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Federal Way committee advances $150,000 lodging-tax support for performing arts center to consent agenda
Summary
The FEDRAC committee voted to forward a recommendation to use $150,000 in lodging-tax (LTAC) funding to support the Federal Way Performing Arts Center to the June 3 consent agenda after staff and council members debated eligibility and transparency of the funding shift.
Federal Way’s FEDRAC committee on May 27 voted to forward to the June 3 consent agenda a recommendation to allocate $150,000 in lodging-tax funds to operational support for the city-owned Performing Arts Center.
The move comes after staff said the city reduced general fund support for the center and asked LTAC to cover the difference. Finance Director Steve Groom framed the request as a budget measure and emphasized the center’s role in tourism and downtown vitality.
Groom said the city previously subsidized the center at approximately $1 million in the 2023–24 biennium and reduced general-fund support to $700,000 per year in the current biennium. “We asked LTAC to review and comment. They did. Said they green lighted it and you as city council approved the budget with this hundred and $50,000 in it,” Groom said. He argued the center contributes to sales tax, lodging tax and the city’s regional brand and described it as “the single biggest investment in the city's regional brand.”
Several council members raised transparency questions about using lodging-tax (LTAC) dollars to support the facility’s operating budget instead of marketing “heads and beds.” Council Member Honda reviewed the RCW categories for lodging tax and noted that while LTAC traditionally funds “heads and beds” tourism marketing and special events, the statute also permits support for “the operation and capital expenditures of tourism-related facilities owned by a municipality.” Honda said that, under that language, the Performing Arts Center qualifies as a tourism-related municipal facility.
One council member urged clearer labeling of the shift so the public understands the city is using lodging-tax funds rather than general fund dollars. “Let's just make sure we tell everybody what it really is, how we're doing it,” the council member said during the discussion.
Staff and council discussed timing and a process to secure a two-year LTAC commitment to avoid yearly repeats; staff said LTAC meets the second Wednesday of the month and could consider a 2026 application in June to permit a fuller review. Finance Director Groom noted the lodging-tax fund is budgeted at about $314,000 for the year with an accumulated fund balance near $2 million.
After discussion, a council member moved to forward the proposed tourism enhancement grant recommendation for the Performing Arts Center operational support (2025) to the June 3 consent agenda; the motion passed at committee. The forwarded item will return to full council for final action.
Why it matters: The use of lodging-tax dollars for city-owned facilities shifts the funding source for a recurring operating subsidy from the general fund to a restricted tourism revenue stream. That reallocation reduces immediate pressure on the general fund but raises transparency questions about statutory eligibility and long-term budgeting.
What’s next: The item is scheduled on the June 3 consent agenda for council consideration; staff said LTAC will review any multi-year application in its regular meeting schedule.
