Developers of the downtown Washington State Convention Center expansion will turn to the muni bond market to raise much needed cash to continue construction on the project after a year of economic uncertainty.
The Pine Street Group announced a deal Wednesday for the sale of $342 million in 10-year bonds with an interest yield of 2.801%. PFM Financial Advisors of Seattle managed the bond offering.
The financing plan required state approval.
The group had been asking the City of Seattle, King County, and the state to help patch a $300 million financing hole to keep construction on the $1.9 billion project moving forward.
The Pine Street Group said “roll out of COVID-19 vaccines and significant stimulus support from the Federal government” have led to “changing financing markets” allowing the private deal to move forward.
“Both of those factors will shorten the time for recovery in the hospitality industry, the key source of repayment for those bonds,” Matt Griffin, managing partner with the Pine Street Group said in the announcement.
The developer had said the $1.9 billion project and 1,000 construction jobs were in jeopardy without a funding solution for the project as it faced a gap of roughly $315 million in financing capacity needed for completion in 2022.
The now $1.9 billion project 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.
As part of the expansion project, the convention center agreed to $93 million in community improvements that include “substantial funding” for affordable housing, parks and open spaces, improvements to Pike/Pine between downtown and new bike lanes to Capitol Hill.
The project is still on track for a 2022 opening, the developers said Wednesday.
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