The city of Seattle and the state of Washington are looking at joining King County in a possible $300 million bailout of the troubled multibillion dollar Washington State Convention Center expansion.
The $1.9 billion convention center project, begun in 2018, has been in financial disarray for most of the last year, as the COVID-19 pandemic has devastated the hotel tax revenue that funds the project.
The Pine Street Group, the project’s developer, has threatened that construction could shut down this year if a plan isn’t secured to fill the $300 million budget gap, leaving a half-built steel and concrete skeleton in the heart of downtown Seattle.
King County Executive Dow Constantine said last month that the county would look to offer the project a $100 million low-interest loan from its public investment pool, which invests funds for county agencies and school, water, sewer and fire districts.
Constantine reiterated Wednesday that he expects the county to be paid back through future hotel tax revenues, if and when the local tourism industry bounces back.
Now, leaders of Seattle and the state of Washington are saying that they’d be willing — depending on the details — to join together to help fill the funding gap.
“We believe that in partnership with the State of Washington and King County there is a path forward for the City to deploy a short-term repayable loan, or an equivalent form of debt guarantee,” Seattle Senior Deputy Mayor Michael Fong wrote in a letter last week to the convention center’s board of directors.
A loan from the city would require approval from the City Council, Fong wrote, saying Mayor Jenny Durkan’s office has had “initial consultations” with the council.
“Significant work remains,” Fong wrote, “but at this time, our initial work and preliminary assessment is path forward is viable.”
Fong made it clear that the city’s participation is contingent on the state and county chipping in as well.
Gov. Jay Inslee also gave measured support to state participation in a bailout of the convention center project, saying he was “committed to finding a solution.”
“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,” Inslee said Wednesday in a press release, issued by the convention center and the Pine Street Group, the expansion developers. He anticipated the project would be completed, as slated, in 2022.
The convention center’s board said Wednesday that these “indications of support” are sufficient for them to keep construction going, for now. They’ll reassess in March, Frank Finneran, chair of the board of directors, said.
Supporters of the project have touted it as crucial for both the region’s current economy — employing 1,000 construction workers — and for the future, as a tool to attract out-of-town visitors to support some 80,000 hotel, restaurant and tourism workers in the county.
The convention center expansion project was to be funded by selling bonds, backed by hotel tax revenue — 9% in Seattle and 2.8% in the remainder of King County — to pay back the debt.
But, since the pandemic hit, downtown hotels have held only 10% to 20% of their normal guests, according to the Downtown Seattle Association, and 2020 revenues were down more than 90% from 2019.
Since the pandemic began, at least 67 downtown conventions have been canceled, the Downtown Seattle Association said. Conventions around the country have gone virtual or flatlined, and there are no guarantees of a full bounce back after the pandemic, even as cities around the country continue to upgrade convention centers in an arms race to woo business travelers to their downtowns.
“This project has the potential to be a crucial community asset for our recovery,” Matt Griffin, managing partner of the Pine Street Group said last month. “Delaying it would be a huge loss for the region.”
In addition to being managing partner of the project, Griffin is a prolific political donor to state and local politicians, overwhelmingly, but not exclusively, Democrats. He’s given more than $400,000 to state and local campaigns since 2006, according to state Public Disclosure Commission filings.
He gave the maximum allowable donations to Inslee, Constantine and Durkan in each of their most recent elections. He has also donated, in recent years, to six of the nine members of the Seattle City Council.