DALLAS — The El Paso City Council raised the interest cap of bonds being issued to build a downtown ballpark due to market movements over the last six weeks.
Acting as trustees of El Paso Downtown Development Corp., the councilors on Thursday voted 6-3 to raise the interest cap that it set in June on $60.8 million of revenue bonds for the minor league baseball stadium.
The interest rate limit was raised to 6.5% from the original 5% cap on the $48.7 million of tax-exempt debt to be issued for the stadium, and to 7.25% from 5.75% for the $12.1 million taxable portion.
The councilors also gave city officials the authority to take the bonds to market in a competitive sale if it would be advantageous. The stadium bond issue is currently set as a negotiated sale.
Interest rates went up soon after the Council approved the earlier interest caps for the bond issue, Deputy City Manager William Studer Jr. said.
The rate rise would make it difficult to sell the bonds at the cap set in June, Studer said.
"That movement put us over what we could do and stay within the parameters set by the council," he said.
The increased interest on the debt will raise total costs to the city by $17 million, said El Paso CFO Carmen Arrieta-Candelaria.
Debt service will total $143 million over the 30-year span of the bonds at the higher cap rate, she said. The city had earlier predicted total costs at $126 million.
Total revenues pledged to support the bonds over the next 30 years is estimated at $153 million, Arrieta-Candaleria said.
Rep. Cortney Niland went along with raising the interest rate caps but said she was doing so reluctantly.
"There was an opportunity here that we missed," she said. "I don't have a lot of confidence right now in our financial team."
The bonds will be supported by a 2% increase in El Paso's hotel occupancy tax approved by voters in November 2012 and stadium revenues.
Underwriters for the special revenue bonds are Morgan Stanley & Co. LLC and Citi.
Fulbright & Jaworski LLC is bond counsel. First Southwest Co. is the city's financial advisor.
El Paso's $564.1 million of general obligation debt is rated AA by Fitch and Standard & Poor's, and Aa2 by Moody's Investors Service.
