Study examines finances of Bellevue-Port proposal

By J. Martin McOmber
Seattle Times business reporter

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But the Port, which is trying to improve its own finances, would probably lose money for at least the first 17 years before seeing any substantial return on its $25 million share, the study shows.

The financial projections do little to settle a brewing debate over whether the Port should join Bellevue in paying for Meydenbauer Center's long-anticipated $55 million expansion.

The city of Bellevue — which would pay $30 million of the tab — says the 10-year-old building needs to be enlarged to compete against an increasing number of convention centers in other cities. But the city needs a financial partner to pay for the expansion, which it hopes to start next year.

Both the City Council and Port commission will decide next month whether to push forward with the second half of the $250,000 feasibility study. A final decision on the project is expected by the end of the year.

"The Port has a very strong economic-development component, and they are funded by the taxpayers of King County," said Bellevue Mayor Connie Marshall. "We thought they would be an interesting partner."

The Port, which runs Seattle-Tacoma International Airport and owns the cargo terminals on the Seattle waterfront, has been trying for years to raise its profile on the Eastside. But the commission is already split on whether paying for a convention-center expansion is the right way to do that.

Commissioner Alec Fisken said he was "baffled" by the financial structure proposed in the report, which, he said, wouldn't pass muster with a private company.

"If it is a good investment, you don't need the Port," he said. "And if it is a bad investment, you shouldn't be putting taxpayer money into it."

Commissioners Patricia Davis and Bob Edwards said they hadn't had time to look at the study in detail, but said they would support the project only if it made good financial sense for the Port.

"If the deal is structured so there is a good economic benefit for the Port, then I do think it is in line with the Port's support for trade, development and tourism," Edwards said.
 
Under the proposal, Meydenbauer would change its name to the Bellevue Convention and Trade Center. And the Port would run a "World Trade Center East," an office that would help Eastside businesses tap into export and import markets.

For the first 15 years after the expansion is completed in 2008, annual payments to the Port would range from $250,000 to $750,000. Assuming the Port borrowed most or all of its $25 million stake, the annual payments are unlikely to cover yearly debt payments.

Only after the Bellevue Convention Center Authority finished paying off construction debt on the existing center in 2024 would annual payments to the Port increase to between $10.8 million and $16.3 million for the next five years. Under that formula, the Port would see an average of 7 percent annual return on its investment.

The convention-center authority would pay for the expansion using the city's share of taxes on hotel and motel rooms, which is projected to triple over the 30-year period.

"If the benchmark is where the Port has been in the past ... it performs well," said Matt Terry, Bellevue's planning and community development director.

But the Port has put a greater emphasis in recent years on making money from investments to better support maritime industry that is now subsidized with taxpayer money.

"We need a fairly steady stream of revenue, and whether we get it 20 years from now or sooner is a significant question," Davis said.

J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com