Reversal of Fortune
Published on November 19, 2009
Amid charges of back-door deals and Cowles family influence, the Mobius Science Center project hits a snag at the Spokane Park Board.
By Tim Connor
On Tuesday of this week, the long-running serial that Spokane historian Bill Stimson casts as the battle between Spokane’s “Insiders and Naysayers,” made a trail to a brand new, fortress-like office building on East Trent Avenue. There, around what was literally a back room conference table at the Spokane offices of HDR Engineering Inc., a subcommittee of the Spokane Parks Board gathered. The atmosphere was tense, though not without nervous laughter.
On the agenda was a single item, “Lease Negotiations.”
A more accurate description would have been “explosive counter-offer,” because the subject of the meeting was a 36-page document from Mobius Spokane. Mobius Spokane is a 
non-profit organization, created in 2005, that according to its website, fully expects to “break ground” in 2011 and be the operator of a $29.5 million Mobius Science Center on the north bank of the Spokane River on the northeast side of Riverfront Park.
The “lease” referenced in the agenda is an as-yet unsigned “ground lease,” whereby the City of Spokane would lease to Mobius 5.7 acres not just for the Science Center but for other, unspecified commercial projects that Mobius would sublease, ostensibly in order to produce revenue needed to finance the operation of the new Center.
No one could have left Tuesday’s meeting thinking it was a done deal. And, indeed, the headline on Jonathan Brunt’s front page story in Wednesday’s Spokesman-Review was “Science Center Plan Falters.”
The headline and the story behind it begged at least two questions. The first is why the project appears, now, to be faltering. The second is just how it even got this far given the peculiar terms of the proposed lease.
“Why can’t the public know what’s going on? What’s the big secret? It is my right as a PB member to know what’s going on and have the opportunity to discuss things. We had public meetings about smoking and pools why can’t we have public meetings about the Mobius lease? Don’t you think the Public would like to know that the PB is giving away their land for a buck a year?”–Park Board Member Kim Morse in an email to board members last week.
The volatility of both these questions is what led to the anxious meeting in Ross Kelley’s office. Originally, the Park Board had planned to discuss the new lease proposal from Mobius at a meeting in the City Council chambers last Thursday, November 12th. But the item was unceremoniously yanked from the Thursday agenda because, as Park Board President Gary Lawton explained, the arrival of the new lease from Mobius had created too much confusion and consternation on the full board to have a meaningful discussion about it.
This, by itself, was a stunning turn of events. In August, with what the newspaper reported as “little discussion and only one dissenting vote,” the Park Board had approved its version of the ground lease and sent it on to Mobius. At the time, it looked by all outward appearances to be a done deal.
But one of the things that emerged into the open at Tuesday’s meeting is that the Park Board, despite the all-but-unanimous public vote in August, has been “split down the middle,” over the Mobius proposal for a long time.
That nugget of news came Tuesday from board member Larry Stanley, who was among those who voted for the contract in August. It was reaffirmed by board member Randy Cameron who indicated the board’s support for pursuing the contract with Mobius as a “six-five” (the board has eleven members) proposition, despite how the vote count came out, publicly at least, in August. Cameron also voted for the contract in August and, with Kelley, is clearly among the project’s strongest supporters on the Park Board.
Among the least supportive members is Kimberly Morse, a finance official at the Mukogawa Fort Wright Institute in West Spokane, who joined the Park Board two years ago. Morse cast the one dissenting vote last summer. At the time, Morse said she was concerned about Mobius’s ability to develop the site and said she didn’t like the commercial subleasing arrangement the City would allow under the lease to assist Mobius with its balance sheets.
(Among the several criticisms of both the City and Mobius lease documents is the very liberal provision for commercial subleasing. City Charter provision 48 specifically prohibits “the use of any part of Riverfront Park” for “permanent commercial purposes without the prior approval of the City voters given by a majority vote in a regular municipal election.” The City and Mobius are apparently working around this provision by declaring the north bank property as not part of the park, even though the city used park bond money to buy the land which most voters understood would be added to Riverfront Park.)
But Morse’s criticisms in August are tame compared to the criticisms she filed with the park board Saturday. For starters, she was deeply upset that the lease discussion was pulled from the full Park Board meeting last Thursday.
“The first thing I have to say,” she wrote in an email to board members, “is I disagree that I need to put my thoughts in writing and hand them to the Mobius sub-committee. I think the full PB should have been given the opportunity to discuss this situation in person. Expressing oneself on paper is very difficult and limiting. Yes there have been complaints about the PB meeting at Manito but is that cause enough to eliminate others from this discussion? Why can’t the public know what’s going on? What’s the big secret? It is my right as a PB member to know what’s going on and have the opportunity to discuss things. We had public meetings about smoking and pools why can’t we have public meetings about the Mobius lease? Don’t you think the Public would like to know that the PB is giving away their land for a buck a year?”
Her “buck a year” comment is directed at another clearly controversial part of the lease, which is that the rent, to Mobius, for the duration of the fifty year lease term, would be $1 per year.
Morse declined to be interviewed for this story, but she did confirm the authenticity of the email. She also disclosed that she had been an original member of the Park Board’s Mobius Subcommittee but that she was removed from the subcommittee after it became clear she didn’t support the proposal.
Morse’s email went on to criticize both the process the Park Board has used to negotiate with Mobius and specific portions of both versions of the lease. Notwithstanding her several criticisms of both lease versions, she’s deeply upset that Mobius thought it had any invitation to propose substantial changes to the terms the Park Board voted on in August.
“When the Parks Board voted on the August version of the Mobius Lease,” she wrote, “[board member] Larry Stanley asked the PB a question, something to the affect ‘This is it? No more negotiations?’ He received nods of agreement and in fact I think I even heard a yes. So why is there any further discussion? We’re done, it’s over. Mobius, you either take the lease agreement we gave you in August or we’re done!!! Didn’t the Mobius sub-committee tell Mobius this?
“And another thing, I get the impression that some PB members have known all along that Mobius did not like the August version of the lease. It sounds like the city attorney worked with Mobius to write up this latest lease agreement. So was all the Mobius sub-committee aware of this and involved? I spoke to Larry Stanley and [Park Board member] Jim Quigley and this new lease agreement was a surprise to them. Why were they excluded? Why are things kept so secret from the rest of the PB? I thought that there would be no conversations with Mobius unless ALL of the Mobius sub-committee was there. So?”
In her email, Morse also complained about what she believes, at the least, is the appearance of a conflict of interest by Kelley and fellow subcommittee and Mobius supporter Randy 
Cameron. Cameron is the Chief Operating Officer for the Baker Construction and Development Company in Spokane. Given the prominence of the commercial subleasing elements of the proposed ground lease, she thinks both might be in a position to benefit directly or indirectly by the contracts the Mobius plan would generate. Without directly mentioning Morse’s email, both men scoffed at the suggestion they had a financial conflict.
Both Larry Stanley and Jim Quigley were at Tuesday’s meeting in the back conference room at HDR.
Quigley was the first board member asked by Kelley to give his reaction to the Mobius re-draft of the lease, and he was brief.
“They take it as is or leave it,” he said. “That’s my only comment.”
Next to be polled was Stanley. Resting on the table in front of him was the new Mobius version of the lease, with dozens of little yellow post-it notes flagging from the pages.
Stanley said he was so upset to learn about the Mobius passback that he first decided not even to look at it “because I thought that it was very clear what we sent back to them [in August] was a non-negotiable document, because we’d already voted on it as a board and had near-unanimous agreement that the terminology that was in that lease is where we were, as a board.”
Kelley prodded both Quigley and Stanley to see if they would concede that the changes made to the lease by Mobius were minor or routine, just the kind of thing that happens when lawyers try to finish documents for signatures. Both were polite and somewhat conciliatory, but neither budged.
The modifications and deletions were substantial, Stanley insisted, and were “totally unacceptable. We either go back to the draft lease, and that’s what they make their decision on, or as far as I’m concerned I’m an absolute, hard lock, no, period.”
Quigley said he agreed. “I thought it was non-negotiable.”
Quigley and Stanley got support from Board President Lawton.
“I was deeply disappointed when I got the note from their [Mobius's] attorney about the differences [between the two documents],” Lawton said. As he read further into the Mobius’s redraft, he said, “it became more evident to me that this was outside the bounds” of what the board had agreed to last August.
Interim Parks Director Leroy Eadie was sitting next to Lawton as the board president spoke. After the meeting, Lawton would give Eadie all the credit for opening the meeting to the public even though the Park Board has, in the past, conducted numerous executive sessions on the Mobius negotiations.
But Eadie, like Kelley, was clearly trying to move the ball forward, to at least get the discussion back to the full Park Board, presumably after a cooling off period. As frustrated as Stanley and Quigley were that substantive negotiations had continued with Mobius after the August vote, even they indicated they were interested in information about what changes in the Mobius version of the draft lease had come not from Mobius, but from Assistant City Attorney Pat Dalton. Dalton has been working with the Park Board on the Mobius lease.
But even the news that Dalton and staff would be further explaining the changes in the Mobius draft didn’t calm City Councilman Bob Apple. Apple, the city council’s liaison member on the Park Board, said he was furious to learn that Dalton had continued to meet and negotiate with Mobius after the board voted in August.
“He didn’t have any authority!” Apple insisted. “That [the August lease] was a final document.”
Efforts on Tuesday and Wednesday to reach Dalton to respond to Apple’s charge were
unsuccessful.
As for the proposal itself, Apple called it “abhorrent and ridiculous,” and said he was totally opposed to it coming back to the Park Board to be voted on.
Apple also said that his vote for the Park Board’s version of the lease in August was actually driven by a calculated prediction, which he says he shared with other board members, that as generous as the lease terms were to Mobius, the Mobius board would reject it and ask for even more concessions. But Apple said he expected Mobius’s rejection to be the end of the story; the end of the prolonged negotiations with the organization and an opportunity to start anew and put out a new request for proposal for the north bank property.
What obviously adds to the intrigue of whatever is now playing out within the Park Board and the Parks Department, is the lineage of the science center proposal. As Stimson reported in his political history of Spokane, the science center in the park proposal emerged in the mid-1990s and enjoyed the unwavering support of the Spokesman-Review and Spokane’s first family, the Cowles family that publishes the paper. It was simply considered part of the family’s and the downtown establishment vision for Spokane.
But this first proposal was met by an unexpectedly effective wave of civic opponents, including businessman and civic activist Jock Swanstrom, and ad executive Steve Corker. They forced the issue to a public vote in 1995, and the public voted it down. Corker has since gotten elected, twice, to the Spokane City Council. But he was all but a pariah in the years after the science center vote among Spokane’s business and social elite. His business was devastated because of it. His rivalry with the Cowles family is the stuff of local legend, though it is also something Corker clearly tried to tone down when he ran, successfully, for a new council seat in 2007.
Despite the 1995 rejection by voters, the science center proposal re-emerged quickly, and in 1999, Spokane voters approved a park bond issue that included funds to develop a science center. In 2005, Mobius (which currently runs a Children’s Museum in the Cowles’s River Park Square development downtown) merged with the Inland Northwest Science and Technology Center to advance a new plan. The Cowles connection remains. Anne Cowles, wife of Spokesman-Review publisher Stacey Cowles, is on the Mobius board and Wanda Cowles, the wife of Stacey’s uncle Jim, just completed a term on the board. It’s pretty clear that the Cowleses and a big slice of the closely-knit downtown business establishment still want to get this done.
Just how much the Cowleses, or anybody else, will benefit financially from the Center is hard to know. But the way the Park Board has thus far conducted the process–including allowing a subcommittee to gather for a meeting in Ross Kelley’s HDR conference room Tuesday–seems almost purposely designed to inflame suspicions.
For example, one of the Park Board’s most recent critics is Ron Wright. Wright, a retired policeman and economic crimes investigator from Riverside, California, moved to Spokane in 2006 during the later phases of the River Park Square scandal. He quickly studied the RPS fiasco and became a tireless critic of the Cowles family and a tenacious watchdog of the newspaper’s coverage of the family’s business activities.
When Wright learned of Jock Swanstrom’s renewed concerns he decided he would get up early and attend the Park Board’s August 6th meeting where it would vote on the Mobius ground lease. Wright says he got there a bit late (the meeting started at 7 a.m. in a conference room at the Manito Park maintenance building) but was on hand to witness the vote. He says he then turned to a Park Board staffer to get a copy of the lease that had just been approved.
“I was told I couldn’t have it,” Wright says. Instead, Wright says, he was forced to file a public records request for the lease with the City Clerk, who provided it to him later that day.
Wright is already something of a Spokane phenomenon in the way he has networked and persistently pushed the newspaper and local government on issues that involve, or might seem to involve, Cowles influence.
“The more I look at this,” Wright says of the Mobius Project, “it’s shades of River Park Square all over again.”
Perhaps. But there are lots of differences too. For one thing, when the city was involved negotiating with a Cowles-formed non-profit (the Spokane Downtown Foundation) over the RPS parking garage, it at least required, and even paid for, several supposedly independent appraisals/feasibility studies in order to protect its interests. True, the city later argued that its own feasibility study was part of a fraud against the city and bondholders, but at least a really bad feasibility study existed, as sort of a public fig leaf.
If the Mobius Science Center project goes forward on the city property, however, there will clearly not be a feasibility study in advance. Instead, all that’s required (even by the city’s proposed lease from last August) is that Mobius produce a business plan–after the lease has already been signed–that the city must find “unreasonable” in order to reject the plan and void the lease.
One of the more amusing changes that Mobius seeks in its new lease, is in the section headed, “Project Feasibility.” There it wants to be freed from having to “determine” that the Center is financially feasible, to only having to “believe,” that it is feasible, and that sufficient funding “will be” available, as opposed to “is available,” in the City’s draft. In other words, if only Mobius believes that the project will be economically feasible, then the new language leans in to suggest the city cannot independently terminate the lease for non-performance on feasibility.
“Boy, I can tell you I’ve been chastised more than once that it’s only a dollar a year from good thinking citizens along the way [who] can’t understand how that ever happened. And I say, ‘hey, it wasn’t me.’”–Spokane Park Board member Larry Stanley.
This proposed change can be considered in light of Brunt’s the reporting in Tuesday’s newspaper that Mobius fell short, by more than $3 million dollars, of the $14 million it had pledged to the city it would raise by May 1, 2008.
Moreover, under the new ground lease, Mobius would have up to five years from signing the lease to show to the “Landlord’s reasonable satisfaction that eighty percent (80%) of the total costs of the Project has been raised or pledged.”
It is the kind of language that deeply bothers Jock Swanstrom who, for fifteen years now, has been trying to warn Spokane about how much of a continuous public subsidy (even after federal grants) science centers require because, as a rule, he says, they run about 50% in the red. He predicts a Spokane science center, like the one Mobius is proposing, will lose upwards of $1.5 million a year and leave the city holding the bag when it has to either pour tax dollars into the center to keep it afloat, or take over the property and start all over.
Whether one accepts Swanstrom’s numbers or not, [and there's nothing that either the city or Mobius has produced to dispute him] it’s nonetheless clear that a large operating deficit is expected. This is why the Park Board has struggled–more than it wants the public to know–about the subleasing portions of the draft leases. The lots that would be available for commercial development are larger than the footprint of the science center itself.
At the meeting Tuesday, interim Parks Department director Leroy Eadie made an interesting point. He was picking up complaints from the skeptics on the subcommittee about Article 23 of the lease that would give Mobius “the unrestricted right to sublease, sublet, rent, or license any part of the Premises or the Center for any time or times during the Initial and Option Terms [beyond the first fifty years].”
As Larry Stanley noted, the board’s discomfort over that part of the lease gets to the very heart of the question about the Park Board’s role in government, as a custodian and steward of the City’s park lands. It was a concern that Randy Cameron addressed as well.
“Many of us had the impression, or misimpression, that this would be pretty much funded through grants and donations and for the most part be self-contained. As time goes on, renderings, ideas, proposals, it appeared that the Mobius Science Center was just a small portion of the square footage of construction, that would be in their final plan. All that being said, I think there’s a line where each of us have to draw that ‘is this actually a retail center that will support Mobius, or just Mobius with a little bit of extra office space and square footage?’ And our spirit, thoughts and impressions it was to be ‘Mobius first.’ That’s what we want to see downtown, on our property, a science center for the betterment of our community. If it’s a lot of retail office space and a small science center that’s totally different. I’m not for that.”
But what Eadie was trying to point out is that the board, with its vote last August, pretty clearly seemed to cross that bridge and allow for the unrestricted subleasing of the property. Because while Mobius obviously made substantive changes to the lease with the draft it sent back this month, it didn’t change Article 23. Thus, if Mobius had accepted the city’s ground lease, the city may very well have had to live with something that still gives even Park Board members who voted for the lease heartburn.
Under the terms of the lease, Mobius would get 85% of the revenue from the subleases and the City would get 15%.
Morse’s main point in her email is that the more the citizens of Spokane learn about the lease, the more they won’t like it.
Stanley sounds like he is beginning to agree.
“Boy,” he said during Tuesday’s meeting. “I can tell you I’ve been chastised more than once that it’s only a dollar a year [ground rent], from good thinking citizens along the way [who] can’t understand how that ever happened. And I say, ‘hey, it wasn’t me.’”
–CFJ