DALLAS - Arlington, Tex., has been trying to convert variable-rate securities into fixed-rate debt for the past few months to no avail.

The City Council wants to refinance more than half of the roughly $300 million that's been issued to fund the city's share of a new $1.1 billion stadium being built for the National Football League's Dallas Cowboys. But continued market volatility has kept the refunding on the shelf.

Public Financial Management Inc. is the financial adviser to the city and Vinson & Elkins LLP is bond counsel.

Despite additional issuance costs of nearly $5 million to refinance the debt, city officials initially tried to get a refunding to market in early July after MBIA Insurance Corp. lost its triple-A rating. The insurer was downgraded, in part because of its significant exposure to subprime mortgage securities and collaterized debt obligations.

In 2005, Arlington sold about $164 million of special tax bonds insured by MBIA in three series - which included some auction-rate securities and other synthetic debt - for the stadium. The debt is secured through a voter-approved 0.5% citywide sales tax, a 2% hotel-occupancy tax, and a 5% car-rental tax.

"There's two ways we can refund this debt," said Marlin Mosby, managing director at PFM. "One way is to replace the credit enhancer and leave it in a synthetic fixed rate, and the second way would be to convert it all to a fixed rate, which would be more expensive for the city."

He also said Arlington chose the second option and set a debt service threshold of $290 million after the refinancing. When they first tried to get the refunding to market the structure would've resulted in debt service of about $298 million, effectively delaying the sale.

"We continue to monitor the market daily and look for a window of opportunity to get this deal done," Mosby said. "But it's a very volatile market that requires constant adjustments to spreads and numbers while gauging investors' interest daily."

Both Fitch Ratings and Standard & Poor's assign A ratings to the special tax bonds issued for the stadium. Moody's Investors Service rates the bonds at an equivalent A2.

Analysts said the pledged revenue streams total more than $60 million since their inception in the middle of fiscal 2005. Debt service is projected to rise slightly upon conversion of the debt, but modest revenue growth should shorten the maturity schedule and additional revenue from annual rental payments and naming rights to the stadium also should bolster reserves available for bond repayment, according to analysts.

Standard & Poor's said the outlook is stable based on analysts "expectation that the sales tax base and sales tax revenue will remain stable, ensuring adequate annual coverage of debt service."

The city's estimated 2007 population of nearly 376,500 is up 13% from the 2000 Census tally of 332,969.

Arlington carries underlying ratings on its general obligation debt of AA-plus from Standard & Poor's, AA from Fitch, and Aa2 from Moody's.

The North Texas city, which sits nearly equidistant from Dallas and Fort Worth, is currently upgrading and expanding some streets and parks, and improving right-of-way around Interstate 30 in the northern part of the city near the new stadium, which will host the Super Bowl in 2011. The Cowboys begin playing the final season at Texas Stadium in Irving this weekend and will open the new stadium in the fall of 2009.

In November, voters in Arlington will weigh in on a $82.4 million bond package. Some projects to be addressed with bond proceeds include: $15.3 million for residential roads, $7.4 million for upgrades to fire stations, $1.5 million for a new roof on the convention center, and nearly $3 million for sidewalks and traffic signal improvements.

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