The Washington State Convention Center is a King County public facilities district in the middle of a $1.9 billion expansion project that is one of the region’s largest construction projects, financed by bonds to be repaid from future lodging tax revenues.
The Center needs a final installment of about $300 million to complete construction, but with coronavirus restrictions limiting travel and tourism, investor interest in lodging tax-backed securities has disappeared.
Executive Constantine and King County Council Budget Chair and Executive Finance Committee Chair Jeanne Kohl-Welles are working with King County Councilmembers as well as the County’s finance and legal experts to come up with a financial package at manageable risk to County finances.
One concept under consideration is a $100 million loan to the Convention Center that would come from the County’s available cash in its investment pool, which is currently about $3.4 billion. The loan would likely carry an interest rate of about 1 percent, which matches the current earnings rate for the investment pool. (The investment pool is comprised of State-authorized fixed-income securities with an average duration of one year).
The loan would be paid back from future lodging tax revenues.
Attorneys for King County are currently reviewing the form and structure of the Convention Center loan and other potential financing arrangements.
The Convention Center is expected to be completed in 2022.
King County and other governments around the region benefit from the project in a number of ways, including sales taxes on restaurants and hotels that fund local services. King County levies its own lodging tax that is devoted to affordable workforce housing, services for homeless youth, arts and culture, and tourism promotion.
The Convention Center indicated that if a solution to the $300 million funding gap is not found in the coming weeks, it will be begin taking steps to shut down the project in the spring, letting go of 1,000 construction workers.
“I have always advocated for sustainable economic development and family-wage jobs. That's why this has been a priority project for me over the course of a decade,” said Executive Constantine. “Particularly at this moment – with so many people struggling – this is good and compelling public policy. We have an obligation to help our region compete for convention and visitor dollars. King County will be fully repaid from future lodging tax revenues, but the real benefit will come in the form of thousands of good jobs and growth opportunities for local businesses.”
“Perhaps at no other time in our region’s history has it been more critical to fight tooth and nail to save every existing family-wage job,” said Councilmember Jeanne Kohl-Welles, King County Council Budget Chair. “And I believe we have a fiscal duty to do everything it takes to keep this highly significant project for our economic recovery moving forward. This world-class facility will serve as an economic engine and attraction for generations to come driving our economy and creating job opportunities throughout King County.”