The crisis point isn't 2029. Three independent factors converge in 2027 — and the 2026 World Cup will make them invisible until it's too late to act cleanly.
None of these require anything unusual to happen. They are already documented, already dated, already set in motion. The question is whether the governance decision happens before they compound — or after.
Each scenario assumes no Commons restructuring decision. The scenarios diverge at 2027 based on how the confluence factors resolve. Scroll right on mobile.
| Year | Favorable Conditions | 2027 Squeeze | Crisis Before 2029 |
|---|---|---|---|
| No crisis. Backstop expiration messy but survivable. Seattle loses the corridor window. | Confluence compounds. Expensive 2028–2029 scramble. Terms set under pressure. | Demand shock in 2027 wipes the reserve. Downgrade before the backstop expires. Crisis is 2027–2028, not 2029. | |
| 2025 |
Stable
Cash position near-neutral. Reserves stable at ~$25M. World Cup event contracts being finalized. Aramark contract looms in 18 months.
|
Stable
Same as Favorable Conditions. All scenarios are identical before 2026.
|
Stable
Same as Favorable Conditions.
|
| 2026 |
Strong
World Cup delivers best lodging tax year since pre-COVID. Aramark renegotiates upward — higher costs locked in through the contract term. Crosslake opens March 28; diversion invisible in the record numbers. SCC board cites strong recovery.
|
Strong — with rumblings
Same headline year. But Q4 bookings come in light outside the World Cup window, and Crosslake diversion is visible in weekly Eastside occupancy data. Rationalized as post-World Cup hangover.
|
Strong — clearer signals
Same headline year. Q4 bookings soft. Crosslake diversion more pronounced in the data — one or two conventions rebook to Bellevue. Rationalized as one-time. No restructuring decision.
|
| Pivot 2027 |
Tighter, but holds
World Cup boost gone. First clean Crosslake read: 3–5% diversion. Lodging tax ~$88–90M, buffer narrows but reserve holds. Aramark costs a new fixed line item — absorbed at this revenue level.
|
Squeeze begins
World Cup boost gone. Crosslake diversion 7–10%. Lodging tax ~$83–87M. Aramark costs — same contract, same terms — now strain coverage. Reserve begins drawing from $25M.
|
Reserve gone
Demand shock — recession, major cancellation, or both. Lodging tax ~$71M ($22M below baseline). Aramark costs — same contract, same terms — are now a fixed obligation on top of a revenue collapse. Reserve consumed. Downgrade triggered.
|
| 2028 |
Pre-2029 watch
Rating agencies begin formal 2029 backstop analysis. SCC refinances a portion of debt at modestly higher cost. Manageable. Political principals aware the clock is running.
|
Under pressure
Reserve at $10–15M. Rating watch issued. Expensive refinancing begins. State and county enter exploratory conversations — but from a position of urgency, not choice.
|
No reserves
Operating on the wire. State faces emergency session. Downgrade has already repriced every WA PFD and stadium district bond. Legislative fight underway.
|
| 2029 |
Backstop expires
One-notch downgrade. Borrowing costs rise. State and county scramble for bridge financing. Messy but survivable — at material cost.
|
Backstop expires into stress
Backstop expires into already-stressed credit. Second downgrade. Full restructuring required on painful terms — far worse than a proactive 2026 deal.
|
Backstop expires into crisis
Backstop expires into a downgraded, reserve-less credit. Restructuring under duress. Whatever form it takes, the terms are set by creditors, not by the city.
|
| 2030 |
Recovery, slowly
Higher debt service absorbs operating margin. Convention pipeline cautious. Year 1 of expensive new terms.
|
Restructuring underway
Expensive restructuring in process. Convention bookings disrupted during uncertainty period.
|
Managed decline
Restructuring or state management. The question is no longer whether to restructure — it's on whose terms.
|
| 2031 |
Six years on
SCC running. The block between the hotels and Capitol Hill looks the same as it did in 2025. No corridor. No commons. Status quo.
|
Six years on
SCC surviving but under financial strain. Convention bookings constrained by restructuring uncertainty. No corridor activation.
|
Six years on
SCC in managed restructuring or state control. Seattle's convention future is a policy problem, not a market opportunity.
|
This isn't a worst-case assumption requiring a catastrophe. It requires only what stress scenarios routinely model: a 10% volume decline and 15% rate compression from oversupply — both within the range of a single recession year.
Source: WSCC PFD audited financial statements, FY 2024. Stress scenario inputs are labeled assumptions, not actuals. The lodging tax figure is derived from the published $93.5M Seattle 7% collection. The reserve figure is the sum of operating reserve ($16.3M) and debt service reserve ($6.1M) from the Dec 2024 balance sheet, consistent with CEO LeMaster's "about $25M" (February 2026).
Crosslake opens March 28, 2026. The first Crosslake diversion signal therefore shows up in 2026 lodging tax data — which publishes in the 2026 audit, expected May 2027, after the Aramark negotiation is already concluded.
But 2026 lodging tax will also include the World Cup: six matches in Seattle, peak hotel rates and occupancy, almost certainly the best lodging tax year since before COVID. That number will look like recovery. The CEO will cite it. The board will cite it. The rating agencies will note it.
The problem is that it's a one-time demand event layered on top of a structural problem, arriving in the same year as the first Crosslake diversion. The two signals cancel each other in the 2026 data. Nobody sees the underlying trajectory clearly until the 2027 lodging tax numbers arrive — by which time the Aramark contract is renegotiated, Crosslake habits are formed, and the World Cup boost has evaporated.
March 28, 2026 — Crosslake opens. Diversion begins.
June 2026 — World Cup matches. Lodging tax spike.
Full year 2026 — Best lodging tax number in years. Masks diversion signal completely.
January 2, 2027 — Aramark contract expires. Negotiation already concluded.
May 2027 — 2026 audit publishes. First clean Crosslake read — but too late to inform the Aramark negotiation.
2027 lodging tax — First year showing the real trajectory: no World Cup, established Crosslake diversion, Aramark costs locked in.
Anyone arguing for restructuring during the 2026 World Cup window will be swimming against a tide of good news. The natural response from the SCC board, the PFD, and the political principals will be: "Things are improving — let's see how 2027 looks." That delay is exactly what makes the 2027 Squeeze and Crisis Before 2029 scenarios possible.
This makes the case harder to make in 2026 and more urgent to make now.
Washington State law treats any WSCC debt service shortfall as a state loan — a guarantee that runs through 2029. That sounds like a long runway. It isn't, for two reasons.
The backstop covers one specific scenario: lodging tax dips below the annual bond payment. When that happens, the state loans the difference to the PFD — not to bondholders — so the PFD can make its payment on time. Bondholders get paid. The PFD now owes the state.
The loan is not concessionary. The interest rate is the 20-Bond General Obligation Bond Buyer Index plus one percentage point — roughly market rate plus a spread. Repayment terms are negotiated with the State Treasurer, and the PFD can only repay the state after covering its existing bond obligations. At that point the PFD has two creditors: the original bondholders at the bond rate, and the state at a higher rate for the covered portion. Using the backstop doesn't stabilize the credit. It makes the hole deeper.
It does not cover operating losses. It does not help if the reserve is already exhausted when a demand shock hits. In the Crisis Before 2029 scenario, the reserve is gone by the end of 2027 — before the backstop even becomes relevant. The downgrade has already happened. The backstop can't undo a credit event.
Rating agencies flag problems before they happen — that's their job. The question they're continuously asking: is this bond more or less safe than when it was issued?
If they're worried today that the state backstop won't be available in three years, they lower the rating today. If they see reserves declining in ways that point to a debt service problem next year, they lower the rating today. The downgrade precedes the event it's predicting.
Which means the 2029 date is not when the credit stress appears in the ratings — it's when an earlier rating action gets vindicated. Under the 2027 Squeeze and Crisis scenarios, the confluence gives rating agencies everything they need to act in 2027 or 2028, before the backstop is even tested.
The same logic runs in the other direction: restructuring that stabilizes the credit — reserves rebuilt, operating losses reduced — produces better ratings. Which matters the next time Washington municipalities need to borrow.
The problem is named, dated, and traceable to specific mechanisms. The window is open now. It is tighter than the 2029 framing suggests — and the 2026 World Cup will make it feel closed when it isn't.
The Commons restructuring addresses the credit problem directly: Arch off the PFD's books, lodging tax stream unchanged, SCC renegotiates Aramark with a credible alternative, credit stabilizes before the 2027 confluence hits. No new bonds. No tax increase. No state legislation. A governance decision by three appointing authorities, each of whom has a documented reason to act before 2027 makes the conversation much harder.
What-If: Restructuring →