In December, I wrote a post that asked, given the recession and the almost non-existent bond market, how the city was going to sell revenue bonds that would fit the budget convention center hotel budget. As SMU’s Mike Davis noted: The price for building the hotel includes the cost of paying off the bonds. It’s similar to buying a house. You wouldn’t buy the house unless you knew if you could afford the interest rate, and the city didn’t know the interest rate.
In February, we did a podcast with Jim Schutze and Sam Merten of the Observer and discussed the same thing.
Why does this matter? Because the city’s plan, apparently, has been to start construction on the hotel before May’s referendum, which would make the result irrelevant. To do that, it needed to sell the bonds last month or this. Which hasn’t happened yet. And, according to Merten, it isn’t going to happen any time soon. Writes Sam: “[T]he city has all but abandoned hope regarding its plans to secure funding before the referendum.”
Apparently, the bureaucrats downtown are the only ones who didn’t see this coming. As noted here four months ago, officials in Portland gave up trying to build their hotel because of the bond market, while officials in Chicago are about to walk away from a deal to privatize Midway Airport because the developer can’t sell the bonds.
