Dallas Metropolis Council OKs $252 million of GO bonds

Dallas officers revealed debt issuance plans for fiscal 2026 that embrace $1.5 billion of bonds for a conference heart undertaking in addition to as much as $252 million of normal obligation bonds, which the town council permitted on Wednesday.

The GO bonds, that are scheduled for a aggressive sale in November, mark the second issuance to faucet into $1.25 billion of debt approved by Dallas voters in Might 2024, in response to a presentation on Tuesday to the town council’s finance committee. An preliminary $250 million of GO bonds have been offered as a part of a $354 million deal final yr and future $250 million tranches may very well be offered in November 2026, 2027, and 2028.

The council Wednesday additionally permitted $35 million of apparatus acquisition contractual obligations that will probably be included within the upcoming sale to finance the acquisition of metropolis automobiles and different tools.

In spring 2026, Dallas plans to promote about $1.5 billion of senior and subordinate lien income bonds to finance a substitute for the Kay Bailey Hutchison Conference Heart and $72 million of bonds for enhancements to Honest Park, the positioning of the Texas State Honest and Cotton Bowl Stadium, in response to the presentation. The deal led by JP Morgan Securities would additionally refund an impressive interim mortgage.

The bonds are backed by incremental development in Texas lodge tax income collected inside a undertaking financing zone and the town’s lodge occupancy tax income that features a two proportion level charge enhance metropolis voters permitted in November 2022 for the tasks.

The presentation confirmed the nation’s ninth-largest metropolis had $1.93 billion of excellent GO bonds as of Sept. 30 and “sturdy” rankings, though Moody’s Rankings revised its outlook on the town’s A1 GO score to destructive from steady final yr within the wake of a voter-approved proposition mandating elevated spending for the police drive and for public security pensions.

The top of Dallas HERO, which backed Proposition U, contended final month that Dallas’ $5.2 billion price range for the fiscal yr that started Oct. 1 didn’t adjust to the constitution modification.

Steve Johnson, a director at HilltopSecurities, Dallas’ co-financial advisor, advised the finance committee Moody’s is “overly penalizing the town.” 

“We do not agree with their destructive outlook, which is likely one of the explanation why the town would not use Moody’s on its new issuances,” he stated. 

The upcoming GO bonds have been rated AA-minus by S&P International Rankings and AA by Fitch Rankings with steady outlooks final week. 

On Wednesday, the town council additionally permitted a $34 million waterworks and sewer system income bond borrowing by way of the Texas Water Growth Board’s State Water Implementation Income Fund for Texas. 

Different potential debt issuance outlined by Dallas officers included a virtually $298 million refunding within the spring of waterworks and sewer system income bonds offered in 2012, 2013, and 2015, and practically $49 million of stormwater drainage utility system bonds for someday in 2026.

Common airport income refunding bonds may very well be issued subsequent summer time for  Southwest Airways’ hub Love Discipline, which has a grasp plan to broaden capability, in response to the presentation.

On Tuesday, the finance committee was additionally briefed about choices for addressing deferred upkeep at Dallas’ 47-year-old metropolis corridor, which was designed by famend architect I.M. Pei.  

Metropolis employees outlined three choices — making solely emergency repairs, funding deferred upkeep estimated to price between $152 million to $345 million, relying on the scope of repairs or replacements, or exploring options like leasing workplace area or constructing a brand new metropolis corridor.