Ocean Shores is making its case in Olympia for changes to Public Facility District legislation that would allow its Convention Center and other similar facilities around the state to refinance their bonds and extend the terms at more favorable payback rates.
The refinancing, at current low interest rates, would help restore funds to help promote and advertise the Convention Center, reduce the annual payments, and allow the facility to have more funds available for short-term and long-term maintenance, the City Council was told Feb. 11.
The Council was briefed on the legislative efforts by former Councilman Bob Crumpacker, now the chairman of the Grays Harbor Public Facilities District, which was formed in 2002 as a way to build the $10 million Convention Center for the city. The Legislature allowed for such facilities as a result of legislation stemming from the construction of Safeco Field as a way for smaller communities to fund similar projects. There are now 25 public facility districts in the state and 23 have projects, with five having multiple projects.
It is possible for there to be more than one project in a county, such as King County, but the Ocean Shores Convention Center is the only one in Grays Harbor County.
“One of the main early decisions was to sell the bonds for the project with a repayment schedule with low payments for the first 10 years to allow for active promotion and staffing,” Crumpacker said.
When it was built, assumptions were for moderate growth and that lodging tax revenue would be enough to bolster promotions and operations, and help cover the debt service, he noted.
“The great economic downturn in 2008 crushed that notion,” Crumpacker said. “Countywide sales tax collections fell. Tourism and construction dwindled. Despite reductions in staff, promotions and operating budgets , debt service was the primary consumer of revenue.”
Debt service on the Convention Center will go from about $600,000 a year currently to $1.12 million in 2027, with the city still owing $9.75 million.
Mayor Crystal Dingler and Crumpacker have written a letter to the Legislature and have begun a concerted lobbying effort with other municipalities in the same situation. In Wenatchee last year, voters approved a new sales tax to bail the city out of mounting debt it couldn’t keep up with to repay bonds for the Town Center, which now is out of the city’s hands after it had guaranteed $41.8 million in debt.
The Ocean Shores letter and lobbying effort asks lawmakers to get behind House Bill 1687 and Senate Bill 5599, which would modify state law governing public facilities district.
“Additional annual revenue to the PFD with passage of the bills would be about $300,000 per year. This would assure the financial security of the Convention Center over the next 30-plus years, and, allow capital replacement and enhancement as needed to keep the Convention Center competitive,” the letter states.
“Our local communities are depending on the Convention Center to draw large numbers of visitors who will also stay in our hotels, eat at our restaurants, purchase gasoline and souvenirs, and enjoy our beautiful coastline enough that they may chose to live or vacation here and contribute further to our economy.”
Crumpacker was planning to testify on the legislation on Monday and believes there is a chance to get something passed with the help of the area’s local delegation.
Councilman Ed Engel asked him if there was another way to redo the bonds.
Crumpacker said after 10 years — the Convention Center would qualify in 2014 — the bonds could be refinanced. Other facilities that already have been able to do so have refinanced at lower interest rates.
“The cost savings are obvious, and that is a possibility,” he said.
Crumpacker also noted the city has been successful in the bond market and that it would benefit the overall city financial shape to refinance the Convention Center: “We’ve not had trouble in the city of Ocean Shores selling bonds. Our credit rating for bonds is A, which is good. We don’t miss payments on any of our bills.”
With now a stable and balanced general fund, Crumpacker added, “by the time all these things fall into place we may present to a potential bond buyer a very good picture about bond refinance.”
Councilman John Lynn wanted to know how often he and others concerned about the legislation should contact their lawmakers.
“Quite frankly, the more volume, the better,” Crumpacker said, noting the members of the PFD board also are lobbying the Legislature.