Title
Consideration of Hands On Children’s Museum Funding Strategy Recommendation
Recommended Action
Committee Recommendation:
Move to approve the Funding Strategy Recommendation and Bond Sale for the expansion of the Hands On Children’s Museum and forward to the full City Council for consideration.
City Manager Recommendation:
Move to approve the Funding Strategy Recommendation and Bond Sale for the expansion of the Hands On Children’s Museum and forward to the full City Council for consideration.
Report
Issue:
Whether to approve the funding strategy and bond sale for expansion of the Hands On Children’s Museum.
Staff Contact:
Jay Burney, City Manager, (360) 753-8740
Presenter(s):
Jay Burney, City Manager
Patty Belmonte, Executive Director, Hands On Children’s Museum
Scott Bauer, Northwest Municipal Advisors
Deanna Gregory, Partner, Pacifica Law Group
Background and Analysis:
The Hands On Children’s Museum (HOCM) was opened in 2012. A large portion of funding for the HOCM comes from Public Facilities District (PFD) funding, which is making payments on the current bond. The PFD, formed in 2003, provides a .033% state sales tax diversion, and currently funds the HOCM and the Regional Athletic Complex (RAC) in Lacey. The initial PFD funding had a 25-year timeframe from 2003-2028.
Phase I of the museum was constructed with $9 million in bonds, repaid with PFD revenues, and $9 million in private fundraising. The current bond for Phase I is paid off in 2029. A bill that passed in the 2017 Legislative Session extended PFD revenues until 2043. A bill that has been sent to the Governor in the 2025 Legislative Session, would extend the PFD revenues until 2058.
Phase II construction is estimated at $30 million, with $20.5 million provided from the bond sale, and $10 million in private fundraising. The bond sale terms are described below in the Financial Impact portion of the staff report.
Staff and the HOCM Executive Director will provide an overview of expansion plans and a funding strategy to complete them, seeking approval by the Finance Committee to move the plan to the full Council for consideration.
Climate Analysis:
The approval of the funding strategy and bond sale will not have any adverse impacts on the climate. As part of the construction of the expansion project, any/all environmental cleanup will be completed.
Equity Analysis:
The museum provides free and reduced access and memberships to all community members, providing access to 130,000 low-income visitors to-date.
Neighborhood/Community Interests (if known):
The HOCM, which opened in 2012, is serving 315,000 visitors per year, most of those being from the greater Olympia area.
Financial Impact:
The proposed funding strategy and bond sale will provide $20.5 million in project funding to construct the proposed museum expansion. The Bond Sale will be used to purchase the land from the Port of Olympia and construct the building. The bond will be paid back utilizing Public Facilities District funding, with HOCM providing a $1.7 million security fund to cover any costs above PFD revenues. Museum fundraising will build out the tenant improvements and exhibit spaces.
The $20.5 million bond will have a repayment term of 30 years, with an average annual payment of approximately $1.5 million. Interest rate assumptions for PFD revenues are conservative at 2% for the first four years, and 4% annually thereafter. The current PFD revenues have grown at roughly 4.1% annually. A spreadsheet prepared by NW Municipal Advisors is attached fully detailing the bonding approach.
With this funding strategy, the fund balance in the City’s HOCM account never drops below $360,000 per year, and if nothing is spent out of this account, leaves a fund balance of $10 million at the end of bond repayment.
Options:
1. Move to approve the Funding Strategy Recommendation and Bond Sale for the expansion of the Hands On Children’s Museum and forward to the full Council for consideration.
2. Move to approve the Funding Strategy Recommendation and Bond Sale for the expansion of the Hands On Children’s Museum as amended by the Committee and forward to the full Council for consideration.
3. Do not approve the Funding Strategy Recommendation and Bond Sale for the expansion of the Hands On Children’s Museum and provide staff with direction on next steps.
Attachments:
Project Funding Scenario - NW Municipal Advisors