DALLAS -- A lawsuit by a spurned developer of a proposed $165 million entertainment center adjoining Irving, Texas’, new convention center has been settled, clearing the way for a plan to resurrect the project.
Dallas County District Judge Carl Ginsburg on confirmed the settlement Monday, signing an order to dismiss the lawsuit by the Las Colinas Group of developers that had worked with Irving for several years to plan the entertainment center.
In its breach-of-contract lawsuit against Irving, the Las Colinas Group sought $39 million in damages. Before the deal collapsed in 2012, the city had spent $37 million in development fees and land purchases for the entertainment center.
The deal with Las Colinas Group was contingent on Irving providing financing for the entertainment venue. But when the city hired Standard & Poor’s to rate a hypothetical bond for the entertainment center, the ratings agency came back with a junk-bond rating of B, creating prohibitively high finance costs. Furthermore, issuance of the bonds would threaten Irving’s triple-A credit rating, according to the analysts.
Under a newly-elected city council, Irving let the deal with Las Colinas Group lapse, prompting the lawsuit. Since then, the council has narrowly approved a new development deal with The Ark Group of Charlotte, N.C. As part of the out-of-court settlement, the Ark Group plans to buy the Las Colinas Group's interest in the project.
The Ark deal approved by the city council last month calls for the city to leverage hotel occupancy tax revenues for a $45 million up-front loan. The city could raise the money through a bond issue, which could gain a higher rating because of the higher coverage ratios.
Rick and Noah Lazes of Ark Group promoted their version of the entertainment center as the Irving Music Factory with multiple outdoor stages, open plaza space and a large amphitheater. The father-and-son team developed a similar $30 million project named N.C. Music Factory in North Carolina.
Irving, with a population of about 221,000, has a heavy slate of redevelopment projects on its drawing board, including the former site of the Dallas Cowboys’ Texas Stadium.