With a new Texas Rangers Major League Baseball stadium set to open in March, the city of Arlington, Texas, is expanding its entertainment district with an adjacent $810 million public-private hotel and convention center development.
Up-front financing by the private Loews Corp. means the city does not need to issue general obligation bonds for the project, city manager Trey Yelverton told the city council last month. Instead, the city will use about $50 million of tax increment re-investment zone revenue bonds to build an 888-room private hotel and 150,000 square-foot convention center that will be city-owned.
“A lot of projects and cities are asked to own hotels,” Yelverton said. “They’re asked to bond fund hotels. They’re asked to bond fund convention centers and take on the operating risk. We’re not doing that in this case. The private sector is doing that. But what we are doing is rewarding the private sector for taking that risk and rebating that back to them.”
Under the TIRZ financing, the city will remit half of the tax revenue created by the project to the developer, Yelverton said.
Arlington chief financial officer Michael Finley said the TIRZ revenue bonds are expected to be issued in late March or early April.
“Based on the impact and the track record of our partners, we believe over 3,000 jobs will be created with $1.8 billion in economic impact, which will leverage the city’s investment nearly one-to-10,” Yelverton said.
The public-private partnership includes the City of Arlington, the Texas Rangers, Loews Hotels & Co. and The Cordish Companies.
Loews vice president Alex Tisch said the company has already secured a $330 million loan with no pledge from the city, which owns the vacant land on which the development will be built.
“It’s easy to design but really, the catch here is that it’s going to cost a lot of money to build, and we’re ready to stand up for all of it,” Tisch said. “Loews Corp. is adequately capitalized. We’re ready to invest $200 million of our own cash.”
Tisch said his company, headed by New York Giants owner Jonathan Tisch, expects Arlington to compete for conventions nationally with the new hotel.
The project, which could begin this month, means that the city will be closing its smaller convention center a few blocks away, Yelverton said.
“We would be getting out of direct competition with our convention center,” Yelverton told the council. “The good news is that we’ve got plenty of time. We’ve got three to three-and-a-half years to work through that.”
Loews Corp. already has a $150 million, 300-room hotel connected to the new baseball stadium called Live by Loews that opened last year with an entertainment area known as Texas Live, featuring restaurants, shops and other facilities. The new hotel will connect to Live by Loews via skybridge.
Counting the new $1 billion Globe Life Field, the partners' total investment in the district comes to more than $2.25 billion, according to Loews.
That does not include the Dallas Cowboys’ $1 billion AT&T Stadium nearby. The city issued $298 million of sales-tax supported bonds for the Cowboys stadium and $500 million for the new Rangers stadium that hosts its first game in March. The Rangers’ previous stadium, Globe Life Park, will be replaced by the new Globe Life Field, but both stadiums will continue to exist. The Rangers' former venue
The city's $135 million debt for Globe Life Park was paid off in 2001, a full decade early.
Last year, Arlington issued $228 million of senior-lien special-tax revenue bonds and $28.5 million of taxable bonds backed by the same revenues for the new baseball stadium.
The senior stadium bonds are backed by revenue from a 5% citywide short-term motor vehicle-rental tax, a 2% citywide hotel occupancy tax, and a 0.5% citywide sales tax secures the senior-lien bonds. A pledge on deposit in certain subaccounts of the revenue, debt service, debt service reserve, and surplus debt redemption accounts provides additional security.
The bonds were rated A-plus by S&P Global Ratings. Moody’s Investors Service rated the senior-lien stadium bonds A1, with an A3 rating on subordinate-lien bonds. Outlooks from both rating agencies are stable.
“Despite the economic sensitivity of sales taxes generally, collections within the city have been resilient, declining only once by 1.5% in 2009 over the past decade,” Moody’s noted in 2018. “Unsurprisingly, the HOT and vehicle rental tax revenues exhibit larger swings with economic cycles.”
Arlington voters approved the baseball stadium bonds in November 2016, authorizing the same special taxes pledged to the special-tax revenue bonds issued for the Dallas Cowboys project. The Cowboys stadium opened in 2009.
The new Rangers stadium will have a flexible, retractable roof and about 40,000 seats for baseball. The roof will allow the use of air-conditioning, providing fans an escape from the area's blistering summer heat. As with the old stadium, the new facility is expected to host concerts and other live events.
The Rangers have pledged $2 million per year in rent payments through Jan. 1, 2054, which is well beyond the 2018 bonds’ maturities.
As the largest of the Mid-Cities between Dallas and Fort Worth, Arlington has a population of 383,862 and is just a few miles south of Dallas-Fort Worth International Airport.
For nearly 60 years, the city's leaders have worked to make it an entertainment mecca for the metro area's more than 6 million people.
In addition to the professional sports stadiums, Arlington is home to the Six Flags amusement park and a water park known as Hurricane Harbor. City officials
In addition to the entertainment venues, Arlington has a General Motors assembly plant and the University of Texas at Arlington campus.
Arlington Mayor Jeff Williams called the new hotel and convention center “a milestone for our community.”
“This is a step that really puts us in the convention center business in a huge way,” he said.
