LYNNWOOD – Many in the hotel industry in Snohomish County are not excited about more tax money going to the Lynnwood Convention Center.
While most still support the project, some are skeptical whether the project will bring as many tourists into the area as projected.
The convention center, under construction and slated for completion in late April, will receive county lodging tax money through 2034, rather than 2025, as originally planned.
The agreement was approved by the Snohomish County Council and Lynnwood City Council last month.
The extension adds $9 million to the county’s previous commitment of $17 million to the $33 million project.
The hoteliers are not convinced the extension is the best use for the money.
“There might be some projects between now and then that come up that benefit the county more than the convention center,” said Bob Keller, general manager of the Everett Quality Inn at 101 128th St. SE.
The county lodging tax is one of the means being used to fund the Lynnwood Convention Center.
The rest of the money for the convention center comes from the city of Lynnwood’s own lodging tax and sales tax money normally kept by the state but returned to the county and Lynnwood to form their public facilities districts. In Lynnwood, the public facilities district, or PFD, is managing the convention center project.
The latest move, requested by the Lynnwood PFD board, is strictly a refinancing measure, officials said.
The convention center is being built with bonds sold by the Lynnwood PFD, with the tax money used to cover the bonds and interest payments.
The debt service on the bonds over the 30 years will total $58.6 million, while the taxes collected from all the sources over that time to cover the bonds is expected to total $79.7 million, said Mike Bailey, Lynnwood finance director.
To sell bonds, cities usually need to show they can raise 110 percent of the money needed for the project, said Mike Echelbarger, chairman of the Lynnwood PFD board. After the original agreement, the board discovered that bond companies want a 125 percent cushion for PFDs, he said.
The cushion improved the PFD’s bond rating and the $9 million will be repaid to the county if not needed to cover the bonds, officials said.
Members of the Lodging Tax Advisory Committee – a panel that provides input to the county on how to spend hotel-motel tax funds, and which includes hoteliers – expressed opposition to the idea, members said.
Also opposing the plan were the Snohomish County Lodging Association and the board of directors of the Snohomish County Tourism Bureau.
The tourism bureau board sent a letter to the County Council outlining seven points of opposition and suggesting other ways to raise the $9 million.
The extra money, Keller said, was going to the convention center “without even knowing if it’s going to be a success or not.”
If it is a success, it won’t help other parts of the county, said other hoteliers, including Susan Nelson, general manager of the Hawthorne Inn at Smokey Point. Many of the hoteliers favor spending more on youth sports facilities to draw more visitors.
Echelbarger said contracts for the convention center events that will generate more than 3,000 hotel room nights into 2007 are already signed, and more are pending.
The original, pre-financing projection was more than 15,000 room nights per year beginning in the third year of operation, he said.
He said the county lodging tax has long been distributed on a basis proportional with where the money is generated – one-third by Everett, one-third by Lynnwood and a third by the rest of the county.
Echelbarger believes the convention center will be a success and the PFD will pay off the bonds early, so the convention center won’t even need the $9 million.
Opponents to the extension “are assuming we’re going to use the money,” Echelbarger said. “I’m assuming we’re not going to use the money.”
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