Council members at this morning's special called meeting are expected to authorize a bond issuance of up to $514 million for the convention center hotel project. The agenda item restricts selling the bonds at a maximum interest yield of 5.5 percent, and a mixture of revenue bonds and Build America Bonds are the probable funding sources.
The American Recovery and Reinvestment Act signed in February by President Barack Obama created the Build America Bond program, which is turning out to be more costly than originally thought. These bonds help state and local governments reduce the cost of borrowing by subsidizing the interest rate to the tune of a whopping 35 percent. As we explained Tuesday, they would allow Dallas to sell hotel bonds at a higher interest rate than 5.5 as long as the federal subsidy yields an amount equal to or below 5.5 percent.
Dave Cook, the city's chief financial officer, confirms to us that Build America Bonds are expected to be part of the bond sale, and he says the project's underwriters are discussing the details of how the debt will be issued. He claims it gets "really complicated" regarding the exact split of the funding between revenue bonds and BABs because it depends on various factors, including what the facility will be used for and any profit-making ventures. To which, we wonder: Isn't this whole project supposed to be profitable? What about our 315 million bucks?