A development company here is working to sign tenants for a proposed $35 million-to-$40 million skyscraper in downtown Spokane, sources close to the project say.


The sources decline to divulge the name of the development company, but say it has an option to buy the site where it hopes to build the retail-and-office tower, which would have at least 25 storiesand perhaps an architectural treatment at its top that would make it the equivalent of 31 stories high.


The high-rise building would be the tallest structure in Spokane, besting the 20-story Seafirst Financial Center, at 601 W. Riverside.


The purchase option is with Spokane businessman K. Wendell Reugh for a site on Howard Street between Sprague Avenue and Riverside Avenue, the sources say, where an office tower long has been proposed and rumors of such a development recently had been escalating.


They say the development company has secured an investor who has agreed to sink $6 million into the proposed project and is hoping also to find at least one other individual investor, to assemble an investment group, and to obtain bank financing for the 250,000-square-foot project.


The development company hopes within the next two months to sign a sufficient number of tenants to go ahead with the proposed structure, the sources say. They say that for the high-rise building to be built, the developer likely would need lease commitments for about 60 percent of the project, or 150,000 square feet of floor space.


If the project were built as it currently is envisioned, the tower would rise off the corner of Riverside and Howard and would have a bank, an upscale restaurant, and other users on its ground floor, additional mixed uses on its second floor, and office space on ascending floors.


It also would have four or five levels of underground parking, with up to 300 spaces in all.


The project would have 180 feet of frontage on the east side of Howard, and 120 feet on the south side of Riverside.


The option on the site involves most of the buildings on that block, which is directly east of the Seafirst Financial Center and is bordered by Riverside, Howard, Sprague, and Stevens Street.


The six-story Fernwell Building, at 505 W. Riverside, and a small structure that houses Gabbys Irish Home & Grill, at 514 W. Sprague, arent part of the optioned site.


The possible plans for a tower on that property come on the heels of a rumor that Metropolitan Mortgage & Securities Co., of Spokane, also is looking at developing a downtown tower on a site at the corner of First Avenue and Wall Street that it acquired when it bought the 18-story former Farm Credit Banks Building, at 601 W. First, two years ago. Metropolitan says it has been looking at a variety of potential uses for that land, but denies its pursuing any specific plans for a high-rise building.


It says any development of that site would be tenant-driven and that it considers redevelopment of its Metro Block downtown to be a higher priority. The Metro Block is bounded by Monroe and Lincoln streets and Sprague and First avenues.


Metropolitan vacated much of the block last year when it moved its headquarters into the former Farm Credit Banks Building, which since has been renamed the Metropolitan Financial Center. Metropolitan since then has been reported to be considering turning the Metro Block into a creative business incubator and an art district of sorts.


Driving talks of a possible office tower here is a tight market for Class A office space in the downtown core and a disclosure earlier this year by Spokanes largest law firm, Paine, Hamblen, Coffin, Brooke & Miller LLP, that its looking to expand and needs up to 60,000 square feet of Class A office space.


The proposal for the project on the Reugh property comes after business owners who lease space on that block voiced rumors that they had heard such a project could be in the wind. Last month, some tenants said they had heard rumors that a high-rise office building, a parking garage, or both were being planned for that site.


A smaller, but similar, project was pitched 10 years ago when Kiemle & Hagood Co., of Spokane, proposed construction of Riverside Centre, which was to be a 17-story office building with a Spokane Transit Authority transit center at its base.


After that project fell through, Kiemle & Hagood Chief Executive Officer Jerry Hagood said that a group of investors still planned to build an office tower there eventually.


The sources close to the new project say that Rockey West Public Relations, a Spokane division of Seattle-based Rockey Co., will be handling publicity for the project.