The Dallas City Council is expected to authorize issuance of up to $500 million of tax-exempt hotel revenue bonds at a special session on Friday. Proceeds from the sale will finance construction of a city-owned hotel adjacent to the downtown convention center.

The proposed ordinance would limit the interest rate on the bonds to no more than 5.5%.

The City Council approved a financing plan in 2008 that included $500 million of bonds supported by revenues from the hotel. The bonds were to be issued in January, but officials delayed the sale because the weak bond market would not provide an interest rate at or below the maximum 5.5% level used in developing the financial plan.

Dallas voters in May narrowly rejected an amendment to the city charter that would have prohibited the city from financing or owning a hotel.

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