In Matthew Jarvis’ latest column on the proposed performing arts and conference center (PACC), he mixes apples and oranges and comes up with a red herring.

In the process, he errs in characterizing the financial status of the Edmonds Arts Center, as well as its relevance to the Federal Way project.

In the 2012 Washington State Audit report on which his column focuses, one need only read to the report’s first page to see the error (though reading the entire report is also informative).

On that page, the Auditor includes a table with basic financial information over the 2008-2011 period. Looking at the operational costs and revenues over the four-year span cited, the facility lost $497,000 the first year, $260,000 the second, $43,000 the third, and by the fourth year, 2011, was in the black, with a $1,500 positive operational balance.

Basic financial principles assert that when a facility makes more than it spends during a year, it is making a profit, or in other words, is in the black.

Where Jarvis begins mixing apples and oranges is with the facility’s debt. Edmonds financed the renovation of an existing building into an arts center, using bonds and received capital funds loans from the city to cover operating expenses during 2008-2010.

The Auditor’s report found that, with the recessionary decline in sales tax, the City of Edmonds had not identified sufficient resources to continue paying debt service on the facility. These are two separate financial issues: operational performance and facility debt service.

While debt service is a very real issue for the City of Edmonds, it is a red herring in the discussion over the Federal Way performing arts and conference center, because the city’s proposed strategy avoids creating any debt for the proposed facility. Should the project move forward, the funding plan requires that construction funding be raised up front. There would be no debt involved.

It is unclear how Mr. Jarvis felt that suggesting one city’s issues with facility debt service would affect a Federal Way project proposed to be built without debt. Nonetheless, it is important to correct the record so that residents get a clear picture of what is actually being proposed.

Where the Edmonds facility is relevant to the discussion is in the review and development of the operational business plan for the Federal Way facility. At this point, the Federal Way City Council has only commissioned the development of schematic design plans, as well as a pro forma analysis of the operational business plan. This will take the current concept-level design to a permit-ready set of plans.

In addition, the pro forma analysis will review anticipated expenses and revenues of the operational plan to a level of detail necessary to inform the community discussion about whether moving forward to construction will achieve the community goals of spurring downtown development and providing desired cultural amenities.

Only at that point will the city council evaluate whether to move forward. It is a conservative approach; one that is designed to improve project design, and generate sufficient detail to inform the community conversation.

The pro forma analysis team includes professional experts in the performing arts, conference and hospitality industries and includes the director of the Edmonds Arts Center. As I noted to Matthew Jarvis in the email he referenced in his column, the importance of involving the Edmonds facility director includes gaining lessons learned from a similar performing arts facility (the Edmonds facility does not have a conference center component) that has opened and steadily improved its financial operations during the worst recession of the last 80 years. We believe there is valuable insight to be gained there.

While the Edmonds Art Center’s indebtedness is a red herring issue for a project to be built without debt, Edmonds and other facilities with similar performing arts and conference amenities will provide valuable information to the city council and community in evaluating the operational feasibility of the proposed performing arts and conference center project.

Chris Carrel, Communication and Government Affairs Coordinator, City of Federal Way