Rep. Eddie Bernice Johnson, D-Tex., has introduced legislation that would authorize the use of Build America Bonds for the purchase or construction of land, buildings or other facilities located near a convention center.
The bill, which has been referred to the House Ways and Means Committee, contains some specific requirements and appears to be targeted to a particular project in Irving, Tex.
Currently BABs can only be used by state and local governments for public projects. The legislation would allow BABs to be used like private-activity bonds for projects near convention centers.
The bonds would have to be issued for a “specified purpose,” which is defined as any land, building, or other property functionally related and subordinate to a qualified land or building.
Furthermore, the facility would have to be located within 2,000 feet of an enclosed convention center that has at least 150,000 square feet.
That convention center must be owned by or on behalf of a governmental unit that has a population of not more than 250,000 people. And the maximum amount of bonds that could be issued for any project is $250 million.
The bill also stipulates that 100% of non-reserve proceeds from the bonds must be used to finance the project or fund a reasonably required reserve fund, and at least 15% of debt service payments must come from generally applicable taxes.
Although no specific projects were named in the legislation, the city of Irving is currently constructing a 275,000-square-foot convention center as part of a 40-acre mixed-use entertainment district, sources said.
The center, which is scheduled to open later this year in the upscale Las Colinas business district, was financed with $130 million of certificates of obligation issued by the Dallas suburb in 2009. However, the city’s efforts to sell $200 million of debt for a companion entertainment project last year stalled because of adverse bond market conditions.
Although the city is rated triple-A, those bonds could not be backed by Irving’s general fund, and the collapse of the bond insurance market kept the deal from being affordable, city officials had said.
Johnson yesterday said she had introduced the bill with Irving in mind.
“After meeting with [Mayor Herbert Gears] for more than a year, I introduced HR 4606, which supports economic development for communities like Irving,” Johnson said yesterday. “The bill makes projects more affordable during this recession.”
Johnson’s district includes portions of Irving. The city is also represented by Republican congressmen Kenny Marchant and Pete Sessions. The city’s population is estimated to be 212,250, according to bond documents recently published by the city.
Staff for Marchant and Sessions could not shed any light on the legislation or project.