Convention center nears completion

Mayor’s speech set as first event

HARLINGEN — For months, deadlines have come and gone.

But now, there’s a pressing need to put the final touches on the Harlingen Convention Center.

After about 17 months of construction, crews appear to be preparing for the Harlingen Convention Center’s first event.

On March 29, Mayor Chris Boswell is slated to hold his annual State of the City address at the $17.6 million facility.

“The speech and the opening of the convention center just sort of coincided,” Boswell said yesterday. “This has always been a free event, open to the public.

“With the convention center opening, we thought it would be a good opportunity for the public to come out and see the building.”

After city officials pushed back several deadlines, crews appear to be wrapping up construction on the project Boswell calls a decades-old dream of city leaders.

“I’m very glad to see the building opening,” he said.

This past week, workers began carrying in furniture, laying carpet and hanging wallpaper, city spokeswoman Irma Garza said.

“The entire building itself is a beautiful facility and we’re very proud of it,” City Manager Dan Serna said.

Boswell said his administration pushed to build the facility to open the city to conferences as well as community events.

“It is the public’s building,” he said. “It’s a place where life events will happen for the community. We want the public to use the building and be ambassadors for the building.”

It’s the city’s biggest project in years.

Operating budget

Earlier this week, the city released the convention center’s first budget.

Since Boswell’s administration began working with BC Lynd Hospitality to build the convention center, officials projected deficits for at least the facility’s first two years.

As part of an agreement, the city would fund construction of the convention center while the San Antonio-based developer built an attached upscale hotel.

Under the agreement, BC Lynd would also operate the convention center while splitting any profits and covering any deficits.

Last week, the city released BC Lynd’s operating budget showing a deficit.

“It’s in line with the projections,” Serna said. “We anticipated during the ramp up period there would be a shortfall.”

Before city commissioners, Serna made it clear the project’s plans call on the city to cover deficits during the first two years’ so-called “ramp-up period.”

In late 2015, Boswell’s administration began working with BC Lynd on the project to build a convention center and hotel in the city’s new Harlingen Heights business district.

Hotel plans

This week, the 44,436-square-foot building stood alone on an eight-acre tract off Teege and Harlingen Heights.

Meanwhile, BC Lynd’s $25 million, 149-room Hilton Garden Inn is about a year-and-a-half behind schedule.

And the project has yet to break ground.

In November, Brandon Raney, BC Lynd’s chief financial officer, said the company searched for the “right” financing plan for 18 months.

Under an agreement, the Arizona Industrial Development Authority, an economic arm of the state of Arizona, is issuing $32 million in tax-exempt revenue bonds to Provident Group-Harlingen Properties to finance the hotel’s construction.

After Thursday’s meeting, Raney said the company continues to work on the hotel project’s financing.

“We’re working on finalizing financing right now,” Raney said, adding he expected to close the deal at the end of the month.

Raney said he expected to launch the hotel’s 12- to 14-month construction project within 45 to 60 days.

“We’re still working out the final schedule,” he said. “Obviously, we’ll be pushing to get it done as soon as possible. We’re excited. We like what we see in the Rio Grande Valley. We like what we see in Harlingen.”

For about five years, Boswell has touted BC Lynd’s attached hotel as offering a business model rivaling other convention center projects in the Rio Grande Valley.

Covering the deficit

Still, as they planned the project, city officials, along with the firm of HVS Convention, Sports and Entertainment Facilities Consulting projected the convention center would run a deficit for at least its first two years.

This week, BC Lynd released an operating budget showing a $323,289 deficit.

“During the first two years of ramp-up for any convention center, it has been made clear to me by HVS Hospitality, there can be expected losses during the ramp-up period,” Serna told commissioners during a Thursday meeting.

As part of a 2015 agreement, the city set aside $500,000 to cover any deficits during the two-year period.

“We did set aside funding to cover any shortfalls, which is already included in the overall project cost,” Serna told commissioners.

Then, Commissioner Richard Uribe questioned whether BC Lynd would share the cost of covering the deficit.

“During the first two years of ramp-up, we cover those costs,” Serna said. “After the first two-year ramp-up period, then we will share the losses and profits with the developer.”

Hotel to boost revenue

However, BC Lynd’s hotel is expected to help spark more revenue, Serna told commissioners.

“Once that comes on, that will also improve the use of the facility and the operation revenues,” Serna said.

In a Feb. 19 letter to Assistant City Manager Gabriel Gonzalez, HVS Managing Director Thomas Hazinski stated the hotel would help boost the convention center’s revenues.

“The mix of business that can be generated by an independent facility is limited when compared to a facility that can offer the benefits of an attached hotel,” Hazinski wrote. “The operator will initially focus on generating events that do not require an adjacent hotel. Once the (hotel) opens in the first quarter of 2020, the hotel will be able to generate events that require an adjacent hotel.”

Bookings

Last month, BC Lynd released information showing booked events for five corporations and a school, according to information the city released earlier this month. Meanwhile, religious events have been booked for 38 Sundays while one quinceañera and four weddings have also been booked.

Yesterday, Serna said at least two more conferences have been booked.

For 2020, so far BC Lynd has booked six corporate events.

Now, the Rotary Club, which hosts the mayor’s annual speech, is considering holding a district convention here, Boswell said.

“There are lots of those kinds of opportunities out there and it’s going to be good for the convention center,” he said. “Any time you have a new venue where you can invite people outside the area to see Harlingen and the surrounding area, that’s good. It’s good to have visitors come to your city.”