DALLAS — A $90 million Irving, Texas convention center hotel deal combining public and private financing has fallen through, city officials said.
Mortensen Development told the Irving City Council that it could not meet an August deadline for finding its share of financing for the project.
Mortenson, the international developer awarded the Irving contract on Feb. 11, 2013, expected to break ground on the hotel this year, with completion expected in 2015.
Financing for the hotel was to include $17 million of bonds backed by hotel tax revenues under a city agreement with Mortenson. The bonds were to be offered through a conduit issuer and would not have carried the city's triple-A rating.
The city will seek new companies to build the hotel, which is seen as a critical link between the Convention Center and an entertainment complex that is in development after years of controversy and litigation.
"It really is a significant adverse situation," Irving council member Joe Putnam told The Dallas Morning News. "Everyone I talked to thought they'd be able to come up with their financing."
The convention center has its own station on Dallas Area Rapid Transit's light rail line between Dallas-Fort Worth International Airport and downtown Dallas, but remains surrounded by vacant fields awaiting development.
Mortenson agreed to build a hotel and skybridge to the convention center, with the city covering 10% of the cost. The Marriott hotel chain was chosen to operate the hotel.
The hotel was set to open before the entertainment complex, but the largest investor backed out after the city granted Mortenson more time to arrange financing, according to Mortenson.
"It's doubtful we're going to grant [another] extension," Mayor Beth Van Duyne told the News. "We've had too many projects in Irving stalled by developers not able to get their financing."
The $300 million entertainment center, to be known as the Irving Music Factory, is financed through a public-private agreement with the ARK Group, a Charlotte, N.C., developer owned by Noah and Rick Lazes. ARK built a similar project in Charlotte.
On Jan. 28, Irving priced $39.7 million of hotel occupancy tax revenue bonds for an entertainment center adjoining the city's convention center that opened in the Las Colinas area in 2011.
The bonds, rated BBB-plus by S&P, drew yields of 5.35% on 5% coupons maturing in 2043.
