SENATE BILL REPORT

SB 5901

BYSenator McDermott

Relating to fiscal matters.

Senate Committee on Ways & Means

Senate Hearing Date(s):April 21, 1987

Majority Report:  That Substitute Senate Bill No. 5901 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bluechel, Cantu, Deccio, Hayner, Kreidler, McDonald, Owen, Saling, Williams, Zimmerman.

Senate Staff:Charles M. Williams (786-7439)

                  April 21, 1987

AS OF APRIL 21, 1987

BACKGROUND:

The Washington State Convention and Trade Center was formed as a public nonprofit corporation under Chapter 24.03 RCW.  The State Finance Committee was given authority to sell general obligation bonds totalling $99 million in order to design and construct a state convention and trade center in Seattle.  The purpose of this legislation was to provide both direct and indirect civic and economic benefits to the people of the state.

SUMMARY:

Senate Bill 5901 was introduced by title only.

EFFECT OF PROPOSED SUBSTITUTE:

Authorizes borrowing from excess balances in the state treasury (not the general fund) to pay cash deficiencies resulting from project completion costs.  Project completion costs are defined to include:  remaining development, construction and administrative costs; demolition of the McKay apartment building and limited construction costs to make the Eagles building and retail and parking spaces ready for occupancy and use, and; contingency costs.

The Convention Center Board is authorized to borrow, pending actual receipt of the remainder of $29,250,000 from Industrial Indemnity Company and sale of property and development rights for $20,000,000 to a private developer.  To the extent amounts borrowed are not repaid by private funds, repayment will be by the hotel/motel tax.

The borrowing authority under this section expires June 30, 1992.  The date allows time to resolve construction claims.

The amount of borrowing authorized is in separate appropriating legislation.

The Convention Center Board is also authorized to borrow from excess balances in the state treasury (not the general fund) to pay cash deficiencies resulting from on-going operational costs.  The WSCTC already has specific authority to borrow from the general fund for bond retirement and debt service on the bonds.

Until hotel/motel tax collections are adequate to carry both debt service and operating deficits, borrowing will be necessary.

This section would clarify the corporation's borrowing authority and provide that funds be borrowed from the treasury rather than the general fund.

The amount of borrowing authorized under this section will be determined by the WSCTC's appropriated budget.

All funds borrowed under Section 1 and 2 of this bill will be repaid with interest at a rate equal to the return on investments of the state treasury during the period of the loan.

Borrowing authority under this section expires June 30, 1999, to provide a specified time for legislative review of borrowing authority.  Borrowing needs may extend beyond that time.

The corporation is allowed to enter into lease and sublease contracts for terms exceeding the fiscal period in which such lease and sublease contracts are made.

They will consider alternative systems of governance for the Convention Center.  The Joint Select Committee created by Senate Concurrent Resolution 8412 shall direct a review, evaluate and prepare a report to the Legislature on the operational, managerial, and financial feasibility and the advantages and disadvantages of alternative systems of governance and funding for the Convention Center.

Appropriation:    $63,040,000 is appropriated to the board from the State Convention Center account.

Fiscal Note:      none requested

Senate Committee - Testified: Jim Ellis, Chairman, Convention Center Board; Bud Krogh, Attorney, Convention Center Board