PAEC construction under budget, still not fully funded

Published 9:00 am Wednesday, April 27, 2016

As construction on the Performing Arts and Event Center progresses, funding for its construction and expenditures have as well.

Since Garco Construction broke ground on the project in October 2015, the 700-plus seat facility is under its $32.7 million budget despite an approximate $11 million deficit.

According to a quarterly report from city of Federal Way Finance Director Ade’ Ariwoola, the city is working on securing a $3 million Community Development Block Grant Section 108 loan and naming rights for the center, which they expect to sell for up to $3.5 million.

To date, the city has $12.6 million, and is expecting $4 million from the the state and $2 million from 4Culture, which both need to be “drawn down,” meaning the city will submit expenses as they come.

Ariwoola said the city is finalizing the billing process for the state-capital allocations contract so the city can start billing the state.

As for the Section 108 loan, Ariwoola said it will be about a month before the city will receive funding, as a letter for closing was submitted and is in processing in Washington DC.

The Federal Way Coalition of the Performing Arts, a nonprofit that was started in 1989 to raise money for the performing arts center, has raised $851,289 toward their $1 million goal from private parties, according to coalition officials. Although the amount each party donated is private information, the nonprofit provided a list of top donors, which include Jan and Tom Crews, Deputy Mayor Jeanne and Dr. James Burbidge, Atomy America, Linda and Jack Butcher, Joann Piquette, Linda and Paul Ellingson and H. David Kaplan, among many others.

Federal Way Mayor Jim Ferrell said while the city was initially expecting $1.5 million from the sale of the hotel site because it was originally slated for the performing arts center’s property, the hotel’s new location sits primarily on Town Center III. Funds from that sale would likely need to go toward paying down the $8.2 million spent on that property.

“But, when all of Town Center 3 is done, the anticipated desire is whatever money is left over, once we recapture that $8.2 million, we’re hoping to get that back into the Performing Arts and Event Center,” Ferrell said.

According to those same February numbers, the city still has more than what has been spent – $6.1 million.

“Based on the construction level, there is adequate cash to pay bills,” Ariwoola said in an email. “As of the end of February, we had more than $6 million to pay for construction costs.”

In four months, $1.2 million of Garco’s $24.1 million construction contract was spent, with 16 months remaining.

Assuming the city receives all expected grants and loans, which would put them at $21.6 million, there’s still an $11 million gap.

According to Economic and Development Director Tim Johnson, the city applied for the 2016 New Markets Tax Credits again in fall 2015, and they’re expected to learn whether they receive those by August or September of this year. Receiving the New Markets Tax Credits would reduce the city’s needs to utilize a three-year, $13 million interfund loan, which they won’t have to start paying until 2019.

This will be the third time the city has applied for New Market Tax Credits.

“We have worked with several community development entities or community development financial institutions towards that result,” Johnson said in an email. “The city continues to meet with [community development entities and community development financial institutions] to answer any questions as it pertains to the project.”

The Performing Arts and Event Center’s quarterly report states that Congress passed legislation for 100 years of New Markets Tax Credits, but there has since been discussion on whether to release about $5 billion toward the 2016 awards.

“Should this happen, many more [community development financial institutions] will receive awards, many of which are [financial institutions] that support the Federal Way project,” the report states.

Community development financial institutions interested in the center include Clearinghouse, Citiscape Capital Group, Enterprise Fund, Enhanced Capital, National Development Council, Nonprofit Finance Fund, Wells Fargo and US Bank.

“US Bank recently visited the site,” the report continues. “All are very interested because the project is under construction. This significantly elevated [financial institution] interest is due to the forward progress made.”

For information on the Performing Arts and Event Center, visit www.federalwaypacc.org or www.fwcpa.org.

[Editor’s note: The print edition of the Mirror states that that Federal Way Coalition of the Performing Arts raised $791,679, the amount reflected on the quarterly report from the city. Joann Piquette of the Federal Way Coalition of the Performing Arts said on April 25 that the to-date amount is the $851,289 reflected above]