Room tax would help fund city projects

Financing expansion of the Spokane Convention Center and Spokane Veterans Memorial Arena may require an increase in the current room tax to raise bond funds for the $65 million in projects approved by voters in April.

Spokane city officials have said they’d prefer an increase in the hotel-motel tax from 10.7 percent to the state-allowed maximum of 12 percent, which would get City Hall off the hook for a loan guarantee. Such a guarantee was being sought by the Spokane Public Facilities District to raise funds on the municipal bond market, officials said last week.

In addition, Spokane County Commissioners are being asked to sell $15 million in general obligation bonds that would be repaid through revenues collected by the PFD, which operates the Convention Center and Arena.

The county would get a $1 million reserve fund from the PFD to protect county revenues.

The additional 1.3 percentage point room tax could also be used for expanded sports facilities throughout the county, facilities that would attract tournaments involving out-of-town competitors and stimulate the local tourist economy, officials said.

Mick McDowell, chairman of the PFD board, said the room tax needs the support of the Spokane Hotel Motel Association.

Kevin Twohig, chief executive officer of the PFD, said that association members reacted favorably to the plan during a briefing last week. The association support comes in part because other urban areas of the state currently collect the full 12 percent room tax.

Twohig also said the proposal has the support of Spokane Mayor David Condon and City Council members.

The city is facing a budget shortfall of $10 million for 2013 and is reluctant to guarantee debt for the PFD projects, he said.

Voters in April approved a 10-year extension of two taxes currently being collected to pay for PFD facilities – a sales tax of 0.10 percent and a 2 percent room tax.

The taxes will now be collected until 2043. Previously, they were to expire in 2033.

The money would be used to add 750 seats to the upper bowl of the Arena, which would place the Arena above the minimum seat requirement for men’s NCAA basketball tournament play.

The money would also pay for the addition of 91,000 square feet of space at the Convention Center with related improvements to the Centennial Trail and riverbank.

The Convention Center expansion has been called a completion of the original facility so that it can compete for national conventions.

Voters approved the measure with a 56 percent yes vote.

Twohig said the municipal bond market has sought additional guarantees in recent years, which has complicated the financing for the expansions.

Even if the economy remains sluggish at zero growth, there will be enough tax money coming in to repay the proposed bond sales, Twohig said.

He also said that Spokane Regional Sports Commission is undertaking a study of needs for new sports facilities in the Spokane region.