FINAL BILL REPORT
HB 2057
PARTIAL VETO
C 1 L 88 E1
BYRepresentatives Locke, Grimm, Bristow, and Hine
Providing for public facilities.
SYNOPSIS AS ENACTED
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 the center 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. The study recommended that some of the proposed retail space be converted to provide 55,000 to 60,000 square feet of additional meeting rooms.
Design issues and a commitment to the City of Seattle to maintain certain public access 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 levied at 5 percent in Seattle and 2 percent in the rest of King County. A 1987 law provides that beginning in 1993 a surtax would be imposed at the level necessary to fund the center operating deficit. The surtax is capped at 40 percent (i.e., 2 percent in Seattle and 0.8 percent in surrounding King County).
Construction is normally financed by issuing 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 need for this borrowing.
The center is also permitted to borrow for capital costs. The statute states that it is the intent of the Legislature that $28 million of borrowed funds be repaid from funds received from a private developer and requires that borrowing for this purpose be repaid by the end of fiscal year 1989.
The study commissioned by the Joint Committee also recommended additional money for center marketing, with the additional money funded from an increase in the hotel/motel tax dedicated to this purpose.
The center is located adjacent to land and a building together known as the McKay Parcel. 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, the center 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. The center has authority to buy and sell property.
Local governments are authorized to construct and maintain various public facilities to meet the needs of their citizens. Public facilities are traditionally financed through local taxes, user charges and state and federal grants.
State law authorizes the creation of convention and stadium districts in any county after public hearings and approval by the voters. These districts may construct convention and public stadiums. Regular property tax levies of $.25 per $1,000 of assessed valuation for six years are authorized with voter approval. Special or "excess" levies are authorized with voter approval.
State law limits the revenue sources and individual tax rates of all local governments. For large and expensive capital projects a local government may not have adequate revenues to either retire bonds or to pay for such a project on a "pay as you go" basis. Three large capital projects are being contemplated by local governments whose revenue sources may not be adequate: in Pierce County an aquatic indoor swimming facility for the Goodwill Games; in Spokane County a convention/coliseum facility; and in Thurston County an Olympic Academy.
Cities, towns and counties are authorized to levy a special excise tax of up to 2 percent on the lodging receipts of hotels and motels. Except in King County these tax revenues must be used for constructing or operating stadium facilities, convention center facilities, performing arts center facilities, visual arts center facilities or paying for tourism promotion activities. In King County those revenues may only be used for debt service on the Kingdome and new capital improvements to the Kingdome.
This local optional 2 percent hotel/motel tax is separate and distinct from the "Seattle Convention and Trade Center hotel/motel tax" of 5 percent in Seattle and 2 percent in the rest of King County and the optional 3 percent hotel/motel tax for convention facilities in Bellevue. Revenues collected by the cities, towns and counties imposing the 2 percent hotel/motel tax are deducted from the state sales tax. The special 3 percent tax for the City of Bellevue is not a credit against the state sales tax.
SUMMARY:
Appropriation. The appropriation from the State Convention and Trade center capital account is increased to include the following:
o$20 million to complete construction of the facility (already in statute)
o$13.0 million for conversion of retail space to additional meeting rooms
o$300,000 to secure the Eagles Building
o$13.3 million for expansion in the 900 level area of the facility
o$10.4 million for purchase of the McKay parcel
!tlTOTAL: $57.0 million
Bonds. General obligation bonds, to be repaid from the hotel/motel tax, are authorized to fund the appropriations.
Hotel/Motel Tax. The hotel/motel tax surcharge is deleted. The hotel/motel tax rates are changed to the following:
!tp1,6,5,3@p7 !tj1!tcSEATTLE!tcSURROUNDING KING COUNTY
!tlThrough June 30, 1988!tc5%!tc2%
!tlJuly 1, 1988 through
!tlDec. 31, 1992!tc6%!tc2.4%
!tlJan. 1, 1993 through date
!tlwhen borrowing for debt
!tlservice and operating
!tldeficit ends!tc7%!tc2.8%
!tlThereafter!tc6%!tc2.4%
@p0 Marketing. The Legislature intends that revenue from the 1 percent increase in the Hotel/Motel Tax be used for marketing.
Borrowing. 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 changed from the end of fiscal year (FY) 1989 to the end of FY 1991.
Property Transfers. 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.
A "public facilities district" is authorized to be created in Spokane County by the City and County of Spokane. The district must encompass the entire county. The district may be created only with a favorable majority vote of the people in the district after a public hearing has been held. A five member board is created. Two members are to be appointed by the county and two members are to be appointed by the city. The fifth member is to be appointed by the other four members.
A 2 percent countywide hotel/motel tax is authorized for the district. A surcharge of up to $.50 on admissions is authorized for the district. Proceeds from these two taxes are to be used for the acquisition, construction and operation of a Spokane sports, trade and coliseum facility. A special or "excess" property tax levy is authorized with voter approval for district use.
Debt capacity of 3/8 of 1 percent of the district's assessed valuation is authorized without voter approval and an additional debt capacity of 1-1/4 percent of the district's assessed valuation is authorized with voter approval.
A total of $1 million is appropriated to the Department of Community Development for the Spokane convention, sports, entertainment and trade facility. This money may not be spent until a district has been created. If by December 31, 1991 all local bonds necessary for the construction of the facility have not been authorized, the district is required to repay the appropriation plus interest.
The legislative authorities of Pierce and Thurston Counties are authorized to impose an additional 3 percent hotel/motel tax. The tax is not a credit against the state sales tax. The purposes of the revenues are limited to constructing and maintaining an indoor aquatic pool in Pierce County and an Olympic Academy in Thurston County. Revenues from the 3 percent tax may not be used to acquire or construct a zero grade beach, wave pool or water slide as a part of the aquatic facility in Pierce County.
A 2 percent hotel/motel tax is authorized for Yakima County and the cities in Yakima County. The county may not impose its tax until at least one-half of the incorporated population has imposed the tax. This tax is not a credit against the state sales tax. A 3 percent hotel/motel tax is authorized for the city of Ocean Shores. This tax is not a credit against the state sales tax. The city of Bellevue is authorized to use the proceeds from their special 3 percent hotel/motel tax for bonded indebtedness. The statutorily authorized uses of hotel/motel tax revenues are altered to include a steam railway for tourist promotion purposes in Lewis County.
VOTES ON FINAL PASSAGE:
House 71 25
Senate 30 17(Senate amended)
House 68 23(House concurred)
EFFECTIVE:March 23, 1988
Partial Veto Summary: Vetoed is a subsection that would have prohibited Pierce County from using receipts from the county's hotel/motel tax for water slides, wave parks or zero grade beaches. (See VETO MESSAGE)