DALLAS — Opponents of a Dallas suburb’s plan to issue $200 million of revenue bonds for an entertainment complex have appealed a judge’s order to post a $10 million bond to continue the case.
State District Judge Craig Smith ordered the challengers to Irving’s proposed bond financing plan to post the bond last week. The appeal was filed late Friday.
The City Council voted in late August to ask the court, rather than Texas Attorney General Greg Abbott, whether the bonds could be legally issued.
The opponents argue that the available revenue outlined in the city’s financial plan cannot be legally used to support the planned debt. Smith has yet to rule on the legality of the bonds, but said in his ruling that the city would suffer financially if the bonds for the project are not sold by the end of 2010.
“Certainly there isn’t a crystal ball, but there has to be some amount of certainty of damages,” Smith said when he set the bond. “I do believe if there is a delay, there will be additional costs. I’m not willing to let this be stopped without some protection for everyone.”
The complex financial plan for the entertainment complex includes taxable Build America Bonds to fund infrastructure at the site near Dallas-Fort Worth International Airport. The city said without BABs, the project would not be viable.
The plan includes $200 million of bonds supported by revenue from the city’s 2% hotel occupancy tax and a tax on parking as well as from tickets at the venue. Voters approved the taxes in 2007.
The total cost is set at $250 million, with the operator, the Las Colinas Group, providing $50 million. If bonds are not sold for the project by the end of the year, the sponsors can terminate their agreement with the city.
Smith said he would not consider whether the revenues would be sufficient to support the $200 million of debt. That will be determined the market, he said, and is not subject to legal review.
Irving was ordered to provide the opponents with projections for the revenues that would support the bonds. However, Smith denied a request from attorney Jim Harris, who represents the challengers, for the city’s detailed economic feasibility study on the project.
“If you’re going to torpedo this deal, you’ve got to rifle it, not shotgun it,” Smith said.
Harris said it is unlikely that the challengers could post the $10 million bond ordered by the court.
Mayor Herbert Gears said the judge’s order indicates the opponents will lose their challenge of the revenue bonds.
“It means we are one step closer to realizing a very important project that means a lot to the future of our community,” he said “It’s certainly something our leadership has worked on for years and years and years.”
Irving’s financial plan calls for the hotel tax to provide 21% of the total debt financing, with the parking tax adding 27%. Other sources include 15% from a ticket tax, 14% from mixed drink taxes at the venue, and 3% from rent on the facility.
Irving’s general obligation rating is triple-A from Standard & Poor’s and Moody’s Investors Service, but bonds backed by the hotel tax are rated A-minus by Standard & Poor’s.