|By Michael A. Lindenberger, The Dallas
Morning NewsMcClatchy-Tribune Regional News
August 19, 2009 - Dallas secured commitments Tuesday from investors who have promised to buy $479.8 million in bonds to pay for the convention center hotel.
The bond sale could close within two weeks, and early phases of construction will begin almost immediately afterward, said Mayor Tom Leppert, who has promoted the hotel plan as a major boost to downtown Dallas' economy.
"From where I am sitting, this was the biggest step left to take," Leppert said. "It is what was the biggest obstacle standing between people using and enjoying the new hotel. All we have to do now, essentially, is build it."
The city will probably hold a groundbreaking in two to three weeks, Leppert said.
Construction should be complete by early 2012, the mayor said. The 1,016-room hotel will be adjacent to the convention center and, if Dallas officials get their way, directly in front of a new DART rail station within a few years.
The convention hotel has drawn strong opposition, especially from hotelier Harlan Crow, who backed a referendum that would have ended the project earlier this year. That effort failed, and the City Council has hailed the hotel as a necessary ingredient to strengthening downtown development.
Leppert said Tuesday that when residents see dirt moving on the site, they should see it as a sign of good things to come: "a bigger, stronger tax base."
Dallas had been biding its time before selling the bonds, waiting for favorable interest rates in a bond market that has grown highly unpredictable in the wake of last year's Wall Street meltdown. City officials had said the project would be affordable only if the city could sell the 30-year bonds to investors willing to accept interest rates of no more than 5.5 percent.
The city easily beat that threshold Tuesday, Leppert said. Commitments from investors guarantee that the city will pay no more than 4.7 percent, thanks largely to the inclusion of more than $300 million in Build America Bonds.
Those bonds are part of government-backed securities included in the American Recovery and Reinvestment Act, better known as the federal stimulus package passed by Congress early this year.
The lower rate means Dallas will pay $149 million less for the bonds, compared with what it would have paid had it sold the debt at 5.5 percent interest, Leppert said.
At the higher rate, the city would have paid interest costs that roughly averaged about $30 million per year for 30 years, Leppert said.
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