DALLAS — Private developers have pledged $80 million to help finance a $250 million entertainment center adjoining the Irving convention center in Texas, but city officials doubt that the pledge is firm enough to earn a credit rating.
The project was proposed as a public-private partnership designed to make the convention center and the surrounding Las Colinas business and residential center more attractive for event planners.
Plans outlined thus far call for the city to issue about $210 million of bonds backed by the general fund. A general revenue pledge from the triple-A rated Dallas suburb is expected to provide a higher investment-grade rating for the debt in the absence of insurance.
When Irving began discussing the entertainment center before the 2008 economic collapse, insurance for revenue bonds was readily available. Since then, ratings of bond insurers have collapsed, with only one provider sufficiently creditworthy to make a deal attractive.
Last month the Irving City Council approved an ordinance for the city staff to negotiate with a rating agency for an opinion on the proposed debt for the entertainment center. Before seeking a rating, however, city officials need to firm up the private portion of the funding from an entity known as Las Colinas Group.
In a letter delivered to city staffers, Las Colinas Group chairman William Beuck identified only one investor, TDI Real Estate Acquisition. The letter also said that the group is working with other “qualified investors and institutions.”
Irving Mayor Beth Van Duyne told the Dallas Morning News that the letter does not meet her requirements for proof of funding. Van Duyne, who defeated Mayor Herbert Gears in a 2011 runoff, has been skeptical about the project that Gears championed after he was elected mayor in 2005. Van Duyne accused Gears of being too close to developers who funded his campaign and made the city’s debt load a major issue.
Van Duyne told the News that the Las Colinas Group letter was “ridiculous” and should have been able to prove that the $80 million has already been secured in order to secure a bond rating. “If that’s their commitment letter, I’m floored because basically what I’m reading is, 'Hey, we’re still trying to get investors,’ which is the same thing they’ve been telling us for five years,” Van Duyne told the News.