DALLAS — As it prepares to fix out the remaining variable-rate bonds issued for the new Dallas Cowboys stadium, Arlington saw Moody's Investors Service revise its outlook on the debt to negative.
The agency assigned an A2 rating with a negative outlook to the city's sale of $60.7 million of special-tax revenue bonds, which may be in the market as early as today.
Fitch Ratings and Standard & Poor's both rate the special-tax bonds issued for the stadium at A with stable outlooks.
Moody's said the outlook change reflects "the softening in economically sensitive special tax revenues and the reduced level of available cash following the fall 2008 restructuring and the completion of this transaction."
The bonds are secured through a voter-approved 0.5% citywide sales tax, a 2% hotel-occupancy tax, and a 5% car-rental tax.
Moody's said sales-tax receipts are down 2.9% so far this fiscal year and are anticipated to be about 8% below budgeted estimates for the full year. While officials hope to address this in the city's general fund with expenditure controls and hiring freezes, that would only indirectly benefit special-tax bondholders, according to Moody's, because reductions in pledged sales taxes directly reduce revenue available for debt service.
Analysts said Arlington's sales-tax receipts averaged 3% annual growth the last five years and 2% growth over the last decade.
Moody's also said excess revenue since the bonds were first sold in 2005 resulted in $31.4 million of cash as of Nov. 11, but that was decreased by $9.1 million to replenish the debt service fund that was previously funded by surety and lowered again by a swap-termination payment of $5.2 million. Another swap-termination fee of about $5 million will further reduce cash balances, according to analysts.
One potential boost to the revenue stream is the funds that would be provided through an agreement regarding the naming rights of the stadium.
When construction began a few years ago, some thought the Cowboys would be able to secure a naming-rights deal worth hundreds of millions. But corporations have been reluctant to enter such an agreement as the financial climate has soured over the past 18 months, and the team has yet to secure such a deal.
Fitch analysts said pledged-revenue collections have weakened recently but should increase following the opening of the the stadium in a few months and the start of the Cowboys games this fall.
The stadium, which will seat nearly 100,000 for football games, is slated to open June 6 with a concert by country music stars George Strait and Reba McEntire.
Soccer games and a college football game are also scheduled to be played in the stadium prior to the first Cowboys home game in September. Super Bowl XLV will be played at the stadium in February 2011.
