Kennewick staff brief council on city guarantee, timeline for bonds to finance 3 Rivers convention center expansion

Kennewick City staff and outside financing advisers told the City Council at a Jan. 14 workshop that the Kennewick Public Facilities District plans to sell municipal bonds in mid‑March to help finance the 3 Rivers Convention Center expansion and that the city will guarantee the PFD’s debt through a contingent loan arrangement.

The presentation, led by Finance Director Jessica Platt and representatives from Hilltop Securities, Piper Sandler and bond counsel Foster Garvey, said the project is currently estimated at about $71,000,000 and that the PFD would likely borrow roughly in the $50,000,000 range to fund design and construction. “We currently anticipate that the PFD will be selling bonds in mid March,” Hilltop representative Lindsey Sogdi said.

The financing team said the bonds will be sold publicly to investors and that the city’s guarantee means the city would be responsible for debt service if the PFD lacks operating or tax revenues to pay on schedule. “These bonds will be tax exempt,” bond counsel Mark Greenough said, noting ongoing disclosure and federal tax rules that will govern the transaction and the facility’s public‑use requirements.

Why it matters: the contingent loan will affect the city’s nonvoted debt capacity and could require amendments and extensions to several interlocal agreements that currently govern the PFD and its partners. Using 2024 assessed‑value figures, presenters said the city’s nonvoted debt capacity was approximately $174,000,000 and the PFD’s capacity about $58,000,000; staff added that preliminary 2025 assessed value discussions indicate a roughly 4 percent increase to about $12.1 billion, which would raise the city’s nonvoted capacity to about $182,000,000. Council member Jim Trumbo asked whether the interlocal agreements will return to council for approval; staff said the agreements and the contingent loan will be brought back, with the interlocal agreement targeted for council consideration on Feb. 18.

How the sale will work: Hilltop and Piper Sandler described the typical municipal financing steps—preparing a plan of finance and preliminary official statement, seeking a rating, conducting a due‑diligence call, pricing the bonds on a sale date and closing about two weeks later. Presenters said they expect to seek an S&P rating; staff said the city currently carries an S&P rating of AA and that the PFD’s debt would likely receive comparable treatment because it would be backed by the city. Underwriting and cost estimates are still preliminary; Hilltop staff estimated the cost of issuance around 1 percent of par (excluding underwriting discount), and Piper Sandler indicated the underwriting spread and fees are being finalized.

Council questions and context: council members asked about cost components, interest‑rate sensitivity and long‑term debt capacity. Justin Monway of Piper Sandler said current market pricing for a 30‑year paper was “probably in a in the 4 a half percent range,” but cautioned rates are fluid. City staff reported the city’s currently outstanding nonvoted debt at about $38,000,000 (including roughly $2,500,000 tied to KPFD obligations) and said the proposed bond issue would use a substantial portion of the PFD’s capacity but would leave remaining capacity at the city level if the council elects to proceed.

Next steps: presenters said the PFD board will consider adopting a bond resolution at its next meeting; staff expects the PFD’s bond resolution and related interlocal agreement amendments to be routed first through the partner jurisdictions (Pasco, Benton County and others) and then back to Kennewick Council for formal action. No formal council vote occurred at the workshop; the presentation served as an informational briefing and to flag upcoming council decisions.

The financing team encouraged council members to direct questions about rates, structure or legal covenants to staff and the advisers before the Feb. 18 council agenda item.