Kitsap PFD reviews multi-year financial forecast, ILAs and HB 1109 extension

Kitsap Public Facilities District board members heard a financial outlook on Feb. 24 from municipal advisors Ryan Neumeister and Scott Bauer that modeled sales-tax rebate revenues, existing interlocal agreements (ILAs) and several bond-issuance scenarios through 2041.

The advisors presented a baseline sales-tax growth assumption of 2.5% annually and two stress scenarios (a 2% flat case and a near-term dip with 0% growth in 2025 followed by 1% in 2026). They reported the district recorded an increase in fund balance of about $725,000 in 2024 but projects to use roughly $1.7 million of fund balance in 2025 to cover planned cash payments for design and early construction activity. The presentation listed current ILAs and letters of intent with local sponsors: Poulsbo Event and Recreation Center ($8,700,000 ILA, expires end of 2027), Port Orchard Community Event Center ($12,000,000 ILA with about $9.8 million remaining plus a $6,500,000 letter of intent; current ILA expires at the end of this year), Port Gamble Heritage Park (roughly $2,000,000 ILA with about $768,000 remaining, ILA expires June), and Port of Bremerton (approximately $1,400,000 ILA with ongoing annual payments of about $144,000 through 2031).

Nut graf: The forecast shows the district will face near-term cash drawdowns as projects move from design to construction, but advisors said revenues under the baseline scenario remain sufficient to meet projected obligations; stress testing and a scenario in which the district would need to issue bonds on its own (rather than partner cities issuing LTGO security) showed materially higher debt service and additional requirements such as audited financial statements and bond-rating work.

Advisors walked the board through key planning points: which entity would issue bonds for city-sponsored projects (Poulsbo and Port Orchard were modeled issuing LTGO bonds in examples), anticipated timing of debt service beginning in 2026 for bonds issued this year, and the district’s options if it needed to issue revenue bonds using a gross revenue pledge. In the district-issue scenario advisors assumed higher interest costs, a required reserve and additional continuing-disclosure and audit obligations for investor confidence.

Board members asked about the sensitivity of the model to lower sales-tax growth (several asked for additional stress tests) and whether funds shown in later-year columns were placeholders until financing decisions are finalized. Advisors said some amounts (for example, previously earmarked further phases of Port Gamble work) were not included in the current scenario and would be modeled when sponsor schedules and financing plans are fixed. They also noted that HB 1109 — a state bill to extend the district’s authority to collect the sales-tax rebate through 2065 — remains alive and, if enacted, would materially extend the revenues available to the district; at the time of the meeting HB 1109 was in the House Rules Committee.

The board received the presentation and asked staff and the finance committee to continue refining stress scenarios, model a case where the district must issue its own bonds (including the cost of audits and rating surveillance), and return with more detailed analysis. No formal board vote or new commitment was taken during this agenda item.

Ending: Board members said they wanted additional scenarios and follow-up work from advisors before altering ILAs or making new commitments; staff said they would schedule follow-ups and continue to track HB 1109’s progress in the legislature.