SEC Investigating Wenatchee Debt

The U.S. Securities and Exchange Commission last month began investigating debt troubles surrounding a Wenatchee events arena, and asked several parties to voluntarily produce documents and emails.

The arena’s owner, the Greater Wenatchee Regional Events Center Public Facilities District, received a letter from the SEC but the letter sat unopened for weeks until last Monday, the Wenatchee World reported Saturday
A call from an SEC investigator to the district on Monday prompted a search for the letter. A part-time worker apparently signed for the overnight package and put it in a locked safe.

“It never got reported to the right people when it arrived,” Pete Fraley, the district’s attorney, told the newspaper.

The public facilities district defaulted Dec. 1 on nearly $42 million in debt, which is tied to the 2008 construction of the Town Toyota Center, a 4,100-seat publicly-owned arena in Wenatchee.

An effort by some state lawmakers to help rescue the district from default died during the Legislature’s special session late last year as senators balked at the idea of acting as a backstop for bad debt.

In December, the SEC sent a letter to the city of Wenatchee, bond attorney firm K&L Gates and bond underwriter Piper Jaffray. Fraley said he worked with the city and K&L Gates to provide information requested of them, but he didn’t believe the district had been directly named in the investigation.

The SEC “said we had received a letter as well,” Fraley said Friday. “But we had no record of receiving it.”

So the public facilities district missed a Dec. 30 deadline to get information to the SEC.

The district now has until Feb. 10 to provide those documents. The city of Wenatchee and K&L Gates both received deadline extensions to the end of January.

Fraley said he told the SEC investigator that the district has limited finances to spend on providing all the information. He said he would focus on information that is not already being given by the city and bond counsel.

The SEC is seeking documents related to financial projections for the arena, the ability of the public facilities district and the city of Wenatchee to finance it, and the disclosure of information during the sale of bonds to pay for it.

The Washington Supreme Court earlier this month heard arguments over whether the public facilities district should be able to refinance a nearly $42 million debt for an events arena. The public facilities district sought money from Wenatchee to do so. A judge ruled last summer that relying on Wenatchee for that money would push the city over its debt limit.