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Slight change in financing on Nebraska Furniture Mart deal: city tweaks public funds
The Colony City Council is perusing final documents that would change the initial public debt dollars on the Nebraska Furniture Mart. The council is expected to approve the changes at its Dec. 4 meeting.
According to city documents, the development was initially planned to use $425 million in public debt. However, after a working with Texas Attorney General Greg Abbott for the past year and an extensive market and cost analysis, the development and the city have decided to use a blend of public debt with private funds for the capital contributions.
According to Tim Miller, assistant city manager, this is a positive development for the city as revenue pledges for the public debt burden will be eased. This will ease up the timeline on the development, he said.
"When we were looking at doing $425 million, they were going have to go from zero to 100 miles an hour in a very short period of time," Miller said. "What that does is really put a lot of pressure on them just to fill up the site with anything they could get in there. Now that we've got some private funds that will be put in there and reduce that public funding requirement, they can focus on maintaining that quality of development they had promised us to begin with - instead of trying to fill stuff in there just to service that debt."
The city will be paying interest during construction. However, the city will not be paying interest on private funds after the construction period. Maybe the only change, Miller said, is that Nebraska Furniture Mart will be taking on a substantial amount of debt on its own outside of the public debt. This does three things, Miller said: it reduces the city's debt burden, shows their commitment to the project and desire to have a quality development.
Before the changes, public debt was projected to be $425 million, $80 million of which would be Public Improvement District backed and $345 million would be credit enhanced. Now, after council approved changes, public debt will be $173 million, PID dollars would remain the same, $93 million would be credit enhanced and $252 million will be privately funded.
Miller said the city is finalizing the mechanics of that change, which is a drastic change to cut out a little over half of the public debt.
The development is expected to bring more than 4,000 construction jobs and 2,000 retail positions to North Texas within the next two years.
The 1.86-million-square-foot development will be part of the largest retail and entertainment destination of its kind in North America and will be situated at state Highway 121 and Plano Parkway in The Colony.
City officials said Nebraska Furniture Mart is expected to attract more than 8 million visitors from more than 200 miles way and generate more than $600 million in annual sales. The store is designed to house more than 160,000 items designed for homes.
Nebraska Furniture Mart assembled multiple tracts of land for its mixed-use development. The entire development is anticipated to receive 14 to 16 million visitors annually, the company said.