Dallas eyes $2.2 billion of bonds for convention center project

City of Dallas

Dallas officials on Wednesday laid out a financing plan for replacing the city's convention center that calls for a $1 billion interim borrowing, followed by the issuance of $2.2 billion of long-term revenue bonds.

A presentation to the city council on Wednesday indicated bonds would be financing 67% of the Kay Bailey Hutchison Convention Center Dallas project's estimated cost of $3.34 billion, with the remainder coming from $428 million in cash on hand and $665 million from other sources, like naming rights and asset sales. 

The bonds will be backed by incremental growth in Texas hotel tax revenue collected within a project financing zone and the city's hotel occupancy tax revenue that includes a two percentage point rate increase city voters approved in November 2022 for the convention center and improvements to Fair Park. 

"We're currently projecting that we would be able to, with those three pledged revenues, borrow a total of $2.2 billion to finance the project," Dallas Chief Finance Officer Jack Ireland said.

All of the bonds would be issued in the first half of 2026, with some of the proceeds used to refinance the $1 billion "bridge loan" with JP Morgan, as well as retire $170.6 million of senior lien special tax revenue bonds Dallas sold for the project in 2023, according to Ireland. The 2023 bonds were rated A-minus by S&P Global Ratings and carry an initial interest rate of 6%.

"(The bridge loan) will enable us to have a line of credit so that we can start awarding contracts, and it will enable us to start having cash available to pay the vendors and we will only pay interest on what we actually draw down," Ireland said.

The loan will also help the existing convention center prepare to serve as the international broadcast center for FIFA World Cup soccer in 2026.  Dallas is one of 11 U.S. cities chosen by FIFA to host the games, which are held every four years.

Approval of the interim borrowing is expected to be on the city council's June 11 agenda. 

Dallas opted to replace its convention center, which was facing as much as $600 million in deferred maintenance, with a larger facility that would attract more business. The replacement project includes 1.035 million square feet of exhibition, ballroom, and meeting room space.