I’m disappointed that the Legislature failed to address the slow-motion financial default in progress in Wenatchee.
7 cities and 2 counties got together and agreed to build an arena in Wenatchee. They used a stream of money from the state plus the expected “operating profits” from the arena to get a construction loan in 2008, and expected to refinance before December 1, 2011 when the balloon payment on the loan came due. Unsurprisingly, the arena isn’t generating enough cash flow to pay the operating costs, let alone any potential debt service.
The relationships between the 7 cities and the counties are complex beyond belief, but the long and short of it is that they failed to refinance and defaulted on the loan last week. I am concerned that this default will result in increased borrowing costs for other local governments and worked with the treasurer’s office to propose legislation that would have paid off the loan and forced the local governments to pay for it.
There’s been lots of news coverage of the issue, most concurring with my concerns about the impacts on other local governments. The proposal would not have impacted the state budget issue, would not have “bailed anyone out”, and would have made money for the treasurer.
The House passed the legislation but it got stuck in the Senate. This felt to me like the triumph of the edges of the political world over the center. We failed to make a practical decision that had bad politics. I hope this does not continue to be the case as we work through the budget situation.