DALLAS — U.S. Treasurer Rosie Rios used a visit on Friday to the site of Dallas’ new bond-financed convention center to highlight the benefits of Build America Bonds in stimulating the North Texas economy in 2009.
Rios was joined at the downtown construction site by executives from local agencies that issued BABs last year, including Mayor Tom Leppert, Dallas Area Rapid Transit executive director Gary Thomas, and Ron Anderson, chief executive officer of Parkland Health and Hospital System.
Rios said local governments in North Texas have benefited by issuing almost $3 billion of BABs, part of the $64 billion that have been issued across the country since the program was authorized by the American Recovery and Reinvestment Act of 2009.
She said BABs have been sold in 779 separate issues by governments in 45 states.
“With the recovery Act’s bond programs, the federal government has emerged as a strong partner in revitalizing state and local communities struggling with tight budgets,” Rios said.
The authorization for BABs became effective on April 3, 2009, and will expire at the end of 2010.
Rios said governments would have been hard-pressed to finance needed projects without the ability to issue the taxable bonds.
The bonds provide local and state governments with a direct subsidy of 35% of the interest.
“By providing much-needed access to financing and low-cost borrowing, Build America Bonds have already helped hundreds of communities fund the development of schools, hospitals, and other public projects,” Rios said.
“These bonds give city and state governments the access to funds needed to jump-start infrastructure projects that will create jobs, improve neighborhoods, and provide our children with the quality education they deserve.”
Dallas issued $388 million of BABs in August for the hotel project, along with two tranches of tax-exempt revenue bonds. The hotel bonds were rated A-plus by Standard & Poor’s and A2 by Moody’s Investors Service.
Leppert said Dallas saved $150 million in debt service with the use of BABS for the project, which will create an estimated 3,000 construction jobs and 800 permanent jobs.
The proceeds are financing construction of the 1,000-room Omni Dallas Convention Center Hotel.
“When the municipal credit market froze last year, these bonds allowed us to make a critical investment in our community,” Leppert said.
The Dallas County Hospital District issued $680.2 million of BABs in August 2009 for a replacement to Parkland Hospital. Anderson said the use of BABs will save county taxpayers some $120 million in debt service.
DART’s Thomas said the $829.6 million of BABs issued by the transit agency in June as part of a $1 billion bond sale will provide financing for 48 new miles of light rail.
He said the agency reduced its debt service by $220 million with BABs.
Thomas said the DART rail expansion plan ultimately will create almost 50,000 construction jobs and is expected to spark $5.6 billion in private developments along the route.
Other North Texas BAB issues in 2009 include $825 million by the North Texas Tollway Authority, $110 million by the North Texas Municipal Water District, $87 million for the Plano Independent School District, and $58 million by the Carroll Independent School District.
Rios said Dallas and Dallas County also have received allocations totaling $54 million for recovery zone economic development bonds.
The bonds, which are earmarked for areas with significant job losses, provide a direct federal subsidy of 45% of the interest to local governments.