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City pays off Celebration Park
By JACINDA HOWARD, The Mirror
A decade ago, many Federal Way residents did not want to see Celebration Park constructed.
Now the city is retiring five years early the bonds it withdrew to build the recreational space, among other things. The action will save the city money and free up other tax-generated revenue to be used elsewhere.
In April 1997, the city was issued the 1997 Community Investment Bonds package, totaling $16.15 million. For the past decade it has paid on those bonds semi-annually, said Iwen Wang, management services director.
Due to an excess in real estate excise tax (REET) generated in the past two years, the city decided in October to pay off the $1.89 million balance of the 15-year bonds today, Wang said.
The early retirement of the 1997 bonds will save the city a total of $2,150,000, she said. It will also give the City of Federal Way some piece of mind.
A key benefit (to retiring the bonds early) is just that we reduce the fixed obligation, Wang said.
With the retirement of the 1997 bonds, the city is now only paying on two bonds, she said. The bond issued in 2000 and used toward the Valley Communication Center, a partnership between Renton, Kent, Auburn and Tukwila, amounted to $2.5 million, Wang said. The citys balance on the bond is $1.7 million, she said.
The bond issued in 2003 for the construction of the Federal Way Community Center totals $15 million. At the conclusion of 2007, the city estimates it will have a remaining balance of $13.2 million on this bond, Wang said.
If we can accrue more funds to pay that off early, Im sure we would, she said.
A little history:
The community investment bonds were needed 10 years ago for the construction of Celebration Park, Knutzen Family Theatre and the Federal Way police facility. The bonds also covered improvements to the corner of South 320th Street and Pacific Highway South as well as the accomplishment of the downtown streetscape project, which included the installation of medians, lighting and trees in the downtown core, Wang said.
At that time, the city had hoped to pay off the bonds early, but was not expecting or planning on doing so, she said. Each year since 1997, following the issuing of the bonds, the city has paid $2 million toward the bonds principle and interest. Money from the real estate excise tax, gathered when residential and commercial land is bought and sold, and one-third of the total utility taxes gathered by the city were used to pay on the bond package, Wang said.
In the past two years, the city experienced a significant growth in REET revenue, she said. In 2006, the city expected and budgeted for $2.8 million in this revenue, but it collected approximately $5.3 million, Wang said. This year, the same thing took place. A total of $2.8 million was budgeted and the city collected about $5 million, she said.
The housing market was very, very hot last year, Wang said. Also there was a lot of commercial buying and selling.
The result was an abundance of funds that can only, by law, be applied toward the citys capital projects. In October, the Federal Way City Council voted to use the excess money to pay off the remaining balance on the 1997 Community Investment Bonds package. The action will free up the one-third, or 2 percent, of the utility tax that was previously applied toward paying off the bonds. It will also relieve the city of paying $430,000 per year bond payments would have decreased after a 10-year record of payments, Wang said.
Contact Jacinda Howard at: (253) 925-5565 or firstname.lastname@example.org
At the time the 1997 Community Investment Bonds were taken out, some Federal Way residents did not agree with the citys choice to invest in Celebration Park. Ten years later, the facility is proving to be a financial success. It attracts tourists from across the state and county.
The 83.5-acre, multiple-use sports complex and park produces revenue from baseball and soccer games and tournaments. The park is booked many weekends from May to October with local, regional, state and even national sporting events.
In September 2006, Federal Way teamed with the cities of Kent and Tukwila to host the Senior Softball World Championships, featuring 220 teams, 82 of which competed at Celebration Park, said Terry Hennessy, CIO of Senior Softball-USA.