Spokane County commissioners on Tuesday said they are willing to provide a financial backup on municipal bonds that will be sold to finance expansions of the Spokane Convention Center and Spokane Veterans Memorial Arena.
The backing in the form of a contingent loan guarantee would calm jittery bond investors and bring millions of dollars in savings on interest costs, officials said.
Voters last month approved the expansions with a 56 percent yes vote. The Spokane Public Facilities District runs the facilities.
The ballot measure was promoted to increase convention and meeting business and to draw more tourists and jobs to the Spokane area.
“We certainly see the value and importance of what you do,” Commissioner Mark Richard told facility staff.
Commissioners said they would like to see the city of Spokane participate as partners in the conditional guarantee but indicated they would provide the full security if necessary.
City officials have indicated a preference to subsidize the bond payments with $900,000 a year to be collected through a one-tenth of 1 percent increase in the room tax in the city core, county officials said.
The plan approved by voters calls for spending $65 million on the convention center and arena, plus improvements to Centennial Trail between Washington and Division streets.
The arena would get 750 additional seats on the west side of the upper bowl, where no seats now exist. That would allow the arena to qualify for future playoff rounds of the men’s NCAA basketball tournament, also known as March Madness.
Last month’s Measure 1 allows a 10-year extension of a pair of sales and use taxes from 2033 to 2043 to provide revenue for the new bond sale.
Those taxes – a tenth of 1 percent sales tax and a 2 percent room tax – first were approved by voters for construction of the 1995 arena and then were extended in 2002 for construction of the convention center, completed in 2006.
Escalation in construction costs on the convention center forced critical reductions in space, which will now be built. In all, 91,000 square feet will be added, with work expected to start as early as 2013.
The main exhibit hall will be enlarged to exceed 100,000 square feet, making it marketable to major conventions that require the larger size, said PFD Board Chairman Mick McDowell.
The county would guarantee bond payments as a loan in case tax revenues fall short of bond payments. The county would be repaid later as tax revenues recover.
The guarantee is enough to drop the interest rate on the bonds by nearly 0.5 percent, said Marshall Farnell, the county’s chief executive officer.
During negotiations on a financing package for the new convention center over the last decade, the county and Spokane Valley won limited funding for projects at the county fairgrounds and Mirabeau Park.
Commissioners said they think those public facilities, which are not under PFD management, should be considered for future investment, especially if the county is being asked to pledge financial backing for the expansion projects.