The City of Seattle and Washington State intend to partner with King County in a potential $ 300 million bailout for the troubled multi-billion dollar Washington State Convention Center expansion.
The $ 1.9 billion convention center project, begun in 2018, has been in financial disarray for most of last year as the COVID-19 pandemic devastated the tax revenues of the hotel funding the project.
Pine Street Group, the developer of the project, has threatened that construction could halt this year if a plan to close the $ 300 million budget gap is not secured and a half-built steel and concrete skeleton at heart downtown Seattle remains behind.
King County’s executive Dow Constantine said last month that the county will seek to offer the project a $ 100 million soft loan from its public investment pool, which will provide funding for county authorities, as well as schools, water, sewer and Fire protection districts invested.
Constantine reiterated Wednesday that he expects the county to be repaid through future hotel tax revenue when the local tourism industry recovers.
Now the leaders of Seattle and Washington state say that – depending on the details – they would be willing to join forces to fill the funding gap.
“We believe that in partnership with Washington State and King County there is a way for the city to provide a short-term repayable loan or debt guarantee equivalent,” wrote Michael Fong, deputy mayor of Seattle, in a letter last week the board of directors of the convention center.
A loan from the city would require city council approval, Fong wrote, saying Mayor Jenny Durkan’s office had “initial consultations” with the city council.
“There is still significant work to be done,” Fong wrote, “but at this point our initial work and preliminary assessment is a path forward.”
Fong made it clear that city participation also depends on state and county involvement.
Governor Jay Inslee also adequately supported government involvement in a bailout for the Convention Center project, saying he was “determined to find a solution”.
“My employees and I will continue to work with lawmakers to work with King County and Seattle to secure a $ 315 million bridging loan for the Convention Center,” Inslee said Wednesday in a press release released by the Convention Center and the Pine Street Group was issued. He expected the project to be completed as planned in 2022.
The board of directors of the convention center said on Wednesday that these “support notes” are sufficient to allow construction to continue for the time being. They will be re-evaluated in March, said Frank Finneran, chairman of the board of directors.
Project supporters have touted it as crucial both for the current economy of the region – with 1,000 construction workers – and for the future to attract visitors outside the city to support around 80,000 hotel, restaurant and tourism workers in the district.
The convention center expansion project was to be funded by the sale of bonds backed by hotel tax revenues (9% in Seattle and 2.8% in the rest of King County) to repay the debt.
Since the pandemic, downtown hotels have only held 10% to 20% of their regular guests, according to the Downtown Seattle Association, and revenues in 2020 were down more than 90% from 2019.
At least 67 downtown conventions have been canceled since the pandemic began, the Downtown Seattle Association said. Conventions across the country have gone virtual or flat, and there is no guarantee of full recovery from the pandemic, even as cities across the country continue to upgrade convention centers in an arms race to attract business travelers to their inner city.