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‘4/5ths’ — County proposal would make big loan to help patch part of $300M financing hole in Seattle’s massive, nearly complete convention center expansion

Crews pouring the roof deck at the Summit Addition last week at the Washington State Convention Center (Image: Lease Crutcher Lewis)

The developer of the massive convention center expansion under construction downtown says the project is seeking help from the the city, the state, and the county in patching a $300 million hole in its finances from the COVID-19 crisis. Thursday, King County Executive Dow Constantine announced he will step forward first with a proposed $100 million loan for the project from cash part of the county’s $3.4 billion investment pool.

But the city, and the state will have to follow suit, apparently.

“No, this is not enough,” Matt Griffin of developer Pine Street Group said in a press conference Thursday to discuss the proposed $100 million loan.

Constantine called the loan proposal on the “4/5ths” completed Washington State Convention Center expansion project “a safe investment.”


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“One concept under consideration is a $100 million loan to the Convention Center that would come from the County’s available cash in its investment pool, which is currently about $3.4 billion,” the county press release on the not quite yet a proposal reads. “The loan would likely carry an interest rate of about 1 percent, which matches the current earnings rate for the investment pool.”

The now $1.9 billion project — Griffin said the budget now includes more than $30 million in “COVID costs” — is an enormous, million-square-foot expansion between Capitol Hill and Seattle’s downtown. It broke ground in summer of 2018 and construction has continued through the pandemic even as worries have grown about the future of business and trade show gatherings and what could be permanent downturns to the travel and tourism the convention center depends on. The majority of the project’s budget was planned to be funded from bond sales supported by a tax on hotel rooms.

Those financial concerns were first identified in the first months of the pandemic as officials said the project would be at risk without a new plan for financing.

But as 2020 draws to a close, county officials and the developer have pitched a solution that would involve the public coffers. It’s unclear if Mayor Jenny Durkan or Gov. Jay Inslee will follow suit. Officials said the hope was the county loan would be “a template” for the state and city to follow.

At risk, Constantine said, are construction jobs and the loss of what he says will be a key new resource to “take advantage of economic growth” in a recovery after the COVID-19 crisis. Constantine also argued that future lodging tax revenues will recover and called fears that people won’t travel and gather again “unsupported.”

Griffin, meanwhile, was not willing to entertain a discussion about ways for the expansion project to cut back and cut costs, likening the idea to “cutting off an arm” to lose weight.

To move forward, the loan plan would need to move through the King County Council. The county said it is currently reviewing any legal issues around “the form and structure” of the Convention Center loan” as well as other unspecified “potential financing arrangements.”

“The Convention Center indicated that if a solution to the $300 million funding gap is not found in the coming weeks, it will be begin taking steps to shut down the project in the spring, letting go of 1,000 construction workers,” the county’s release says.

It’s not clear what impact the downturn might have on other elements of the project. As part of the development, the convention center is providing a $80 million “public benefit” package including $29 million in affordable housing, $10 million for Freeway Park improvements, and $10 million in backing for the Pike-Pine Renaissance project to improve the streetscape of Pike and Pine between downtown and Capitol Hill including new Pike/Pine bike lanes.

The convention center expansion was expected to complete construction next year but is now on track for a 2022 opening, officials said.


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Eli
Eli
5 months ago

If it’s such a safe bet, why can’t they get a loan on the open market from commercial lenders?

Nooe
Nooe
5 months ago
Reply to  Eli

Or if the current conv cent was such a money maker surely it could finance it out of profits over the years. Or perhaps the construction company did a little political donation and now we are stuck building it.

next up will be 520 running out of $ since no cars = no revenue