LYNNWOOD—The Lynnwood Public Facilities District (otherwise known as “The District”) is seeking to utilize the Snohomish County Treasurer’s Community Investment Program with the issuance of up to $15 million bonds towards its economic development goals and refinancing its existing debt obligations. A similar $15 million short-term loan was utilized by the Port of Everett back in 2022, to fund its economic development at Waterfront Place.
If awarded, the loan will be used to refinance The District’s remaining $9 million worth of debt from its Lynnwood Event Center construction (which opened in 2005) as well as receive additional funding to pay for the schematic designs for its downtown redevelopment Master Plan.
This Master Plan seeks to transform the surrounding 1960’s era shopping mall into a 13-acre town square with public plazas, downtown open space, festival streets, 80,000 square feet of commercial spaces for local Pacific Northwest retailers, a new hotel, a 550-stall parking garage with a new City Center ring road, and privately developed workforce apartments serving households with 60-80% of area median income.
The City of Lynnwood currently provides credit backing for approximately $9.6 million in long-term PFD bonds. From the short-term loan currently being considered, $9 million out of $15 million will be used immediate to pay off the PFD’s existing debt, bringing the City of Lynnwood’s total debt backing to $15.6 million while the loan new is outstanding, according to Lynnwood Finance Director Michelle Meyer.
The PFD’s Board of Directors approved a resolution seeking this loan at its July 8 meeting and has was discussed in Lynnwood’s Finance Committee on July 23. The decision now falls on the Lynnwood City Council at its upcoming August 4 Work Session, to approve the additional $6 million debt backing of the Lynnwood PFD which would reduce the City’s current non-voting bond capacity from approximately $76 million to $70 million.
When the City of Lynnwood and the Lynnwood Facilities District signed a Supplementary Interlocal Agreement back in 2004, and reaffirmed its commitment via a resolution on 2014, the contract states that in the event the District is unable to timely provide the payment of principal or interest on any of its 2004/2005 Bonds the City would loan the District the amount necessary to make such timely payments (a.k.a. securing the debt).
In other words, the City backed the bonds that funded the capital construction costs for the original 2005 Event Center. The District has paid off the majority of this debt since, Executive Director of the PFD Janet Pope informed the Lynnwood Times.
“Think of this like a home refinance where you refinance the debt and take out a little more to finance a remodeling,” said Pope. “The City is acting in its historical role as a guarantee.”
Though Snohomish County purchaser of the bonds in this process, if awarded, the City of Lynnwood would be held responsible if the District is ever delinquent on payments. The City of Lynnwood currently has a AA+ bond rating.
This loan would in no way affect Lynnwood’s current budget deficit, Finance Director Meyer told the Lynnwood Times, since there is no out-of-pocket funding being requested.
In this agreement, the District would be required to make minimum payments in $500,000 increment over the next five years.
“The loan will be paid back within 5 years, and it actually shortens the City’s guarantee obligation as this loan will be paid off sooner than the original loan obligation,” said Pope adding, “As public facilities district, we are simply working with the city as a guarantee as we refinance the $9 million to pay off in 5 years.”
Author: Kienan Briscoe
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