It’s a big day when homeowners get to burn a mortgage after paying it off. Getting that multiyear financial burden off their backs opens up all kinds of possibilities.
So imagine how Arlington officials felt last week after learning that paying off the $300 million in AT&T Stadium debt early is scoring big points with New York credit-rating agencies, ultimately making it cheaper for the city to borrow money for future projects.
And luckily, this good financial news comes at a time when city officials are involved in efforts to convince the Texas Rangers to stay in town after the team’s lease at Globe Life Park expires in 2024. Arlington and club officials don’t like to talk about it, but there are rumors that business and political leaders in Dallas would like to lure the Rangers away.
“Our taxes are coming in stronger than expected and we’re able to pay this down faster,” said City Treasurer Ethan Klos. “I would think the citizens would be proud of this. They voted and said we are willing to do this for 30 years, and we’ve been able to do it in a whole lot less.”
Sign Up and Save
Get six months of free digital access to the Star-Telegram
Mayor Jeff Williams praised the actions of the council and city staff in managing Arlington’s debt. Even before its recent credit upgrades, he said the city had one of the highest bond ratings in the state. But being able to maintain it “is not easy,” Williams said. “I’m proud of how prudent our staff and council have been.”
It has been a proven financial formula to invest in the entertainment district and it pays back to our neighborhoods.
Arlington Mayor Jeff Williams
A little over a decade ago, the Dallas Cowboys and Arlington joined forces to build the $1.2 billion, 80,000-seat stadium. It opened in 2009 and has hosted a number of high-profile events including Super Bowl XLV, the college football championship game and the NCAA Final Four men’s basketball tournament.
Originally, the city sold $298 million in bonds in 2005 to pay for the Cowboys’ new home over the next 30 years. The total cost, with interest, was expected to be $641 million. A subsequent refinancing trimmed the payout to 2028. But the city continued to pay off the debt quicker and now plans to write its final check in 2021, cutting its overall cost for the stadium to about $400 million.
The bonds are paid off from money raised through a half-cent sales tax, a 2 percent hotel occupancy tax and a 5 percent car rental tax approved by voters in 2004. The city kicks in another $2 million a year in rent from the Cowboys and $500,000 a year from the team’s naming rights deal with AT&T. In recent years, the city has pumped more than $30 million annually into paying off the debt, records show.
This aggressive approach led Fitch Ratings to kick up its rating on the Cowboys stadium bonds three notches at the end of April — from A+ to AA+ — while Standard & Poor’s raised its rating from A to A+. Moody’s settled at A1.
I got a sense of urgency from him, along the lines ‘We’ve got to deal with this now and we’ve got to get it done.’
Kenneth Barr, former Fort Worth mayor, on Williams’ need to make a deal with Rangers
Knocking down the stadium costs also probably influenced the agencies in determining the city’s overall credit rating, Klos said. Fitch and Standard & Poor’s give the city AAA ratings, while Moody’s set its rating at Aa1, one level below its highest rating of Aaa, he said.
In its report, Fitch said it expects Arlington to realize “continued sound revenue growth” based on its “participation in the expanding regional economy.” It added that “revenue raising capacity is strong, supported by ample tax rate capacity.”
Last week, the city sold $34.4 million in bonds to pay for park land acquisitions and renovations, among other things. It also sold $16 million in tax and revenue certificates of obligation to pay for renovations and a new clubhouse at the Chester W. Ditto Golf Course.
“We are generating more money from our entertainment district to put back into our neighborhoods,” Williams said. “It has been a proven financial formula to invest in the entertainment district and it pays back to our neighborhoods.”
It’s not the first time the city has paid off debt from a sports complex ahead of schedule. Arlington paid off $135 million in debt from building the Ballpark in Arlington, since renamed Globe Life Park, in 2001, about a decade earlier than expected. The ballpark opened in April 1994.
It would take voters’ approval to use the money now designated for paying off the AT&T Stadium debt for another project.
But the good financial news comes at a crucial time for the city, which already is considering how to keep the Texas Rangers’ home plate in Arlington. Williams has made it clear that one of his highest priorities is to keep the Rangers from moving away, and speaks about it wherever he goes.
He recently met with a Fort Worth executive roundtable, where he talked “very candidly” about the situation with the Rangers, said former Fort Worth Mayor Kenneth Barr.
We need to show love for Rangers right now, ya’ll.
Arlington Mayor Jeff Williams
“I got a sense of urgency from him, along the lines, ‘We’ve got to deal with this now, and we’ve got to get it done,’” Barr said. “He made the comment the other day that they are working closely with the Rangers and committed to work with them.”
During a speech Friday to the Rotary Club of Fort Worth, Williams was asked about the Rangers, and he stressed how important it is to keep the team on this side of the Metroplex.
“We need to show love for the Rangers right now, ya’ll,” Williams said. “The Rangers don’t want to leave, but there are other cities, and we know one that starts with a D, that wants to take it. ... Right now is a key time for us.”
“With the Rangers in Arlington, they are a North Texas team. If they move somewhere else, they will become that city’s team,” he said.
Rob Matwick, the Rangers’ executive vice president for business, declined to speculate on the ballclub’s future beyond the end of its 2024 lease. The team’s owners have not said whether they plan to pursue a new stadium, perhaps with a dome or retractable roof.
City officials already have agreed to pay $50 million toward construction of Texas Live! with the ballclub. That project includes 100,000 feet of restaurant, bar and retail space, 35,000 feet of convention space and plans for a 300-bed, high-rise luxury hotel, to be built directly across from Globe Life Park.
The Rangers would not have made that kind of investment with the city if they didn't have a strong interest in maintaining their presence in Arlington.
Arlington City Councilman Jimmy Bennett
The city’s $50 million share is considered an incentive grant, said city spokeswoman Susan Schrock. The city recalled money from the Arlington Tomorrow Foundation to provide for the grant, and plans to replenish the funds over about 15 years.
For the hotel adjacent to Texas Live!, the city has agreed to provide the developer tax breaks including refunds of hotel occupancy tax, property tax, sales tax and mixed beverage tax for 30 years, plus hotel occupancy and sales tax for 10 years from the state. The state comptroller’s office recently determined the project is eligible for a refund of those taxes, said spokesman Kevin Lyons.
The precise dollar value of the tax breaks, which will be applied to both the hotel and the entertainment complex, bars and restaurants, will depend on how many people book hotel room nights, eat meals, drink beverages and buy retail goods.
Texas Live! will be built at the southwest corner of Randol Mill Road and Nolan Ryan Expressway, catty-cornered from the ballpark’s first-base entrance. Construction is expected to begin this fall.
“We are working every day to show the Rangers why they should stay here for generations,” Mayor Williams said. “We have a 40-year history of taking care of the Rangers and we want to continue to do that.”
Councilman Jimmy Bennett said Texas Live! is not an ironclad guarantee that the Rangers will stay in Arlington, but it is a concrete statement about how they feel about the city.
“The Rangers would not have made that kind of investment with the city if they didn’t have a strong interest in maintaining their presence in Arlington,” Bennett said. “It will have a life beyond the lease with the Rangers. They are making this investment with that in mind.”
“It is not a guarantee, but it is a commitment to the future,” Bennett said.
This report includes material from the Star-Telegram archives.