DALLAS - Dallas will proceed with its plan to issue $500 million of tax-exempt revenue bonds to finance a city-owned hotel in downtown after voters on Saturday narrowly endorsed the proposal.
Voters turned down an amendment to the city charter that would prohibit a municipally owned or financed hotel by a margin of 51.2% to 48.8% in an election where a "no" vote favored the hotel project.
The preliminary voter official turnout was 84,699, with 43,382 opposed to the anti-hotel amendment and 41,287 in favor.
Dallas Mayor Tom Leppert called the narrow win "a giant victory for the Dallas taxpayers."
"We're going to move this forward," Leppert said at a victory party on Saturday night. "We're going to make good on our promises. We're going to make a good deal for the taxpayers of Dallas."
The election was forced by hotel opponents who gathered 60,000 signatures last fall on petitions seeking a public vote on changing the city charter to ban Dallas from financing or owning a hotel.
The opposition said the hotel revenues would not be sufficient for debt service and would require assistance from the city's general fund.
The City Council approved a financing plan in 2008 that included $500 million of bonds supported by revenue from the hotel.
The bonds were to be sold in January, but officials delayed the sale because the weak bond market would not provide an interest rate at or below the maximum 5.5% level used in developing the financial plan.
Councilman Ron Natinsky, one of the strongest supporters of the hotel plan on the council, said he hoped for a quick sale of the bonds.
"It will probably take us four to five weeks to get all the paperwork ready," he said.
However, Leppert said it is uncertain when the market will be stable enough to sell the bonds. Conditions have to be advantageous to the city, he said.
"I'm not going to rush into it," Leppert said.
Ann Raymond, a real estate executive who led the Citizens Against the Taxpayer-Owned Hotel opposition group, said after the election that the city should consider a public-private partnership for the hotel project.
The council created the Dallas Convention Center Hotel Development Corp. in August 2008 to issue the hotel revenue bonds.
Citi is the book-running manager and co-senior manager for the hotel revenue bond offering. Other co-senior managers are Goldman, Sachs & Co. and Siebert Brandford Shank & Co. Co-managers include Jackson Securities LLC, RBC Capital Markets and Southwest Securities Inc.
The city will allocate 30% of the debt to Citi, with each of the other senior co-managers receiving 20%. The three co-managers will each receive 10% of the debt.
First Southwest Co. and Estrada Hinojosa & Co. are co-financial advisers on the proposed issue.
The hotel, which will be built adjacent to the convention center in downtown Dallas, will include approximately 1,000 rooms, a parking garage with more than 700 spaces, and nearly 150,000 square feet of meeting and ballroom space.
Construction is expected to take at least 28 months.
