PFD charts early payoff plan for Town Toyota Center bonds, builds cushion for taxpayers

WENATCHEE — The Chelan County Public Facilities District (PFD) is setting up the Town Toyota Center for a long, healthy middle age, and giving local taxpayers a clear line of sight to earlier tax relief.

In a special meeting Monday, the PFD board reviewed a conservative, annually updated plan to retire the arena’s bonds in 2033 — nine years ahead of the scheduled 2042 maturity — while simultaneously building about $42 million in reserves to keep the building in good working order for decades to come. The approach, developed with advisors from Hilltop Securities and guided by PFD attorney Pete Fraley, prioritizes two goals often in tension: Ending extra taxes sooner and avoiding deferred maintenance or future tax asks.

“This really does do a lot of what we set out to do. It gives us the flexibility annually, [with] this board and future boards, to adjust everything to fit what real life presents this facility,” said Jim Fletcher, the PFD’s secretary/treasurer and one of three mayors who served on the finance committee that vetted the model. “We’ll have the ability to have sustainability for this facility and all of its operations for the future.”

Under the base-case scenario, which assumes no growth in sales tax and 2% investment earnings, the district would make its required annual debt payments, fund projects in a refreshed 20-year capital plan (which includes a 10% contingency), build two reserves (about $7.5 million for repair/operating contingencies and a $35 million long-term capital reserve), and then start calling bonds early in 2029. Illustrative redemptions would run about $3.6 million (2029), $4.0 million (2030), $4.3 million (2031), $2.3 million (2032) and a final $4.5 million payoff in 2033. Advisors stressed the numbers will be refreshed each year with real-world results.

Paying off the debt in 2033 would trigger the sunset of the City’s 0.2% sales tax immediately and the PFD’s 0.1% sales tax after one additional year, as promised in 2012. Meanwhile, the 0.033% PFD sales-tax credit — which does not raise the local rate but keeps a sliver of the state sales tax here — can continue to support arena operations. The PFD has already extended that credit to 2047 and can extend again to 2062, preserving a steady operating backstop without increasing local tax rates. Fraley underscored that keeping all jurisdictions in the PFD (“keeping the band together”) preserves the broadest tax base for that credit.

Ward Media spoke with Fraley after the meeting, and he clarified that jurisdictions in the legal agreement that created the PFD — including Chelan and Douglas Counties, the Cities of Wenatchee, East Wenatchee, Cashmere, Chelan, Entiat, and Rock Island, and the town of Waterville — all have a right to pull out of the PFD. But doing so would reduce the 0.033% tax credit from the state.

That’s money that taxpayers would be paying anyway, not an additional tax mounted by the PFD, that the state credits back to the PFD for simply existing in the form it does. But that maximum rate has been locked down, meaning no one could join the PFD to increase the tax credit, Fraley said.

Board members framed the plan as a “retirement model” for the building: Once the bonds are gone, the reserves (and the investment earnings they spin off) are designed to fund upkeep and modernization, so future boards aren’t forced to choose between deterioration or new taxes.

“This is a wonderful starting point,” said Jerrilea Crawford, PFD board member (and mayor of East Wenatchee), during discussion about how the model codifies lessons learned since the arena’s rocky post-recession start. “It would be irresponsible of us as a board to not do that.”

Fletcher emphasized documenting today’s strategy for tomorrow’s boards as elections turn over seats. “Maybe one of the things we want to do is write down our vision so that, while we cannot commit future boards [to using our model], at least future boards know what our thinking was in terms of carrying this forward,” he said.

Hilltop’s Mike Newman reminded the board that a model is “simply a planning tool” — and that it’s set up so the board can quickly test what-ifs (say, lower sales tax or higher investment income) and see how the payoff date or reserve targets shift. “A model is only as good as the assumptions,” he said, adding that updates will come annually “to give you greater insight and planning ability for when those sales taxes can go away.”

Fraley recapped the legal and financing arc that makes an early payoff possible — including the 2012 legislative fix that created the city’s 0.2% and the PFD’s 0.1% sales taxes to stabilize the project, and the 2021 refunding that cut interest costs by roughly $7 million (from ~6% to ~3%) and deliberately included flexible call features so bonds could be redeemed early if conditions allowed. The new plan would put that flexibility to work.

The board took no action Monday; formal decisions will follow after staff rolls the model forward with year-end numbers and brings back an authorization schedule. The headline for taxpayers, though, is already in view: Earlier debt retirement, earlier tax relief, and a durable reserve strategy to protect the community’s arena for the long haul.

Andrew Simpson: 509-433-7626 or andrew@ward.media