Crisis half a world away hitting Everett’s budget

EVERETT — Add this to Everett’s budget worries: a financial crisis in a country halfway around the world.

Everett is one of dozens of U.S. cities affected by a burgeoning debt crisis in Greece that led to a sharp increase in interest rates for municipal bonds.

The Everett Public Facil

ities District, which owns Comcast Arena, issued $27.4 million in revenue bonds now affected by the crisis.

The publicly owned district’s variable interest payments have more than doubled since May — from $14,646 to $39,432 a month.

Everett got a mention in the Wall Street Journal last week as an example of a far-flung town affected by Greece’s troubles.

While the city of Everett doesn’t own the arena, it does guarantee the bonds that paid for its construction. That means if the district couldn’t pay on its debt for some reason, the city would have to pick up the bill.

Variable interest rates on bonds often provide better terms than a fixed rate, saving thousands of dollars.

One risk of variable-rate municipal bonds is that payments can suddenly balloon, which is why it is important to keep a close eye on the market, said Karen Clements, the chief financial officer for the Port of Everett.

She deals with bonds as part of her job with the Port. In her experience at the Port, it takes about 60 days to refinance bonds into a fixed rate, she said.

The public facilities district is having no problem making interest payments right now, said Debra Bryant, Everett’s chief financial officer.

“There’s really nothing to be done at the moment,” she said.

The city is monitoring the markets daily.

Even with the increase, the variable interest rate — hovering around 2 percent as of Friday — is still relatively low, Bryant said. The district had enjoyed an interest rate of around .65 percent earlier this spring.

Bond interest rates went up sharply after Standard & Poor’s Corp., a ratings firm, warned that Belgian-French bank Dexia’s credit ratings might be downgraded. Dexia backs some of the municipal bonds held by the Everett Public Facilities District. That bank also has billions of dollars of exposure to Greece’s debt.

After the warning surfaced, investors became skittish about municipal bond deals tied to Dexia.

Dexia sent the city a letter in late May warning of higher bank bond rates and advising the city to “seek another provider” or “consider alternative financing structures” for the public facilities district.

It doesn’t make sense to do that now, Bryant said.

The variable interest rate is still a better deal for the district than moving to a fixed rate, which would likely be around 5 percent to 6 percent, she said.

“It should remain pretty low unless there’s some big jolt to the economy,” Bryant said.

The district has a contract with Dexia until 2017.

Debra Smith: 425-339-3197;

Talk to us

More in Local News

The entrance to the new free COVID vaccination site at the Everett Mall on Monday, Jan. 17, 2022. (Olivia Vanni / The Herald)
Free mass-vaccination site opens Tuesday at Everett Mall

Hundreds of appointments are up for grabs at the state-run site, which will offer initial doses, boosters and pediatric shots.

Michael Jensen, left, and Nathan Jensen, right, pick up trash in their encampment that they being forced to clear out of by Parks Department the near Silver Lake on Wednesday, Jan. 23, 2019 in Everett, Wa. (Olivia Vanni / The Herald)
Annual homeless count could shed light on pandemic’s impact

Snohomish County canceled its 2021 point-in-time count. Officials hope this year’s will bring clarity.

Marysville Pilchuck student Gianna Frank and Marysville firefighters bag puzzles and snacks in Marysville, Washington on January 17, 2022. (Isabella Breda / The Herald)
In Marysville, care packages filled in an MLK act of service

Some bags will go to seniors, some to survivors of domestic violence and some to those living with housing insecurity.

Index School (Index School District)
Voters to decide fate of critical school funding measures

Levies to pay for staff and programs are on the Feb. 8 ballot in districts across Snohomish County.

A crew member carries plywood to steathe a roof as of the Home Repair Service Program Friday morning in Brier, Washington on January 14, 2022. (Kevin Clark / The Herald)
Habitat for Humanity program helps Brier homeowners stay put

The nonprofit’s Home Repair Service program gave a senior couple a new roof — and hope.

Snohomish County Courthouse. (Herald file)
Lawmakers consider Snohomish County request for 2 more judges

It’s been 15 years since the Legislature approved a new Superior Court judge for the county.

NO CAPTION NECESSARY: Logo for the Cornfield Report by Jerry Cornfield. 20200112
Ports and potties, and a delay in long-term-care payroll tax

Here’s what’s happening on Day 8 of the 2022 session of the Washington Legislature.

A mail carrier delivers mail along Dubuque Road in Snohomish on Wednesday, Jan. 12, 2022. (Olivia Vanni / The Herald)
Mail delays frustrate and perplex Snohomish residents

One woman waited two weeks for delivery. Then came “an avalanche of mail.” The Postal Service blames snow and staffing issues.

Sam Dawson administers a collection swab herself Thursday afternoon at the walk-up COVID testing center on Wetmore Ave in Everett, Washington on January 13, 2022. (Kevin Clark / The Herald)
Sketchy firm’s COVID-test sites shut down as questions mount

The Center for COVID Control will close an Everett site and others around the U.S. as officials take a closer look.

Most Read