Nov. 11 (Bloomberg) -- Dallas is going to ask voters whether it should be in the hotel business in May 2009.

By then, the city of 1.2 million people will already have sold millions of dollars in bonds and may have even broken ground on the project. Or at least that's the plan.

What happens if they hold an election and nobody shows?

I couldn't blame them. That's very unlikely, though, considering that a group opposing the project went out and collected 60,000 signatures demanding a referendum on the issue, according to the Dallas Morning News.

The petition was certified on Nov. 7, the newspaper reported, adding that neither supporters nor opponents of the plan knew for sure whether the financing and other work to be done on the hotel would be held up.

What a fine pickle! In the meantime, though, perhaps we will finally have a thorough debate on the convention center and its hotel business, which since the 1980s has obsessed so many American cities and towns.

The hotel component is a relatively new addition to the convention-center craze. At some point in the 1990s, the experts started to tell public officials that it was no longer enough to build a convention center to attract the big shows to your town. No, you had to expand the center, and while you're at it, you also had to build an attached hotel. The bigger, the better.

Bonds on Ballots

Dallas residents are in for a lively debate.

On the one hand, it can be argued that this is no time to be fainthearted, and that municipalities must invest in the future. It is perhaps difficult to envision now, but at some point, the country will emerge from recession, and prosperity will return. States and municipalities might even hasten the day by spending money on useful public works.

Perhaps mindful of this, voters last week approved 82 percent of the bonds on ballots this election day, $54.5 billion of the almost $67 billion that were up for the vote. That's the second-highest amount ever.

Included in the total were billions of dollars in bonds for roads, bridges and schools, and almost $10 billion in California alone to build a high-speed rail system. Voters shrugged off economic bad news, and proved just as amenable to new borrowing as they were during the recent fat years.

This is likely to change as the recession deepens and layoffs pile up, but for now, the voters have sent the message: full speed ahead.

Elusive Dream

That's on the plus side for Dallas's proposed convention- center hotel.

There are arguments on the other side to be made. There is a small body of academic literature on convention centers and their attached hotels, and whether or not they pan out in terms of economic development. There's evidence to suggest they don't.

It can also be argued that the nation's cities and towns are chasing a dream that is dying, that attendance at conventions and tradeshows has been declining for years. Will it ever revive? Travel and expense dollars are hard to come by now. How likely will companies be to spend them in the future, and is it three years, five years or 10 years?

Finally, are cities such as Dallas preparing to fight a war that has already been won by Las Vegas and Orlando, Florida, both of which dominate the market for the really big shows?

Feasibility Study

Dallas is supposed to sell bonds to build the hotel in January, and is also planning on refinancing the debt it sold to build its convention center.

These documents will be a treasure trove for participants in the debate, revealing all kinds of financial details. I am especially looking forward to reading the feasibility study for the new hotel, and for how the city discloses the May referendum.

Feasibility studies are often good for laughs -- they don't call them infeasibility studies, remember -- but they do provide a ton of information on the health and prospects of the business under study, and on how comparable rivals are doing.

What kind of yields will the city of Dallas have to offer potential investors in these bonds? Will they be insured?

For students of public finance, it doesn't get any better than this.

(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net

Last Updated: November 11, 2008 00:01 EST