Council hears proposal for county treasurer line of credit to help PFD advance schematic design

City of Lynnwood staff presented Sept. 15 on a proposed short-term financing plan the Lynnwood Public Facilities District is pursuing with the Snohomish County treasurer: a renewable line of credit up to $15 million that would be backed by the city as credit guarantor and repaid by the PFD.

Director Meyer explained the structure and timing. "They're asking for 15,000,000 from the county," Meyer said, describing a line-of-credit arrangement in which the PFD would draw funds as needed. Meyer said the district plans to draw an initial roughly $9 million in November to repay principal on outstanding bonds the city currently backs, and then draw remaining proceeds to advance schematic design and other work. Meyer said the PFD currently has about $9.6 million of outstanding debt that the city backs; after the PFD's initial paydown the city's immediate backed exposure would shift, and the PFD would still be seeking overall short-term backing consistent with the proposed line.

Meyer said the line would carry a floating quarterly interest rate tied to the five-year Treasury plus a spread (the document cited a 0.75% basis-point spread in the Port of Everett example). Proceeds would be drawn as needed, principal repaid could not be reborrowed, and the notes would be structured with five-year terms that are renewable. Meyer said the county treasurer had used the tool previously (Port of Everett) and that Washington State Commerce conducted a financial review and found the PFD had adequate expected revenues and assets to support repayment.

Proposed uses for the borrowed funds included: paying down legacy bond principal; funding schematic design (estimated at about $2.8 million) so the PFD can refine cost estimates and the project scope; underwriting environmental remediation (a cited estimate of about $2.8 million for contamination cleanup related to a former dry-cleaner site); and providing working capital so the PFD does not exhaust its operating cash while advancing design.

Meyer said the PFD had spent about $5.8 million on conceptual master-planning work to date and that schematic design would allow the PFD and potential county underwriters to determine the true construction costs required before pursuing permanent financing. The PFD has also proposed to loan the city $400,000 (50% of an initial 30% design effort) to advance Ring Road design work located within the TIF district boundaries.

Council members asked for more detail about the PFD's previous expenditures and the schematic design cost estimate; Councilmember Escamilla requested a breakdown of the roughly $5.8 million already spent. Councilmember Hurst asked whether city bond capacity would be affected; Meyer said the city's current backing ($9.6 million) would rise to about $15.6 million overall if the city backs the line and the PFD draws the full amount, and that current city debt capacity would not be materially constrained for planned near-term projects. Councilmember Coelho asked for clarification of revenue assumptions underlying the PFD's economic projections.

Staff said the PFD is pursuing Brownfield grants and that Commerce's recent review labeled the interim financing low risk. Jenna Pope (staff) confirmed staff had defined the contamination plume and that remediation planning is underway. Meyer said next steps would bring the loan request and resolution back for council action and that council would be asked to consider the loan guarantee resolution at a future meeting (staff intended an Oct. 13 council meeting after the DA consideration).