Council approves major steps in Lynnwood Event Center expansion

The Lynnwood City Council Oct. 13 approved three major measures supporting the Lynnwood Public Facilities District’s (PFD) event center expansion and surrounding redevelopment, known as The District, while continuing discussions on the city’s budget shortfall.

Public Facilities District

The Council unanimously approved ordinances authorizing a development contract with the PFD, a street construction agreement, and a resolution backing a $15 million loan. The PFD drafted the agreements at no cost to the City.

• Development agreement: The 15-year plan covers redevelopment of the 13-acre site around the existing event center, addressing parking, design, building heights and tree preservation. City documents describe the project as a “vibrant community hub” featuring housing, retail, a hotel and an expanded event center nearly twice its current size. 
• Road construction: The City will oversee construction of new streets, including a 38th Avenue “ring road” connecting to 196th Street, and may extend 194th Street between 36th and 40th Avenues West.

• • Funding sources include a $5 million state Transportation Improvement Grant and about $10 million from tax-increment financing. The PFD will cover up to $400,000, or half, of design costs.
  • Development and Business Services Director Ben Wolters said either party may end the agreement if funding stalls. “Both parties have to demonstrate progress,” he said.

• Short-term financing: The Council authorized the city to guarantee a $15 million loan from the Snohomish County treasurer to the PFD, improving the district’s borrowing terms. Finance Director Michelle Meyer noted cities often back PFD loans; Lynnwood did so for $30 million in bonds for the event center in the 2000s, with no missed payments.

• • The City’s $70 million bonding capacity and current budget deficit will not affect its ability to back the loan, Meyer said.
  • Of the $15 million, $9 million will retire existing PFD debt and $6 million will fund design and contingency costs, per City documents. 

Budget deficit discussions

The Council also continued talks on closing a projected $11.8 million shortfall in the 2025-26 budget. Meyer said state law prohibits ending the year in deficit, which could harm the City’s bond rating.

Council President Nick Coelho said new taxes, such as a business and occupation tax, would take multiple years to generate revenue and urged the Council to identify options for 2026.

• Reserve policy: Councilmembers revisited a proposal to lower reserve requirements from three months of operating costs to 2.5 months. Meyer said the change would balance the budget for 2025 but not for 2026.
• Revenue options: Meyer cautioned that the City relies heavily on volatile sales tax revenue and should consider more stable sources such as property tax. Councilmember Robert Leutwyler supported exploring new projects that create dedicated revenue streams.
• The Council directed staff to return with a list of revenue options, including timelines and rollback possibilities.

In other business, the Council approved the purchase of land next to the Lynnwood Wastewater Treatment Plant to expand construction staging space. The purchase, funded through the city’s utility and sewer fund, won’t affect the general fund deficit, Lynnwood Public Works Director Jared Bond said. 

Members also adopted minor updates to the city’s public works purchasing policy to align with state law.

The meeting agenda and a recording are available on the city’s website.