Commissioners to decide on hotel financial support
HARLINGEN — A $32 million bond issue is falling on the city’s lap — even though it isn’t selling the bonds.
Tomorrow, city commissioners will hold a public hearing into BC Lynd Hospitality’s proposal to finance a $20 million full-service hotel to be attached to the city’s $16.7 million convention center, currently under construction.
After the hearing, commissioners are expected to decide whether they will support the proposed bond sale.
Last week, Mayor Chris Boswell, along with some commissioners, hinted they would back the proposal.
The commission’s votes would not lead the city to incur expenses or liabilities, Irma Garza, the city’s spokeswoman, said yesterday.
BC Lynd, the city’s partner in the convention center project, is proposing the Arizona Industrial Development Authority issue $32 million in revenue bonds to finance the hotel’s construction, which is apparently about year behind schedule.
As part a proposed agreement, borrower Provident Group – Harlingen Properties LLC would pay back the bonds over a 40-year term.
At the end of the 40 years, the hotel could be donated to the city or its designee.
Following the public hearing, commissioners are expected to consider a resolution approving the $32 million bond sale “to finance costs of acquiring, designing, constructing and equipping a convention center hotel,” according to the meeting’s agenda.
Garza said the Arizona Industrial Development Authority, an economic arm of the state of Arizona, would like the city to approve the resolution to show its support for the project.
Commissioners are also expected to consider approving a corporation and development agreement between the city and Provident Group-Harlingen Properties for the hotel’s construction.
Garza said the proposed agreement would donate the hotel property to the city or its designee after the 40-year term.
As part of that agreement, she said, all revenue derived from the hotel’s operation, sale or rent would go to the city.
“ Creative financing”
City Manager Dan Serna has called BC Lynd’s involvement critical to the convention center’s success.
Meanwhile, Boswell has described BC Lynd’s proposal as “creative financing.”
Last week, Boswell said officials and attorneys had “done our due diligence,” determining the city would not incur “any financial obligation” as a result of the deal.
BC Lynd’s proposal comes apparently after a year-long delay in the hotel’s construction.
Last January, Brandon Raney, BC Lynd’s chief executive officer, told commissioners the finalizing of the project’s financing was delaying construction “a few months behind the opening of the convention center.”
As part of an agreement approved in late 2015, BC Lynd will operate, manage and staff the convention center while splitting any profits or deficits with the city.
Under that agreement, the city funds the construction of the 44,436-square-foot convention center, whose construction is expected to be completed in January.
Meanwhile, BC Lynd is committed to build the $20 million, six-story Hilton Garden Inn to be attached to the convention at corner of Harlingen Heights and Teege roads.
According to a public notice, the proposed deal would “finance the costs of acquiring, designing, constructing and equipping a full-service convention center hotel.”
“ The hotel will initially be owned by the borrower for the benefit of the city for the purpose of lessening and alleviating the burdens of government of the city in connection with the operation of its convention center, promoting economic development and welfare and diversifying the economy,” the notice states.
“ The hotel is expected to initially be operated by BC Lynd Hospitality,” it states. “The hotel will eventually be owned by the city or transferred at the direction of the city and all residual revenues from the hotel shall belong to and be transferred to the city.”