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Hotel effort gets news of promise and concern

Supporters of Tampa's proposed convention hotel got good news and bad news Friday.

The good news: Standard & Poor's, one of the nation's leading bond rating services, gave an "A" rating to the $141-million bond issue that the city hopes will finance the 905-room hotel.

Moreover, Standard & Poor's indicated that issuing the hotel bonds would not hurt the city's overall credit rating, which is slightly higher than the rating for the hotel bonds.

The bad news: An attorney for Hillsborough County Property Appraiser Ron Alderman said a crucial legal opinion on the hotel might not be ready by Thursday, when the City Council is scheduled for a final vote on the project.

"I don't know if we're going to have anything for them by the 27th (of October), but we'll work on it," Steve Anderson said late Friday.

The opinion would address whether the proposed hotel, known as the Marriott Tampa Center, should be exempt from local property taxes. Because of the city's involvement, hotel revenues already would be exempt from federal income taxes.

An exemption could save the hotel more than $3-million a year. It's so important to the success of the hotel that Mayor Sandy Freedman has said she won't go ahead with the project without it.

Researching the opinion was already difficult enough, but Anderson said it was delayed this week when one of the lawyers working on it had a family emergency. He is not expected to return until the middle of next week.

Despite that news, city officials still plan to ask the City Council to vote on the hotel project next week, with or without Alderman's exemption opinion.

City Finance Director Bob Harrell said officials would simply ask the City Council to make their approval contingent on getting a favorable opinion.

In an announcement from New York, Standard & Poor's said its "A" rating "reflects the strong general creditworthiness of the city . . . and sound legal provisions securing" repayment of the bonds.

Hotel supporters welcomed the rating as an outside check of their conclusions. "In a sense, it's another validation of the numbers on the project," said Stephen Pankau, a Tampa bond lawyer working on the project.

But Steve Nelli, Standard & Poor's director of municipal finance, said, "We're not necessarily passing judgment on whether or not this hotel will be successful."

Nelli said the project does not appear so risky as to affect the city's overall credit rating. The "A" rating, however, is based largely on the fact that a financially stable government like Tampa's has pledged its own money to repay the bonds in case hotel revenues aren't enough, he said.

Without the city's pledge, Nelli said, the rating on the hotel bonds would have been "lower and potentially much lower."

The "A" rating means the bonds would be considered upper medium grade, although Nelli and Pankau said bond insurance would make them AAA, the highest.

The bond insurance, which the city expects no problem obtaining, has nothing to do with a special insurance policy that officials had discussed buying from Lloyd's of London. The Lloyd's insurance was meant to add an extra layer of protection for taxpayers, but neither Lloyd's nor other major carriers are writing such policies now.

Getting a bond rating in the A's also will make the bonds "investment grade" debt. Unless a bond is considered investment grade, institutions that invest other people's money cannot buy it under most state laws.

Harrell said earlier this week that a favorable rating also would help the city get a lower interest rate when it went to the bond market for the hotel financing.

_ Information from Times wire services was used in this report.