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DOJ Asked to Investigate Mall Development

Here's something you don't see every day. The Department of Justice has been asked to come in and investigate possible corruption in the development of a development in Spokane, Wash.

The River Park Square mall redevelopment was a $100 million public-private partnership that involved the city of Spokane and the mall's owners, Cowles Co. Cowles is a powerful Spokane business that also owns The Spokesman-Review newspaper, KHQ-TV and the Journal of Business, as well as other property and businesses in the region.

As part of the deal, the city applied for a federally backed, low-interest loan of $22.65 million, which was secured with Community Development Block Grants and reloaned to the mall developer. Cowles set up a nonprofit foundation to sell $31.5 million in bonds that would purchase the mall's expanded garage, and when the bonds were paid off, the city was to take possession of the garage.

The bonds and other garage expenses were to be repaid by parking revenues, with the city's guarantee to loan money if garage revenues fell short.

Projections in the bond prospectus that the garage would cover its expenses proved wrong; soon after it opened in 1999, the garage faced significant losses.

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