Bloomberg News

Washington Governor Signs Bill on Taxes to End Arena Default

March 01, 2012

Washington Governor Christine Gregoire signed a bill allowing the city of Wenatchee to raise sales taxes to begin repaying creditors of a regional arena that went into default three months ago.

The law permits Wenatchee, a city of 32,000 on the eastern flank of the Cascade Mountains, to raise the sales levy 0.2 percentage points to 8.3 percent without a public vote.

The additional tax would raise about $1.5 million a year toward the estimated $4 million needed to make good on the bonds, Wenatchee Mayor Frank Kuntz said by telephone today. The nine jurisdictions covered by the arena district plan to ask voters to boost the levy an additional 0.1 percentage point, yielding another $1.7 million a year, he said.

“If the one-tenth passes, we have enough to get the bondholders paid,” Kuntz said. “Without the one-tenth, we don’t have enough.”

The city, about 140 miles (225 kilometers) east of Seattle, is among nine municipalities that make up the Greater Wenatchee Regional Events Center Public Facilities District. The district defaulted Dec. 1 on $41.8 million in bond-anticipation notes sold in 2008 to build a 4,300-seat arena whose revenue has fallen short of projections.

The district consists of Chelan and Douglas counties, the cities of Wenatchee, East Wenatchee, Chelan, Cashmere, Entiat, and Rock Island, and the Town of Waterville.

Washington state Treasurer James McIntire warned in November that letting the district default on its debt would tarnish other issuers across the state.

To contact the reporter on this story: James Nash in Los Angeles at jnash24@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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