The Olympia Finance Committee approved a recommendation to issue debt financing for two major community projects — the Yelm Highway Community Park and the Armory Arts Center.
Interim Parks, Arts & Recreation Director Silvana Niehuser presented an overview of the two projects to the committee on Monday, April 21, recommending an $18-$20 million investment in the community developments. If approved by the city council, the financing plan would be repaid over 20 years using dedicated park revenues.
Yelm Highway Community Park, the first new community park in 40 years, would feature a full-sized synthetic soccer field that could also be used for lacrosse, rugby and other sports. There would be 13 pickleball courts, including an ADA-inclusive court.
The plan also includes a dog park, playground, basketball courts, and multiple pathways. She added that pathways and hiking trails are always rated high in the community.
According to Niehuser, the project has been in planning since 2004 and is currently at the 90% design phase, with hopes to begin bidding late this year.
"This is going to be a modern, multi-use park, addressing recreational gaps," she said.
Niehuser added the park represents a $25.3 million investment on 83 acres, with $14 million already invested and $3.85 million in grants secured.
The proposed debt financing for the Yelm Highway Park project is $13.2 million. Niehuser also proposed using $2 million of the voted utility fund balance and impact fee revenues.
In discussing the Armory Arts Center, Niehuser said the project aligns with Olympia's equity goals and creative space needs.
First identified as a community necessity in 1989, the project gained momentum with a feasibility study in 2007. After nearly two decades, the city acquired the armory and hired Valerie Roberts as the building manager.
Niehuser highlighted the Armory Arts Center's critical renovations, focusing on safety and accessibility improvements.
A key feature of the project is a $1.5 million grant for solar panels and battery storage, which will be installed on the roof, supporting the city's climate goals.
With the armory, Niehuser proposed a $5.5 million debt financing and used $3 million of the non-voted utility tax fund.
The armory received $2.5 million in grants, and using small of the Olympia Metropolitan Park District's (OMPD) revenue. It has $900,000 in cash in hand.
The anticipated cost for the Armory Arts Center renovation Phase 1 project is $12.2 million.
The proposed debt financing for both projects ranges between $18-$20 million. Niehuser noted construction costs continue to rise. She warned that delaying the projects would only increase costs.
She also proposed using $2 million of the voted utility tax fund balance and $3 million of the non-voted utility tax.
The financing plan includes $6.2 million in grants and donations, impact fees and OMPD revenue, and $6.8 in cash reserves.
The financing strategy involves a 20-year bond with annual payments between $1.3 million to $1.5 million. The city would adjust the total bond amount based on interest rates, with the flexibility to scale back project elements if needed without compromising core services.
The first debt payment would be scheduled for 2027, provided the city council approves the proposal.
Niehuser said she expects to secure funds in July or August, using dedicated Parks, Arts & Recreation revenue sources to repay the bond.
In discussing potential long-term financial strategies, Niehuser mentioned several revenue opportunities for the parks department.
She said the potential Southeast Olympia annexation, which could generate $800,000 annually, extending the non-voted utility tax to parks, restructuring the business and occupation tax, and exploring levy lift options through either the city or the OMPD.
If the city does not fund these projects, Niehuser warned of significant risks.
"We would have to turn back about $6.3 million in grants," she explained, adding it could potentially damage the city's credibility with funding agencies.
The delay would also impact the eight nonprofit arts organizations counting on the Armory Arts Center, and "potentially impact the trust of the community" after decades of planning.
The city would still incur maintenance costs for Yelm Highway Community Park and Armory Arts Center without public benefits. Niehuser said the city already spends about $400,000 annually to maintain the armory in its current condition.
While recognizing potential financial challenges, Finance Committee Chair Clark Gilman underscored the importance of maintaining a long-term vision for community development. "
We are on a 30-year planning cycle for these parks. I think it is important that we stay the course right now of providing one of the services that is most visible to people in our community," he said.
Council member Jim Cooper recognized the economic development potential of the projects.
"Because this committee's job is economic development, we should talk about the economic development opportunity of injecting $20 million in construction into our community in an uncertain time," he said.
The committee members voted unanimously on the recommendation to issue debt for the two projects.
Gilman is urging the city council to affirm the committee's decision.
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