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Thursday, October 10, 2002 - Page updated at 12:00 AM

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Sour note sounds at McCaw Hall

Seattle Times staff reporter

Seattle Mayor Greg Nickels has proposed a $27.8 million "bridge loan" to keep construction on track for the opening next summer of Seattle Center's renovated Opera House.

The loan, part of Nickels' 2003 proposed budget, would cover public and private fund-raising gaps for the nearly $128 million performance hall and would be in addition to a similar $4.75 million city loan to the project this year.

How and when the city would get repaid is uncertain.

The loans appear to conflict with what voters were told when they approved a $72 million levy in 1999 that included $29 million for a complete refurbishing of the 75-year-old Opera House, which is being renamed Marion Oliver McCaw Hall.

The levy ordinance said the city did not intend to "bear the cost of any additional interim financing" due to "delays in raising non-City funds." It later repeated it was "not the City's intent to consider using the City's debt capacity to cover any shortfalls in non-City funding."

But that's what's happening.

The main problem is McCaw Hall boosters overestimated the amount of money they would get from the state and King County, which had contributed to past Seattle Center projects.

Supporters expected $12 million from the state and $5 million from King County although they had received no firm commitments. So far, each has given $2 million, and because of the recession prospects are slim for getting the rest of the money anytime soon.

Meanwhile, the Seattle Center Foundation is trying to meet its goal of $72 million in private donations before the building opens in June. So far, the foundation has secured about $59 million in pledges, with $47.5 million actually collected, said Sherrie Boyer, the foundation's director for community strategies.

Without the city loan, the project would be in danger of running out of cash to pay its contractors and might not finish on time.

Nickels is proposing that the city bail out the project with the hope — but no guarantee — that the state, King County and private donors will eventually pay up.

"It is a loan, and it will be paid back. It is not a gift," said Kym Allen, Seattle Center spokeswoman.

The city would raise money for the loan by selling bonds, and Nickels is pledging that won't affect the general-fund budget, which is facing a $60 million shortfall.

Nickels' spokeswoman Marianne Bichsel said the proposed loan is within "the spirit and intent" of the levy ordinance because the city will be paid back, one way or another.

Grumbling on City Council

But the situation has irritated some City Council members, who said they may have little choice but to approve the loan.

"The least-desirable option is for the project to halt, unfinished," said City Council President Peter Steinbrueck. But he said he wouldn't rule it out.

City Councilman Nick Licata, who raised questions in 1999 about city contributions to the project, said he has always been suspicious of the financial projections by McCaw Hall supporters.

"It's just a game. They were only thinking about getting this thing built fast, and they didn't care who paid for it," Licata said. The city promised $9 million to the project and has paid it. The loans and the $29 million in levy money are in addition to that.

Licata predicted it will get harder to raise cash for the performance hall after it opens next year. "Where's our leverage? Who are we gonna foreclose on? Ourselves?" he said.

Debt payments on the loans would cost an estimated $800,000 next year, said Dwight Dively, city finance director. He said that cost would be absorbed in the short term by Seattle Center, which has a separate budget largely funded by revenues from Key Arena, festivals such as Bumbershoot and other events.

Seattle Center is proposing to cut its staff by 48 positions next year to handle budget cuts sought by the mayor and debt payments on McCaw Hall and Key Arena, which was remodeled in 1995.

In the long term, the city hopes to collect the remaining public and private contributions to the project, Dively said.

If that fails, the city would likely replace its short-term bridge loan, which comes due in 2005, with a 15- or 20-year loan that Seattle Center would pay back by charging higher rents and licensing fees to Seattle Opera, Pacific Northwest Ballet and other organizations that will use the remodeled hall, Dively said.

Efforts to secure state and county funding continue. Nickels and arts officials have asked Gov. Gary Locke to secure $6 million in state funding in next year's budget.

Ed Penhale, spokesman for the state budget office, said the governor will consider the request. But Penhale said the state's capital budget is $900 million to $925 million and there are $1.7 billion in requests for funding.

"The governor has expressed some interest in funding this project at some level, but at this point we have no idea what it would be," Penhale said.

It will be at least as difficult to get money out of King County, which has struggled with tax-revenue shortfalls brought on by tax-cutting initiatives and the slumping economy.

Elaine Kraft, spokeswoman for King County Executive Ron Sims, said there was no money in next year's budget for the project.

Metropolitan King County Councilman Larry Phillips, who chairs the council budget committee, said odds are "quite slim" the project will see the additional $3 million it expected from the county. "It's not for lack of desire," Phillips said.

King County has historically supported arts organizations, giving $5 million toward the building of Benaroya Hall. "I think it was reasonable" for McCaw Hall to ask for a similar contribution, Phillips said, but circumstances have changed.

Meanwhile, the Seattle Center Foundation plans to continue its private fund-raising drive through June. The foundation recently extended the payment deadlines for pledges to 2006, hoping the flexibility will draw in new donors and motivate old ones to give more. "We believe we will be successful," said Boyer, the foundation's director of community strategies.

Private fund raising got off to a strong start, buoyed by a $20 million purchase of the hall's naming rights by the four McCaw brothers, founding directors of McCaw Cellular Communications (now AT&T Wireless). They named the hall in honor of their mother, Marion Oliver McCaw Garrison. An additional $10 million was donated by the Kreielsheimer Foundation.

In 1999, when the McCaw Hall project was estimated at $110 million, private donors were slated to contribute $55 million to the project, to be matched with $55 million in public money. When the project's cost increased to nearly $128 million, the Seattle Center Foundation agreed to seek more private donations to cover most of the additional costs.

If construction continues on schedule, the hall is expected to open in August, with a black-tie reception and a performance of Richard Wagner's opera "Parsifal."

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com

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