal is being made outside the court-ordered mediation that Powers had pushed. It's also being done with a new council that doesn't carry all of the animosity from years of garage debates.

Gary Ceriani, lead attorney for the bondholders, said the city's offer might best be negotiated outside of mediation. But Ceriani and other lawyers say they are preparing for trial, scheduled to start April 19.

"The train's going down the track and there's not much time," Ladd Leavens, attorney for the mall developer, said last week.

But for Powers, the settlement train is gone. He lost his re-election bid last fall in the primary. His replacement, former state Sen. Jim West, made much of the fact that Powers had campaigned on settling the garage dispute in 2000, and still hadn't done it.

After talking a few months off after leaving office, Powers recently announced he was taking a job as the chief executive officer of the Economic Development Council of Seattle and King County.

•Sunday: Trying to tally the values and costs -- both concrete and intangible.

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