Last week, the Federal Way City Council voted 6-1 to spend another $1 million toward a performing arts and conference center (PACC).
This puts their total investment of taxpayer funds at approximately $7 million. While reasonable people can debate the merits of a PACC, the council has yet to outline a plan to pay for the $32 million construction cost, or the projected annual loss of $200,000 (I’m still betting $10,000 that says the annual losses will be dramatically higher).
The city has basically three options for funding the PACC: raise taxes, cut services, and/or get someone else to pay for it.
Let’s start with getting someone else to pay for it. The city projects it will receive $7.5 million from various government agencies outside of Federal Way (e.g. state and county). While these are still tax dollars, spending these funds will not directly affect Federal Way residents.
The city also projects it will receive somewhere between $7 million and $13.5 million from a variety of other sources including naming rights, private donations and selling a portion of the Toys R’ Us lot to a hotel. To me, these numbers seem wildly optimistic, so we will use the city’s lowest number of $7 million. This leaves the city short $17.5 million.
Financed over 10 years, this $17.5 million will cost the city approximately $2.3 million annually. Because the city already claims to be running on a “no frills” budget, I’m going to assume that there remain no services that can be safely cut. After all, since 2010, the council has already cut 20 positions from the police department and some $1.5 million from the road maintenance budget.
This leaves us with tax increases. If the $17.5 million were financed entirely with property taxes, a $250,000 home would see their taxes increase by $80 annually. This is approximately one-third of the $228 annually voters recently approved for the new Federal Way High School.
While one could make an argument against further raising taxes, even with this increase, our property tax rate would remain below that of our neighboring cities.
Unfortunately, we have yet to see a financing proposal from an elected official or PACC supporter. The only indications we have are the comments from three council members stating that they are unwilling to raise taxes for the PACC.
Without new tax revenues to pay for the PACC, the city will be forced to again make significant cuts to the police and infrastructure budgets.
If I were Czar of Federal Way, here is how I would proceed with a PACC.
First, I would ask every arts group in Federal Way to sign a 10-year contract to use the new facility. I would also push on every downtown property owner to commit to making simultaneous investments into their own properties.
Second, talk is cheap, but money talks. I would call every PACC supporter and ask them to sign a pledge. Let’s start with the mayor and city council. I would also talk with local service groups to see how willing they are to raise funds for this project. If we can’t get $1 million of pledges, the deal would be dead.
Third, I would commit to selling the Dumas Bay Centre/Knutzen Family Theatre once the PACC was completed. In addition to generating somewhere in the neighborhood of $4 million of capital, it would also free up $110,000 annually in the city’s budget (the school district used a similar strategy to help pay for the new district office and bus garage).
Fourth, I would follow Seattle’s example and create a tax specific to the downtown business/property owners who should benefit most from this project. Let’s say this raises another $2 million over 10 years.
This leaves us with a shortfall of approximately $10 million. My final move would be to run a ballot measure for a $47 annual increase in property taxes. While such a move will be regarded by some as “political cowardice,” nearly everyone I talk to calls it democracy.
Without all five of these funding sources, I would scratch the project, sell the property and give the money back to the state.
Now that you’ve heard my funding plan, what’s yours?
Corrections
In a previous article, I stated that the prior to construction, the Federal Way Community Center had been projected to cover its own expenses. While no fewer than three city council members are on record stating that the Community Center would be (or currently is) largely self-sustaining, city directors Cary Roe and Tho Kraus kindly explained to me that the city staff had accurately projected that the Community Center would require significant subsidies. My apologies for the error.
