HOUSE BILL REPORT
HB 1801
BYRepresentatives Locke, Grimm, Ferguson, Wineberry, Armstrong, O'Brien and Basich;by request of Governor Gardner
Revising provisions relating to the state convention and trade center.
House Committe on Ways & Means
Majority Report: Do pass. (20)
Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Appelwick, Basich, Belcher, Brekke, Dellwo, Hine, Holland, Locke, McLean, Nealey, Peery, Rust, Sayan, Silver, H. Sommers, Taylor, Valle and Winsley.
Minority Report: Do not pass. (1)
Signed by Representative Fuhrman
House Staff:Susan Kavanaugh (786-7136)
AS REPORTED BY COMMITTEE ON WAYS & MEANS JANUARY 25, 1988
BACKGROUND:
A study commissioned by the Joint Committee on the Convention and Trade Center indicated that the Washington State Convention and Trade Center (Center) would yield a greater long term benefit to the state if it were completed with full state funding and ownership rather than through a contemplated private/public partnership. The study also stated that the Center would be a more competitive facility if it had additional meeting rooms and recommended that some of the space set aside for retailing be converted to provide 55,000 to 60,000 square feet of additional meeting rooms.
Design issues and a commitments to the City of Seattle to maintain certain public assess and retail space in the Center limit the amount of retail space that can be converted to meeting rooms. Another source of additional meeting room space is expansion in the upper (900 level) part of the facility.
The special excise tax on hotel and motel room rentals is currently levied at 5 percent in Seattle and 2 percent in the rest of King County. A law passed in the 1987 legislative session provided that beginning in 1993 a surtax would be imposed at the level necessary to fund the Center operating deficit. The surtax was capped at 40 percent (i.e.: 2 percent in Seattle and .8 percent in surrounding King County).
The normal method for financing construction is to issue bonds. In the past, general obligation bonds reimbursed from hotel/motel tax revenues have been issued for the Center.
The Center is authorized to borrow from the general fund or treasury for both debt retirement and operating costs. Issuing additional bonds means higher debt retirement costs and, therefore, additional Center borrowing until hotel/motel tax revenues are sufficient to cover both debt retirement and the Center operating deficit. Raising the hotel/motel tax would reduce the amount borrowed.
The Center is also permitted to borrow for capital costs. Current statute states that it is the intent of the legislature that $28 million of borrowing be repaid from funds received from a private developer and requires that borrowing for this purpose be repaid by the end of FY 1989.
The study commissioned by the Joint Committee also recommended additional money for Center marketing, with the increase funded from an increase in the hotel/motel tax dedicated to this purpose.
Land and a building together known as the McKay Parcel are located adjacent to the Center facility. The Center is obligated to sell the McKay Parcel for at least $10.4 million by 1991 and turn the proceeds over to the federal government and an industrial insurance company. Alternatively, it could turn the property over to the federal government and industrial insurance company in 1991. Finally, the state could itself buy the McKay Parcel for $10.4 million. Current statute allows the Center to buy and sell property.
SUMMARY:
The appropriation from the convention center capital account is increased to include the following:
- $20.0 million to complete construction of the facility (already in statute)
- $13.0 million for conversion of retail space to additional meeting rooms
- $300,000 to secure the Eagles Building
- $13.3 million for expansion in the 900 level area of the facility
- $10.4 million for purchase of the McKay parcel
$57.0 million TOTAL
The above appropriation is to be funded by general obligation bonds to be repaid from hotel/motel tax revenues. $57 million in additional bonds are authorized.
The hotel/motel tax surcharge is deleted. The hotel/motel tax rates are changed to the following:
- 5 percent in Seattle and 2 percent in the rest of King County through June 30, 1988 (already in statute).
- 6 percent in Seattle and 2.4 percent in the rest of King County from July 1, 1988 through December 31, 1992.
- 7 percent in Seattle and 2.8 percent in the rest of King County from January 1, 1993 through the date when borrowing for debt service and the operating deficit ends.
- 6 percent in Seattle and 2.4 percent in the rest of King County thereafter.
It is stated that the legislature intends that revenue from the 1 percent increase in the hotel/motel tax be used for marketing. (The temporary second additional 1 percent increase from 1993 until operating and debt service borrowing ends is used to reduce borrowing).
$1.54 million dollars is appropriated from the Center operating account for marketing ($1.54 million is the amount estimated to be available in FY 1989 from a 1 percent increase in the hotel/motel tax).
It is stated that the legislature intends that $20 million of capital borrowing is to be repaid from additional bonds (backed by hotel/motel tax) rather than from funds received from a private developer. The deadline for repayment of capital borrowing is extended from the end of FY 1989 to the end of FY 1991.
All Center acquisitions or transfers of real property -- including the McKay parcel -- are required to be approved by the Director of Financial Management in consultation with the chairs of House and Senate Ways and Means Committees.
Appropriation: $37,000,000 to the state convention and trade center corporation from the state convention and trade center account and $1,540,000 to the state convention and trade center corporation from the state convention and trade center operations account.
Revenue: The bill has a revenue impact.
Fiscal Note: Requested January 25, 1988.
Effective Date:The bill contains an emergency clause and takes effect immediately.
House Committee ‑ Testified For: Representative Gary Locke and Senator Emilio Cantu.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: The benefit of the project to the state is greater with full state funding than with proposed private partnership. The project is more competitive under the revised design. Additional bonds would not be subject to the statutory debt limit.
House Committee - Testimony Against: None Presented.