HARLINGEN — Amid rising interest rates, the city’s taken its first big step toward financing the $14.8 million convention center.
Last night, city commissioners approved the publication of a notice of intent to sell as much as $13.5 million in taxable certificates of obligation to fund construction of the 43,700-square-foot convention center.
“This is what we have to do to finance the project,” Mayor Chris Boswell told commissioners after meeting with Anne Burger Entrekin, the city’s financial consultant with First Southwest in San Antonio.
For Boswell, who’s served as mayor since 2007, the project marks one of the milestones of his administration.
For about 20 years, he’s said, city leaders have planned to build a convention center to draw more tourist dollars to town.
As part of a finance plan, the city will use $9.7 million generated through the Harlingen Community Improvement Board’s sales tax and $3.8 million in hotel occupancy tax revenue to pay back the debt over a 20-year period.
The city also will use $1.95 million in property tax revenue generated within its three tax increment financing reinvestment zones to buy 8 acres on which to build the convention center near Teege and Brazil roads in the Harlingen Heights business distinct.
Burger Entrekin said she plans to close the bond sale Dec. 21, projecting interest rates of about 3.83 percent.
Burger Entrekin said she plans to set interest rates Dec. 5 and 6 before the Federal Reserve System moves to possibly increase rates Dec. 13 and 14.
Burger Entrekin said interest rates have climbed from near historical lows in anticipation of the Fed’s possible move.
But the market remained a “very, very low interest rate environment,” she told commissioners.
“There are times when rates have been considerably higher,” Burger Entrekin said.
As part of an agreement, the city will fund construction of the convention center while San Antonio-based developer BC Lynd builds an attached 150-room Hilton Garden Inn.
HVS Consulting and Valuation Services, an international consulting firm, recommended the site at Harlingen Heights over a proposed site behind Bed Bath and Beyond in the Harlingen Corners shopping center, Boswell said in an earlier interview.
Boswell has also said BC Lynd wanted to build the hotel on the land off Teege Avenue and Brazil Road.
Last year, negotiations between the city, landowner Ezequiel Reyna, a Weslaco developer, and BC Lynd led to a sale price of $2.7 million for the 8-acre convention center site.
In 2013, the city’s independent appraisal gave the land off Teege Avenue and Brazil Road near Sam’s Wholesale Club a market value of $1.69 million.
According to the Cameron Appraisal District, the 8 acres is being subdivided from a total 12.3-acre tract appraised at $1.8 million this year.
The district conducted its appraisal in 2013, before the development of Sam’s Wholesale Club and other businesses there.
The city will pay for most of the land with $1.96 million from property tax revenue generated through Harlingen’s three tax increment financing reinvestment zones.
Officials have agreed to take $601,312 from Zone 1, $1 million from Zone 2 and $367,162 from Zone 3, where the convention center and hotel will be built.
Pete Smith, a city-contracted tax attorney in Dallas, gave officials a legal opinion stating tax law allows the city to fund the construction project through the three zones because the convention center would benefit the city’s overall economy.
Tax increment reinvestment zones are public financing tools used to fund economic development projects in which properties’ assessed values are frozen based on the theory their values will increase. The increased property taxes collected make up the increment.
The Harlingen Community Improvement Board, which generates a one-eighth cent sales tax to fund quality-of-life projects, will fund the remaining $800,000 of the land purchase.
