The move by Walt and Karen Worthy to build a convention headquarters hotel on Spokane Falls Boulevard shows the economic potential of expanding the Spokane Convention Center, public officials said on Wednesday.
Mick McDowell, chairman of the Spokane Public Facilities District, said the letter of intent reached with the Worthys on Tuesday affirms promises made last spring when voters approved a pair of tax extensions for Convention Center expansion.
Proponents said at the time that new jobs – both for construction and in an expanding tourism industry – would surely follow approval of the $65 million measure on April 17.
The ballot called for adding 91,000 square feet of space to the boat-shaped Convention Center, a project that officials argued was needed to attract larger conventions from national groups.
In addition, 750 seats are going to be added to the Spokane Arena, and the Spokane River shoreline is going to get a remake in front of the Convention Center complex.
McDowell said that voter approval of the expansion led directly to the Worthys’ interest in building a large convention hotel on the block immediately south of the INB Performing Arts Center.
“They (the voters) did it,” McDowell said.
A big new hotel, with its own convention spaces and meeting rooms, means that the Convention Center complex can host more than one event at a time, he said.
“We could have two conventions concurrently multiple times a year,” McDowell said.
On top of that, many conventions prefer to hold their opening and closing sessions within the confines of a headquarters hotel, reducing their rental costs for the larger convention facilities, said Kevin Twohig, chief executive officer of the PFD.
Spokane has not been able to offer that arrangement.
The land, which was redeveloped as a parking lot several years ago, was acquired by the PFD through a series of transactions. In 2008, the district paid $7 million to the late Glen Cloninger and other investors for 61,000 square feet of the block.
The Worthys’ letter of intent allows for several options for the real estate transaction, but each would include a covenant restricting use to a high-rise hotel and parking.
The Worthys could purchase the block outright or they could lease it. In addition, a condominium division or air rights could be sold, McDowell said.
“We are trying to keep as arm’s length as we can,” he said.
Included in the transaction would be a guarantee from the Worthys in the form of a $10 million bank letter of credit to be held until the hotel roof is in place.
The PFD would pay for a skywalk connection between the Convention Center and the new hotel. The agency also would continue to operate and collect revenue off of more than 300 ground-level parking spaces.
At the same time, the PFD is moving ahead with a financing package for the Convention Center expansion – a bond sale backed by the voter-approved extensions of a 0.10 percent sales tax and a 2 percent hotel-motel tax from 2033 to 2043.
Those taxes have been used over the years to build the Spokane Veterans Memorial Arena and the newer Convention Center.
In addition, the city of Spokane is expected to approve a 1.3 percent increase in its room tax and use that money for the Convention Center expansion as well as new tournament sports facilities.
County commissioners are expected to approve a $15 million contingent loan agreement as additional backing for the bond sale, McDowell said.