The Downtown Redevelopment Authority, the legal entity that oversees the city-owned Hilton Vancouver Washington, will be able to refinance bonds to take advantage of lower interest rates.
The Vancouver City Council voted unanimously Monday to approve the recommendation of Lloyd Tyler, the city's chief financial officer, which was to approve a revised payment agreement that will allow the DRA to refinance. Tyler said the DRA wants to move quickly, as interest rates have been trending up.
In December 2003, $65 million in 30-year bonds was issued for the construction of the hotel and convention center, with an average interest rate of 5.56 percent.
Tyler told the council that the DRA's Board of Directors believes it could save an estimated $15 million over the life of the bonds. The savings, instead of going toward paying off debt, would be used for capital repairs and replacements, which are needed to meet Hilton standards, Tyler said.
Only one person signed up to speak during the public hearing.
"The Hilton has been a huge asset to downtown," said Paul Montague, executive director of Identity Clark County. He said the hotel-convention center has spurred redevelopment and said approving the refinancing makes sense.
During a workshop in March, Tyler warned the council that if the project wasn't refinanced, and money wasn't available for repairs and replacements, the city could lose the Hilton corporation as the hotel's manager.
Refinancing, he said, ensures money for planned capital investments and scheduled refurbishments and makes the project more financially sustainable.
Previously, city lodging tax revenues, which are now going to help cover debt payments, had been available for other city tourism-related ventures such as Independence Day at Fort Vancouver and the Vancouver Wine & Jazz Festival.
State law prohibits lodging tax revenues, which are collected from a 4 percent charge on hotel rooms, from being spent on anything other than tourism promotion.
The hotel and convention center were meant to contribute to the revitalization of downtown, entice visitors and establish a venue for major conventions and community events. Between 2007 and 2012, the facility was the site of approximately 7,000 events.
The city's annual revenue from the hotel and convention center averages $11 million, with a net operating income of approximately $2 million.
The hotel and convention center has fallen short of revenue projections by at least $1 million each year, which Tyler attributed in large part to the recession. He said during the March workshop that there are signs of modest improvement, similar to what's happening in the hotel-convention center business in general.
The Hilton opened in 2005 at Columbia and Sixth streets downtown on the south side of Esther Short Park, the focal point of the city's downtown revitalization program.