Nov. 23 (Bloomberg) -- Washington would prevent a default on $41.8 million in debt tied to a Wenatchee arena with a 10- year loan financed by a sales-tax increase, under a proposal by Treasurer James McIntire.
Allowing the Greater Wenatchee Regional Events Center Public Facilities District to default on bond-anticipation notes due Dec. 1 would “cast a long shadow over outstanding and future financing” across the state, said McIntire, a 58-year- old Democrat. State lawmakers may introduce the proposal as soon as today, Chris McGann, his spokesman, said yesterday by telephone.
The arena district issued the notes in 2008 to fund the 4,300-seat Town Toyota Center, a regional sports and entertainment facility in Wenatchee. The city of 32,000 is about 140 miles (225 kilometers) east of Seattle. By the end of last year, the arena had lost $6.5 million since it opened in October 2008, according to a state audit.
“Unfortunately, this situation now calls for state intervention to protect other local governments and their taxpayers,” McIntire said in a statement.
Without intervention, the arena district won’t be able to meet the Dec. 1 deadline for repaying its debt, according to a disclosure statement filed Nov. 4.
McIntire would pay the debt from a state account that holds sales and use taxes earmarked for distribution to local governments, according to the treasurer’s office. The state would recoup the money, plus interest, by withholding sales and use taxes due to Wenatchee and other municipalities in the district for 10 years.
Under the proposal, those municipalities would be allowed to raise their sales-tax rates by 0.2 percentage points without passage of a referendum, the statement said.
On Nov. 8, Standard & Poor’s lowered its short-term grade for the arena district to SP-3 from SP-1, second-highest. The company also reduced the outlook for the district’s sales-tax issuer rating to negative.
S&P analysts Chris Morgan and Gabriel Petek declined in a telephone interview yesterday to predict the effect of the proposed loan on the district’s credit rating.
“This isn’t necessarily something that improves the fundamentals of what we’re talking about here,” Petek said.
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