A team of El Paso, Texas, officials and advisors spent last week traveling to New York and Washington, D.C., to trumpet their planned nearly half a billion dollar bond-financed overhaul of the city's downtown area, which they see as a major game-changer for their region.
El Paso's 10-story city hall building imploded into a pile of dust and debris on the morning of April 14, the first step of the city's $473 million "quality of life" program that was envisioned in the bond referendum approved at the polls last November by a margin of roughly three to one.
El Paso city manager Joyce Wilson said the city does not fear issuing a lot of debt, despite the atmosphere of fiscal conservatism and anxiety surrounding the White House's ambition to cap the value of the municipal bond tax exemption at 28%. El Paso, which has a population of roughly 655,568 in 2011, currently has about $600 million of general obligation debt.
"We wanted to get out ahead of the market, before interest rates go up," Wilson said.
The bonds approved in the referendum would finance 85 separate projects, from parks, pools, and recreation centers to a new children's museum, Hispanic cultural center, and multi-purpose performing arts facility.
A $50 million minor-league baseball stadium will take the place of the demolished city hall about a year from now, said Tripper Goodman, president at Goodman Financial Group.
The bonds, which have been rated AA by Standard & Poor's and Fitch Ratings and Aa2 by Moody's Investors Service, will be backed by hotel occupancy tax revenues, and will likely come to market in May, Wilson said.
Wilson said El Paso's radical overhaul is roughly modeled on Oklahoma City's transformation during the past decade. That city financed a brand new indoor sports venue that helped lure the National Basketball Association's Seattle Supersonics into moving and becoming the Oklahoma City Thunder.
Goodman said El Paso, situated in West Texas on the border of Mexico, has seen other Southwestern cities outgrow and out-develop it over the years and that the new initiative could inject new energy into the region.
El Paso's economic activity also includes Northern Mexico, with cross-border commerce accounting for close to 20% of the city's economic activity, said Wilson.
"We're marketing ourselves as a region," said Goodman.
Wilson said the El Paso community, which is largely Hispanic, has a strong affinity for open spaces like parks and soccer fields. Construction of new parks has not sated demand, she said.
"We couldn't build them fast enough," Wilson added.
That community, and young people interested in seeing a dynamic downtown, accounted for the overwhelming bond referendum support, Goodman said.
But the decision to move ahead was not simple, Wilson said. The city council fought it out over some expensive propositions that failed to reach the ballot, including a $100 million major league soccer stadium.
"We had people fight us," Wilson said.
Goodman said the investments will be worth it in the long term, paid back in a higher quality of life for El Pasoans and in economic development for years to come.
"Sometimes you've got to stick your neck out," he said.