DONNA — August is typically budget-planning season for local government entities, and things are no different in “The Heart of the Valley,” where officials recently met to go over the city’s fiscal projections for the coming year.
And while those discussions included standard talking points about payroll costs, property tax revenues and such, something new underlay the conversation — the hopes pinned on a pending multimillion-dollar investment as Donna embarks on the next phase of its international bridge.
The city has been steadily working on expanding the Donna-Rio Bravo International Bridge in order to accommodate commercial traffic.
Things kicked off in October 2019, when officials broke ground on construction of two southbound lanes for so-called “empties,” or commercial trucks that are returning to Mexico after having delivered their cargo here in the U.S.
That phase of the project was funded by more than $20 million in state and federal grants, as well as some $35 million in revenue bonds.
Now, Donna has its eyes set on the next phase — the construction of two northbound lanes for fully laden Mexican trucks to cross into the United States.
This phase of the project will be funded entirely through financing — but precisely how much new debt the city will acquire remains unclear as officials have mentioned conflicting figures in recent weeks.
During budget talks on Thursday, and again on Saturday morning, city administrators indicated that they expect to go out to market on some $60 million in revenue bonds as soon as next month.
However, during a meeting of Tax Increment Reinvestment Zone No. 2 earlier this month, Donna City Manager Frank Perez indicated that inflation has had an effect on how much the project will cost.
Perez said the city had initially expected to issue about $40 million in revenue bonds, but that that number has risen substantially.
“It’s about $77 million total, with everything in it,” Perez said at the Aug. 2 meeting, which was held at the Chase Tower in McAllen. “It started (at) about $40 million, and I think it’s been going up every year.”
Nonetheless, should the sale of the bonds be successful in September, construction could begin as early as December or January, Perez said.
HOPES AND CONCERNS
Donna Finance Director David Vasquez was optimistic about the city’s finances. He began Saturday’s workshop by going over some big highlights.
Property valuations have risen by 16%, meaning the city can expect to generate more revenues, Vasquez explained. The city expects to generate nearly $295,000 more in ad valorem taxes in the next fiscal year — an increase of 6%.
And the opening of The Shops at 493 earlier this year has brought a sizable sales tax windfall.
Sales tax revenues are expected to go up by more than $800,000 — or 30% — in the coming year, according to figures in the proposed budget.
Employees will also be getting a 3% pay increase.
But while there was optimism about the city’s growth and its future, there were also some concerns — primarily among Donna’s two economic development corporations.
The 4A and 4B EDC boards also met last week to discuss finances.
It was during those meetings on Thursday that the directors learned Donna is banking on the EDCs to shoulder some of the debt load from the bridge expansion.
Donna is asking the EDCs to each take on about $10 million of the $60 million in bond debt the city will incur.
“What our financial advisor is suggesting is that we have the EDCs absorb a certain amount of that debt,” Vasquez, the finance director, explained during the EDC 4B meeting.
“We don’t know the final number until we actually go out to market,” he said.
That amount will encumber the EDCs with a debt service of just under $500,000 per year for the next 30 years.
Further, that figure is in addition to some $60 million in bonds and certificates of obligation that Donna has been paying down since the bridge’s original construction in the early 2000s.
But the board had questions, including how or if the corporation would ever be reimbursed for taking on the debt, and how the bridge is performing currently.
“I asked you how the bridge is doing at the moment,” Director Norman Cordova said.
“It’s not making money,” Vasquez said.
“This is an enterprise and it comes with risk,” he added a moment later.
