Saying the move could greatly enhance the revitalization of downtown, Spokane City Councilman-elect Stephen Eugster says he will go ahead next month with his proposal that the city create a public development authority to buy and complete the redevelopment of the Davenport Hotel.


I consider an empty Davenport Hotel to be a blight on downtown Spokane, Eugster says.


He believes that redeveloping the long-shuttered hotel into condominiums would entice people to live downtown. Additionally, Eugster says, a redeveloped Davenport, which could house a civic center, public market, and restaurants, could be the catalyst needed to encourage the development of a parking garage and an office tower nearby, as well as commercial development in that vicinity.


We cant afford, in my opinion, to continue to have an undeveloped, unused Davenport. I think we need to begin the process of redevelopment within the next year, Eugster says.


The key purpose of the proposed PDA would be to raise money, probably through the issuance of revenue bonds, to redevelop the hotel. The PDA likely would acquire all or parts of the hotel property, redevelop it, and then sell the propertyor parts of itback to Davenport Sun International Hotels & Properties Inc., its current owner; to another developer; to individuals; or to a combination of all three, Eugster says.


Im not saying this is the best way to redevelop the Davenport. Its just a way, he says. The best way would be if a private party came forward with the $30 (million) to $40 million needed to begin the project. Thats the best way, but I dont think, in my own opinion, that thats going to happen soon.


Idea formed last year


Eugster says he originally drafted the resolution for the formation of the PDA last year, and at that time sent a copy of it to City Councilman Orville Barnes.


Barnes says the resolution didnt go any further then because, I dont think that people at that point took it very seriously. If you remember, last year (Jeffrey) Ng had said he was close to signing a deal with a national hotel chain, and, of course, that would be the best way to go about redeveloping the Davenport.


Barnes adds, though, that if other types of financing options have bogged down, the PDA could be a mechanism for redeveloping the hotel.


Hes unsure whether development of the authority is the right answer, but Barnes, who will leave the council in January, says, Id be one to take a look at anything. Its pretty blighted to have such a major property, right between the redeveloped River Park Square and that Steam Plant, thats vacant and looks so bad. Its an eyesore.


According to Eugsters proposed charter, the PDA would be formed by the city, but risks involved in the developments success would fall on buyers of the bonds.


The Davenport PDA would go into business to redevelop the Davenport and then go out of businessat no risk to the city. The city doesnt have to put a dime into this, Eugster says.


Interest generated by bonds secured by the Davenport PDA would be tax free to the investors who bought the bonds, which would increase the authoritys ability to borrow money because it could borrow it at a lower interest rate, Eugster says.


If it doesnt make sense (to form a Davenport PDA) then I dont want to do it, Eugster says. But I do want to give serious thought to how the Davenport can be redevelopedand redeveloped today.


Before the City Council decides whether to form the PDA, Councilman Barnes believes it should gather a lot of information. He says the first thing that would have to be done is to talk to Davenport Sun to see if its interested in selling the hotel to a PDA, and if it would be willing to sell it at a price that would allow the venerable building to be redeveloped economically.


Eugster says he has been criticized by some people for not speaking with Jeffrey Wai-Kwong Ng, Davenport Suns executive director and chief operating officer, prior to drafting the resolution to create the PDA, but says he opted not to contact Ng to avoid any appearance of a sweetheart deal.


If I was the Ng family, this is a concept I would jump on. So, I didnt want to give the idea that I was doing a deal for them, Eugster says. This is an independent idea.


Eugster says he now has met with Jeffrey Ng and has discussed the resolution with him.


Ng couldnt be reached for comment, but Eugster says he seemed receptive to the PDA concept and might be interested in considering it further.


Meanwhile, companies affiliated with Metropolitan Mortgage & Securities Co., of Spokanewhich supported Eugsters successful run for the City Council this past fallloaned Davenport Sun in 1997 and 1998 a sum of more than $1.5 million to cover costs that were accruing while Davenport Sun sought to arrange a larger financing package for the hotels rehabilitation.


Eugster says that the notion that his proposal for a PDA is a way to pay back Metropolitan for its support is totally false. Bear in mind, this was a proposal I wrote back in 1998. Its nothing new, he says.


Eugster says he didnt know about the loans that the Metropolitan companies had made, until reading about them in the Journal of Business earlier this year.


What I do know is that Metropolitan doesnt want to be in the business of redeveloping a hotel. This way, their loan is paid back and the hotel is redeveloped, Eugster says. He adds that Metropolitan owns a substantial amount of property near the Davenport, as does Spokane-based Washington Trust Bank, and he expects both companies would benefit from redevelopment of the hotel.


Philip Sandifur, president of Summit Property Development, a Spokane-based affiliate of Summit Securities Inc., which is affiliated with Metropolitan, says the company never discussed the resolution with Eugster before it was written.


He showed it to us after he had drafted it. Its still too early to say whether its the answer, but its a good start. Anything we can do to put the hotel back on line would be a good thing for the community. We think its a positive message that the council is sending, Sandifur says.


In addition to the resolution to form the authority, to be called the Davenport Public Development Authority, Eugster also has drafted and plans to submit to the council a charter and bylaws for the PDA, as well as a resolution to appoint three to five people to a board of directors that would govern the affairs of the authority. If those documents, which are subject to change, are approved and the PDA is formed, Eugster believes redevelopment work could begin at the hotel within the next six months.


Eugster says there are several people who he would like to see on the proposed PDAs board, including George Nachtsheim, a principal at Integrus Architecture PS, and Tom Tilford, a member of Mission Property LLC, a Spokane group that hopes to open a national-brand restaurant outlet at the corner of Spokane Falls Boulevard and Browne Street downtown.


Dividing hotel into condos


Eugster says that if the PDA is formed, he hopes that it would work with the current owners of the Davenport Hotel to fashion a redevelopment plan that the authority then would be able to undertake.


That plan could take a number of forms. Eugster, however, currently envisions some of the hotel buildings interior being divided into units that could be used as offices or condominiums.


Eugster sees the first two floors of the venerable structure as housing dining, banquet, and meeting rooms, and possibly a civic center. He also would like to see the Spokane Public Market move into space on the east side of the structure, on the ground level, he says.


The perimeter of the second floor could be used as office space, while the third through fifth floors could house hotel rooms. The remaining floors could be developed into separate condominium units of varying size, including two or three penthouse suites on the top floor that could include as much as 3,000 square feet of space each, Eugster says. The condominium units could be sold to the public with the understanding that when the buyer isnt using his or her condo unit, the owners of the Davenport would be allowed to lease it to others.


I think the units on the upper levels could be sold for at least $500,000 a pop, Eugster says. I think others would agree that the way to save downtown is to bring quality residential units downtown.


He says that at one point, Bobby Brett, managing partner of the companies that own the Spokane Indians, the Spokane Chiefs, and the Spokane Shadow, had expressed an interest to him in owning a condo in the Davenport. Eugster says it also makes sense for Avista Corp., of Spokane, to buy one or two units so that when people come from out of town to meet with the company, they could be put up in one of the units. Such a purchase could be written off as a business expense and the company would have a substantial share in preserving our city, he says.


The more I think about this, the more I think its a marvelous idea. There are so many positive advantages they dont even warrant listing, he says.