After months of controversy over plans to build a convention center hotel, Dallas Mayor Tom Leppert said he was pleased with the market’s response to last week’s $480 million issue that included taxable, tax-exempt, capital appreciation, and Build America Bonds.
“This really speaks to the strong position of Dallas,” Leppert said. “Investors clearly felt confident in the area’s economy, in the management of the city, and in the future of our convention and hospitality business.”
The average interest rate landed at 4.69%, well below the 5.5% cap set by the City Council and included in early financial projections.
“The rate being about 88 basis points below where we needed it really helped,” Leppert said.
The bond sale will close in two weeks and construction could begin a week later, with estimated completion in early 2012.
A voter initiative sought to derail the project, as some citizens claimed the city had no business owning a hotel. The plan calls for Omni Hotels to operate the 1,000-room hotel.
City officials said that without an attached hotel, the convention center could not compete with other major convention cities. Dallas in the past has been one of the top-ranked convention cities.
The hotel will be located on six acres of an eight-acre site at the corner of Harwood and Young Streets in downtown Dallas, adjacent to the 2,100,000-square-foot convention center. The hotel’s developer is Matthews Southwest.
City manager Mary K. Suhm said that the low interest rate on the bonds “reduces the cost of the project, the amount of debt service, and will help the hotel be profitable from day one.”