SEATTLE – March 31, 2021 – The Washington State Convention Center (WSCC), which has been in the midst of a coronavirus-induced financing crisis, confirmed today the sale of about $342 million in municipal bonds to close the financing gap and enable completion of the Addition project.
Orders in excess of $3 billion were placed for the $342 million in bonds, a testament to the belief by the bond market in the long-term strength of Seattle and the region. This private funding solution replaces the need for loans King County, the City of Seattle and State of Washington had been considering to offset the financing shortfall. The gap resulted from the pandemic-fueled collapse of the tourism sector in 2020 and the subsequent drop in lodging-tax revenue to back a long-planned second bond issuance.
“We are so grateful to the leadership of the County, City and State for considering loans to bridge the financing gap,” said Frank Finneran, chair of the WSCC Board of Directors. “Recent changes in the financing markets have made it possible for us to instead issue a second round of bonds, as we have always intended to do.”
Matt Griffin, managing partner with the project developer Pine Street Group, Seattle, attributes the changing financing markets to the roll out of COVID-19 vaccines and significant stimulus support from the Federal government. “Both of those factors will shorten the time for recovery in the hospitality industry, the key source of repayment for those bonds.”
The financing plan was approved by Washington State Treasurer Mike Pellicciotti, who commented: “The financing plan……shows that the private market has confidence in the future tourism growth of our state.” He further added that the financing plan is an important step forward in the state’s post-pandemic economic recovery and ensures that Washington will be prepared to welcome back tourists.
Without a financing bridge, the Addition project (also called Summit) would have started a shutdown this spring, more than a year prior to its scheduled completion in summer 2022. Now construction can continue, maintaining a construction worker population that is expected to grow to 1,000 people this summer, according to Griffin. The jobsite population is composed of more than 30 percent people of color and about 25 percent from distressed ZIP codes. More than 15 percent are apprentices on their way to building family-wage careers.
The $342 million in 10-year bonds sold today have an interest yield of 2.801 percent, Finneran said. The firm of PFM Financial Advisors LLC, Seattle, managed the bond offering on behalf of WSCC, assisted by the Pacifica Law Group LLP, Seattle. The bonds were sold by an underwriting team senior managed by J.P. Morgan with co-managers Citigroup and Goldman Sachs & Co, LLC.
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 – many in hospitality – and generate approximately $260 million in new customer spending and $19 million in sales tax annually.
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.
Finneran expressed gratitude to the Downtown Seattle Association, Visit Seattle, the Greater Seattle Chamber of Commerce, and local Labor leadership and membership for supporting efforts to solve the financing crisis.
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 over 30 years. In a typical year, WSCC welcomes hundreds of thousands of visitors from around the globe, 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 inclusivity, WSCC services its surrounding community and provides visitors with a truly unique Northwest experience.