DALLAS - Even with its triple-A credit rating, the Dallas suburb of Irving says it needs federal support to issue debt at affordable rates for projects such as its $333 million convention center and entertainment complex.
Although the city sold $130 million of certificates of obligation earlier this year to build the convention center, Mayor Herbert Gears says that the 5.22% true interest cost was about 70 basis points higher than a triple-A CO should have drawn.
Now, the city is waiting for an opportunity to issue $200 million for a companion entertainment project. Without the backing of Irving's general fund, the entertainment center bonds would carry ratings of A-minus. That would translate to rates higher than 7%, the mayor says, and insurance simply isn't available.
"If we didn't have these credit conditions, we'd be moving ahead," Gears said.
Gears said he started campaigning for federal intervention in the bond market after a November revenue bond deal rated A-minus had to be called back when it appeared the rates would be about 7.25%.
"Normally, we would get that insured to bring it down to something like 4.5%," he said. "I set out on a mission because we are directly affected on a project on which we have to defer."
To get then President-elect Obama's attention, Gears sent a video that is now on YouTube.com.
"I figured that was a way that he liked to communicate, so I would give it a try," the mayor said. Since then, Gears has been lobbying members of Congress and the Texas House, which has passed two resolutions in support of the proposal.
Gears is returning to Washington April 21 to meet with the Texas congressional delegation as HR 1669 sponsored by Rep. Gerald E. Connolly, D-Va., makes its way through the House Financial Services Committee. Connolly's measure would require the Treasury secretary to buy municipal bonds, or issue Treasuries backed by pools of munis, as well as provide credit enhancement. It would authorize the Federal Reserve to establish a credit facility to backstop short-term munis.
In supporting the federal measure, Gears is talking up job creation, predicting more than 10,000 jobs would be created under the city's proposed projects. Irving is already seeing aggressive "transit-oriented development" around Dallas Area Rapid Transit's $750 million Orange Line that is under construction.
Related to that is the redevelopment of the Dallas Cowboys Texas Stadium surrounded by three major freeways. The team is moving to a new stadium in Arlington this year.
As he began pushing for federal assistance to the bond market, Gears found that the U.S. Conference of Mayors was already thinking along similar lines. In October, the group sent a letter to federal lawmakers seeking help for local issuers.
"Metropolitan areas are the economic engines of America because we invest in our neighborhoods, we invest in our people," Miami Mayor Manny Diaz, president of the organization, wrote in the letter.
Among the Texas lawmakers supporting Gears' campaign are Republican state Sens. John Carona and Florence Shapiro and Democratic state Reps. Kirk England and Rafael Anchía.
Rep. Barbara Mallory Caraway, D-Dallas, signed Gears' letter and also wrote the two resolutions that passed in the Texas House last week.
With a population of 210,150, Irving has used its central location in the Dallas-Fort Worth metroplex and proximity to Dallas-Fort Worth International Airport to become a major corporate hub. Irving's Las Colinas' area is home to several international corporate headquarters, including Exxon Mobil, Kimberly-Clark, Commercial Metals, and Fluor Corp.