DALLAS — Under pressure to issue bonds before the end of the year for a $250 million entertainment center amid falling revenue, Irving, Tex., now faces an investigation into questionable expenses by the city’s private partner on the project.

In question is how $2.1 million the city has paid to Las Colinas Group LP has been used. The private partner has reportedly used some of the funds for travel and entertainment, including a $1,561 trip to Las Vegas. Expenses that do not involve construction or design are not allowed under the agreement between Irving and Las Colinas Group.

Documentation of the expenses is also in question, but the firm denies any wrongdoing.

“At every step of the way, Las Colinas Group has endeavored to provide supporting documentation for every invoice submitted to the city,” company spokesman Jonathan Morgan said in a statement. “We are well-aware of our obligations in this regard, and we are confident we have complied in an overwhelmingly comprehensive fashion.”

City manager Tommy Gonzalez launched an investigation into the payments after WFAA-TV and the Dallas Morning News raised questions about the expenses.

Plans call for a 600,000-square-foot entertainment center adjoining the Irving Convention Center in Las Colinas, a mixed-use district near Dallas-Fort Worth International Airport.

The city plans to raise $200 million in construction costs for the entertainment center with a bond issue. Las Colinas Group must raise the other $50 million.

However, the city’s bond financing plan is tied up in court.

State District Judge Craig Smith last month ruled that the city would suffer financially if the bonds for the project are not sold by the end of the year. Opponents argued that the revenue earmarked in the city’s financial plan cannot be legally used to support the planned debt.

The plaintiffs appealed the ruling and are also appealing Smith’s order that they post a $10 million appeal bond.

Irving’s financial plan for the entertainment complex includes taxable Build America Bonds that under current law must be sold by the end of 2010. The fate of the BAB program has become even more uncertain after Republicans won a majority in the U.S. House. Without BABs, the Irving project would not be viable, according to city officials. If bonds are not sold by the end of the year, sponsors can end their agreement with the city.

Meanwhile, revenues for the nearly completed convention center needed backing from property taxes after hotel tax revenue fell short.

The City Council voted last week to use property-tax revenue to cover a possible shortfall in debt service on the new $133 million convention center.

The council approved $41.6 million of bonds, including $35 million to refinance outstanding debt. Refinancing is expected to save the city $19 million that can be applied to the convention center shortfall, officials said.

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