Mielke: Vancouver wants county to forgive $4.4 million Hilton debt

He, Boldt say they’d oppose idea; block to biomass plant stirs anger

By Andrea Damewood and Stephanie Rice

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Vancouver city officials want the county to forgive $4.4 million in debt related to the Hilton Vancouver Washington, Clark County Commissioner Tom Mielke said Tuesday.

The disclosure came while Mielke, at the end of the commissioners’ weekly meeting, was describing how disappointed he was with the Vancouver City Council. On Monday evening, the council approved a surprise six-month development moratorium to kill the county’s biomass project.

Whether the biomass boiler plant could even be legally sited west of the Clark County Jail is under review by a hearings examiner — the city’s abrupt block, while legal, caught the county off-guard.

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Even if the hearings examiner sides with the county, then Schneider Electric, the company the county contracted with to build the biomass plant, would not be able to move fast enough to be eligible for an $8 million federal grant that expires at the end of the year — putting financing of the project into jeopardy.

After the meeting Tuesday, Mielke said that while the city hadn’t yet publicly asked for debt relief, it’s public money and he wants to be transparent.

But Mielke was clear when asked if he would consider forgiving the debt: No.

Mielke said he felt as though the city council “stabbed us in the back” with the surprise moratorium.

At issue is a growing debt linked to an agreement made when plans for the city-owned, privately operated hotel and convention center at Sixth and Columbia streets were first formed.

Under terms of legislation signed into law in 1999, the state gives Vancouver and Clark County a tiny piece of sales taxes collected inside their borders to help pay for convention centers and other large projects. The county formed a public facility district to build the Clark County Events Center at the Fairgrounds; the city formed a public facility district to build the Hilton.

The county, in 2003, voted to give most of its sales tax credits to the convention center, with the understanding that the city would eventually pay the county back.

As of Sept. 30, the city’s public facilities district owed the county $4.4 million. That amount accumulates at a rate of $45,000 to $60,000 a month, with an interest rate of 5.64 percent, Vancouver Chief Financial Officer Lloyd Tyler said.

At the same time, the Hilton and convention center have been struggling financially since the recession, with profits down 40 percent. About $400,000 in dedicated reserves were used to help the facility make a $2.3 million payment in January. Tyler said revenues have since been high enough to make those payments.

That has prompted the city and the Hilton to search for any and all ways to cut costs — including seeing if the county would modify the interest rates, suspending debt accumulation or totally forgiving it.

County commissioners must approve any changes to financial terms like the Hilton agreement, said Bronson Potter, the county’s chief civil deputy prosecuting attorney.

“The discussion was, let’s brief the county public facilities district on the options, let’s discuss the loan,” Tyler said. “They’re considering the discussion, and at some point in the coming weeks, we’ll circle back and see what changes, if any, might occur.”

Along with Mielke’s lack of enthusiasm to negotiate, Commissioner Marc Boldt, asked separately whether he would agree to forgive the debt, shook his head.

Clark County Administrator Bill Barron said no formal debt relief proposal exists for commissioners to consider.

Potter said there’s no deadline for the city to repay the debt. He said the idea of the county granting the city debt relief has been floating around for about a year.

Vancouver Mayor Tim Leavitt sent an email to Boldt and Mielke on Tuesday — Commissioner Steve Stuart voted against the biomass project — attempting to make amends for not giving a heads-up on the moratorium.

“Frankly, this matter came fully to fruition in the 11th hour before our City Council meeting this past Monday evening,” Leavitt wrote. “As you may have heard, the council unanimously agreed that there appears to be a disconnect between the vision for the city center revitalization and the city’s current zoning in the core of our community.”

“The ongoing revitalization of our downtown core, providing for a thoughtful mix of housing, business growth and employment opportunities for future generations is of priority concern for the city council — as I’m sure it is for you,” he continued. “To that end, we very much appreciate your continued support and look forward to working with you to continue advancing the opportunities for community prosperity.”

In July, the commissioners signed an agreement with Schneider Electric to build a $25 million incinerator to burn woody debris — biomass — on county-owned property at the corner of West 11th and Harney streets. The biomass plant’s boiler system would provide heating, cooling and hot water for five nearby county buildings, including the courthouse and jail. The county would save money on its utility bills and receive rental income.

Schneider would market the electricity at a profit. Neighborhood groups, along with a majority of the city council, opposed the plan.