The city of Eugene was among the 100 investors that put money into a Washington regional events center that defaulted on $41.8 million of bonds in early December, according to a published report.
Eugene officials, who said it is the first time in memory the city has had a default on an investment, are hopeful the $175,000 it invested will be repaid, according to the Eugene Register-Guard. The city has received $40,312 in interest payments on the investment, the report said.
Investors included 43 individuals who paid between $10,000 and $500,000 for the interest-bearing bonds, along with cities, counties, and other public entities, such as a small town hospital in Minnesota and an investment division of Wells Fargo Bank, which had invested nearly $4 million, according to the report.
The Greater Wenatchee Regional Events Center Public Facilities District issued $41.8 million of bonds to finance the 4,300-seat Town Toyota Center, a sports and event arena.
The money was to be paid to investors on Dec. 1, but the district defaulted on the tax bond anticipation notes when it was unable to refinance the debt.
“We are hopeful that it will get resolved, and we will be paid in full,” Sue Cutsogeorge, finance director of the city of Wenatchee, told the newspaper. “Even though this bond is in default, that doesn’t mean we won’t recover all of the funds.”
The Wenatchee arena default will not jeopardize the city’s ability to pay its bills, according to the report.
The public facilities district was created in 2006 when Wenatchee and six nearby communities and two counties joined forces to build the arena, which opened two years later.
The district raised the $41.8 million by issuing sales tax bond anticipation notes, a portion of which was financed by a sales tax rebate from the state.
The district will ask the state Supreme Court to validate its attempt to have the city of Wenatchee provide a loan to pay off the debt.
A lower court judge ruled three months ago that Wenatchee cannot legally back the refinancing of the arena’s debt without exceeding its legal debt limit.
Legislation for the state to provide a loan to pay the debt failed in special session in mid-December.
The Securities and Exchange Commission has launched an informal investigation into the bond default.