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Hoteliers Lawsuit Over Use of Hotel Tax Against Washington State
Could be Dropped if Legislature Approves State Convention Center
Being Released From State Control

By Jim Brunner, Seattle TimesMcClatchy-Tribune Regional News

Mar. 18, 2010--OLYMPIA -- The Washington State Convention Center would be cut loose from state control under a proposal moving through the Legislature, likely clearing the way for an expansion sought by Seattle tourism boosters.

Under the plan, the convention center would be governed by an independent public-facilities district, much like Safeco Field.

The new entity -- not the state Legislature -- would get to decide whether to pursue a major expansion to the convention center aimed at attracting more out-of-state visitors to downtown Seattle.

"We would be semiautonomous," said John Christison, president of the convention center.

The plan does not call for any new taxes for the general public. The convention center would simply get more control over its main funding source -- taxes on hotel rooms in Seattle and King County. That would allow planning for an expansion without interference from Olympia.

Last year, the Legislature balked at a proposed $766 million expansion at the site of Metro King County's Convention Place Station, about a block from the current convention center. Lawmakers said they wanted more feasibility studies before giving the project a green light.

Lawmakers have raided the convention center's hotel-tax accounts of more than $80 million over the past two years to help balance the state budget. That angered Seattle hoteliers, who sued the state to challenge the fund transfers.

Despite the dismal economy, convention-center boosters want to be able to plan for the future without interference from the Legislature.

"We think the expansion is the right thing to do. It's going to be a matter of timing and size," said Craig Shafer, president of the Tourism Alliance of King County, and owner of Hotel Andra in Seattle.

Shafer is among the plaintiffs in the hoteliers' lawsuit against the state. They argued the taxes collected by the convention center, a 7 percent tax on hotel rooms in Seattle, and 2.8 percent in the rest of King County, were supposed to be dedicated to the convention center and tourism promotion.

If the current proposal in Olympia passes, Shafer said the hoteliers will drop their lawsuit against the state.

Christison said any expansion plans would need to proceed with caution. While a project may no longer require legislative permission, financing could still prove difficult.

"It's still a major question, and we would not just run right out and expand," Christison said.

A construction project would depend largely on bonds repaid out of the hotel-tax collections, which have declined with the economy. This year, those taxes will bring in an estimated $27.3 million, down from $35 million in 2008.

In exchange for its newfound freedom, the convention center would give up one slice of the hotel tax money it now receives -- a 2 percent sales tax on hotel rooms in Seattle, which brought in $7.6 million last year.

The convention center also would have to refinance $366 million in debt remaining from construction of the center's last expansion in 2001, freeing up more borrowing capacity for the state.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com

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