Loans needed to help project overcome coronavirus-induced financing gap
SEATTLE – January 27, 2021 – In a letter to the Washington State Convention Center (WSCC) Board of Directors on Friday, the City of Seattle said it is exploring providing a bridge loan to help WSCC overcome a coronavirus-induced financing gap for its Addition project (also called Summit). The City’s support could take the form of a short-term repayable loan or an equivalent form of debt guarantee.
Approval by the Seattle City Council also will be required, as details are worked out. WSCC would bear all borrowing costs.
“The City believes that completion of the WSSC Summit Addition project is critical for the long-term future of Seattle’s economy. In addition, continued work on the Addition will provide hundreds of family-wage construction jobs right now, which will help the community more quickly recover from the current recession,” said City of Seattle Senior Deputy Mayor Michael Fong in the letter.
The $1.9 billion project – and some 1,000 construction jobs – are in jeopardy without a funding solution for the Addition, which is grappling with a gap of roughly $315 million in financing capacity needed for completion in 2022. In December, King County Executive Dow Constantine announced the County’s plan to provide a $105 million loan to the project.
“This has been a priority project for me over the course of a decade. Particularly at this moment, we must advocate for sustainable economic development and family-wage jobs,” said King County Executive Dow Constantine. “King County will be paid back by future lodging tax revenues, and thousands of local jobs will help our region thrive now and into the future.”
Both the City’s and County’s participation depends on participation by the State.
“I am committed to finding a solution that supports the completion of the Washington State Convention Center Addition project that benefits our entire region. My staff and I will continue to work with legislative leaders to find the best way to join King County and Seattle in providing a $315 million bridge loan to the Convention Center. We look forward to completing the construction of this critical project in 2022,” said Governor Jay Inslee.
With these indications of support, the WSCC Board of Directors agreed this week to keep Addition construction moving forward. A plan for an orderly mid-year shutdown of the project will remain on hold as loan agreements are pursued. The project team will assess in March whether construction can continue full-speed, or if certain activities need to be curtailed, said Frank Finneran, Chair of the WSCC Board of Directors.
The Addition will be a key tool for the recovery of the regional hospitality sector, which employs up to 80,000 people in King County. With its commitment to diversity, the project is also central to ensuring the area’s recovery is inclusive and supports long-term economic vitality.
The impacts of a potential project shutdown are significant, including sending about 1,000 construction workers home in an industry expected to shrink in 2021. The jobsite worker population is composed of more than 30 percent people of color. About 25 percent of the workers are from distressed ZIP codes, and more than 15 percent are apprentices who are developing long-term, family-wage careers in the building trades.
WSCC had long since scheduled its final round of financing to complete the Addition construction. With the pandemic-induced collapse of the tourism sector – and the subsequent drop in lodging-tax revenue to back the bond issuance – the financing gap resulted.
“We appreciate that our region’s leadership recognizes the importance of this project and is willing to explore creative solutions to get it finished so that it can fully benefit our community,” Finneran said.
As part of the Addition project, WSCC is investing $93 million in community improvements that include substantial funding for affordable housing, parks and open spaces, improvements to Pike and Pine between downtown and Capitol Hill, bicycle infrastructure, and more. Once open and fully operational, the Addition is expected to create about 3,900 new, ongoing jobs and generate approximately $260 million in new customer spending and $19 million in sales tax annually.
About the Washington State Convention Center
Located in the heart of Seattle and walking distance to world-class hotels, restaurants, entertainment and attractions, the Washington State Convention Center has been the Northwest’s premier meetings and events facility for 30 years. In a typical year, WSCC welcomes hundreds of thousands of visitors from around the globe each year, offering industry-leading service, award-winning catering and a comprehensive range of services for event planners, exhibitors and guests. With a longstanding commitment to sustainability, public art and modern technology, WSCC services its surrounding community and provides visitors with a truly unique Northwest experience.