How Did We Get Here

In 2019 — the last full year before COVID, operating as a single building — the convention center generated $37 million in revenue against $37 million in expenses: $74,000 in operating income. Breakeven. Self-sustaining.

The Arch — 434,988 square feet of exhibit halls, ballrooms, and meeting rooms at 705 and 800 Pike Street — had operated this way for years. It wasn't a financial burden on the city. It was a functioning public facility that paid for itself.

The question wasn't whether it worked. The question was whether it was big enough.

Source: WSCC PFD Audited Financial Statements FY2024. 2019 figures from comparative data. Cash expenses exclude $52.9M annual depreciation on Summit building.

The Arch had a structural constraint: no single contiguous exhibit hall larger than 205,000 square feet. National medical conferences, trade shows, and corporate events that needed 400,000+ square feet of combined space couldn't book Seattle. They went to Chicago, San Diego, Denver, Boston — cities where the convention center could accommodate them.

The economic case for expansion was built on this lost business: Seattle was leaving substantial convention economic impact on the table every year by being too small to compete for the largest events. A second building two blocks away on 7th Avenue would double Seattle's convention capacity and put it in contention for the national tier.

The financing model matched the rationale: lodge the debt in a public facilities district, secure it with lodging tax, let the hotel industry pay for a facility that drives hotel demand. No general obligation bonds. No property tax. If the Summit generated the room nights it was supposed to generate, the lodging tax would cover the debt service with headroom to spare.

The new building was named the Summit. Construction began in August 2018. The original budget was $1.6 billion, financed entirely through lodging tax bonds — the same 7% Seattle rate and 2.8% King County extended rate that had been securing PFD obligations since the district was created.

Then COVID hit.

The Summit opening changed everything about the organization's cost structure. The PFD had spent years learning to run one building efficiently. Now it ran two — the full fixed costs of a second facility running alongside the first, whether or not events were booked.

Cash operating costs went from $37M to $75M — up 103%. On top of that: $52.9 million per year in depreciation on the Summit's cost, and $75 million per year in interest on the bonds. Revenue grew from $37M to $58.6M — up 58%. Not nearly enough.

The $75M in annual interest expense sits outside this P&L — it flows through the lodging tax mechanism, not the operating budget. But it is the central financial risk: lodging tax must cover $90M/year in total debt service (interest + principal) to keep the bonds current.

Before asking whether a restructuring is possible, it's worth asking who benefits from the status quo — and who quietly bears the cost. The structure is stable not because it's working, but because the people with leverage to change it don't bear the costs directly, and the people who do are diffuse.

The 3% figure is derived from SCC's reported 367,375 attributable room nights against total Seattle market demand (~12M+ room nights/year, from HVS supply data and Visit Seattle occupancy figures). See the source walkthrough.

The Summit was supposed to capture the large national conventions Seattle had been turning away. The 2026 event calendar — 85 events from February 2026 through February 2027, drawn from seattlecc.com — offers a one-year snapshot.

Across 44 Summit events, the high-draw events (national professional and medical conferences where most attendees fly in) generate an estimated 43,500 hotel-night-generating attendees. The 44 Arch events generate approximately 31,800 from their high-draw events.

The Summit is doing what it was built to do. It hosts the larger national conferences — the ones that require out-of-town travel and generate multiple hotel nights per attendee.

But the bar is high. $75 million per year in interest alone — before operations — requires substantial lodging tax generation. Seattle's 7% lodging tax on the 2024 hotel market produced $93.5 million: enough to cover the $90M in debt service, but with only a $10M buffer. A 10–15% shift of attendee room nights to Bellevue hotels (taxed at 2.8%, not 7%) would erase that buffer.

The Summit is generating hotel nights. Whether it's generating enough — and whether that margin is durable as Bellevue's hotel and convention capacity grows — is the question the next page's sensitivity model explores.

Event data: seattlecc.com/events, captured February 20 2026 (85 events Feb 2026–Feb 2027). Hotel draw classification based on event type and geographic scope.

The Summit expansion achieved what it set out to do operationally: Seattle can now compete for the largest national conventions. The Summit is booking them. Hotel nights are being generated.

The financial problem isn't the Summit's event calendar. It's the capital structure. A $1.9 billion building financed entirely through lodging tax bonds — $300 million over budget, opened into a post-COVID recovery market — requires near-perfect execution on the hotel side to break even. The Arch, running alone, didn't need the hotel market to perform. It just needed to fill its own halls.

The PFD now needs both: a Summit that books large national conferences, and a Seattle hotel market that captures the room nights those conferences generate. The lodging tax stream is the link between them — and it's exposed in ways it wasn't before the Summit opened.

Consider the base rate: SCC's events generate an estimated $5 million of Seattle's $93.5 million annual lodging tax stream. The other $88 million comes from tourists, business travelers, and visitors with no connection to the convention center. The bonds are financed overwhelmingly by people who have never set foot in either building.

The Bellevue exposure compounds this. As Bellevue's hotel and convention capacity grows, more convention attendees stay across the lake — where the lodging tax rate is 2.8% (King County), not Seattle's 7%. A room night that shifts from Seattle to Bellevue cuts the tax yield to the PFD by 60%. The $88 million base that covers the other 95% of debt service is not a fixed number.

CEO Jennifer LeMaster, February 2026: "I'm not going around saying the sky is falling, but I want people to be aware that we're in a fragile position."