The city of Edinburg is moving forward with plans to issue approximately $23 million in certificates of obligation that will partially go towards downtown investments.
This week, the city council ratified an intent by the Edinburg Economic Development Corporation to issue a series of tax exempt and non-tax exempt bonds.
The EDC is proposing issuing bonds in the amount of $9 million of which $2 million would be taxable while $7 million would be non-taxable, according to Edinburg City Manager Ron Garza.
After several months of strategic planning between the city and the EDC, Garza said they determined their key priority for strategic investment was the city’s downtown area.
“So this investment is specifically for downtown area,” Garza said.
The funds will go towards the construction of a new parking facility in the area and the construction of a new cultural, arts, and event center that will be located where the old Sam Houston High School currently stands.
About $6 million will fund a portion of the cultural arts/event center, $1 million will go towards general downtown revitalizations projects, and $2 million will go towards work on the parking garage.
Garza said the city hopes their investment will spur more economic development in the area from restaurants or bars.
“With the construction of a new courthouse that the county is doing, they’ve made significant investment there,” he said, adding that they were on the heels of a project from the Texas Department of Transportation that will renovate State Highway 107, also known as University Drive.
But Garza said there still wasn’t a lot of sales tax activity there compared to other downtown areas.
“There’s some small businesses that are sporadic in the area but we’ve had some recently just grow and the need and the appetite for investment is really there,” he said. “The will of the city council and the EDC was: use this investment to catalyze other investors to come in and privately invest other things that will create sales taxes.”
Additionally, the EDC is planning to refinance $13.750 million in previous bonds that stem from a previous EDC project with Santana Textiles LLC, a company that went out of business and was in default of their loan payments and interest, according to a city audit report.
The Edinburg EDC was the secondary lienholder, according to the audit, which stated that Santana Textiles had combined balance $13,640,004.
The city is now refinancing the lien with the hopes of saving money with lower interest rates.
As far how bond issuances will affect residents, Garza said the council had no intention of increasing property tax rates to pay for the investments, expressing confidence that the city’s growth would be enough to absorb those costs.
“We did this very strategically with a commitment from the city council, and the EDC obviously, but ultimately the city council that the tax rate will not be raised due to these funds,” Garza said. “From an investment standpoint, we’ll definitely see a return on investment from a sales and property tax, but then, most importantly to the current tax payer is that this does not bear any additional obligation for them.”
Before the city council makes a final authorization on the issuance of those bonds, they will hold a public hearing during their Aug. 17 city council meeting.
“We’ll do a full presentation on all the projects, then there will be a public hearing done regarding the city side of the certificate of obligation bonds and then also the ratification of the EDC bonds,” he said.