DONNA — Officials here approved some $84 million in new debt to finance the continued commercial expansion of the Donna-Rio Bravo International Bridge.
The Donna City Council, Donna Economic Development Corporation (4A) and Development Corporation of Donna (4B) boards all passed votes approving the issuance of the debt which will go toward funding the construction of two northbound lanes for commercial truck traffic.
The 4A and 4B boards further approved agreements to shoulder $10 million each of that debt load.
The city has been working for months to bring the bond discussions to fruition, and Thursday’s votes during the consecutive meetings — which were one of the last steps needed to do so — had officials ebullient with optimism.
“I think everybody feels that it’s a good project,” Donna City Manager Carlos Yerena said afterward.
“They just want some assurances that we’re working on with our bond counsel and our financial adviser, but we continue to move forward with the project,” he said.
However, the approval of the bond issuance wasn’t without some controversy as one member of the 4A board expressed concerns over the way officials were going about passing the proposal.
Dr. Michael Flores, who was first appointed to the 4A board in 2020 during the height of the COVID-19 pandemic, said he was unclear about the method for which the three entities were going about approving the bond issuance.
Originally, the plan had been for the city council and the EDC boards to call their meetings to order consecutively, then briefly recess before reconvening and heading behind closed doors for a joint executive session.
There, they were to hear presentations from the project’s financial adviser, Andre Ayala, managing director of Dallas-based Hilltop Securities, as well as Port Director Walter Weaver, with U.S. Customs and Border Protection.
“One, why are we doing it that way, first of all?” Flores asked before mentioning a contract that he and his fellow 4A directors had received only minutes before the meetings began.
“I echo the sentiments of some of the members of this 4A corporation,” Flores continued. He suggested instead that the 4B board meet alone in executive session.
The 4A board would remain behind closed doors for precisely two hours, after which Flores appeared to be satisfied with the answers he had received there.
“I just want the public — to go on the record — that this is how things should be done… don’t rush anything,” Flores said.
“It’s not bad to talk and sit down,” he said, especially when considering such a large amount of public debt.
In the end, Flores joined his colleagues on the 4A, 4B and city council in voting to approve the bond issuance.
In sum, Donna will take on $84 million in debt through several different mechanisms, the city manager explained.
“It’s a revenue bond, one, (a) sales tax bond (from the) 4A and 4B, and then a certificate of obligation,” Yerena said.
The bonds are likely to include 30-year repayment plans, and the $84 million figure does not include interest, the financial adviser confirmed.
The certificate of obligation will also represent just a minor part of the plan at about $2 million for roadway infrastructure.
In addition to the debt, CBP has agreed to contribute $11.9 million in funding for “nonintrusive inspection technology” that will be installed at the bridge. And the city still has a $4 million CBP grant left over from the construction of the two southbound commercial lanes, Yerena said.
But of the bond debt itself, Yerena said the city plans to sock away about one-quarter of the money just in case.
“About $21 million of that is basically reserve funds. So, in other words, it’s funds that we’re borrowing so that we can put aside for a rainy day,” Yerena said.
“And then we also have some capitalized interest so… that our first payment is not gonna be until 30 months,” he said.
The city expects to put the bonds on the market by late October, Yerena said.
The $84 million issuance comes just three years after Donna approved $35 million in revenue bonds to fund the construction of the southbound lanes for so-called “empties,” or commercial trucks that have already delivered their cargo in the U.S.
Meanwhile, the city continues to pay down debt associated with the bridge’s original construction in 2010, including $30 million in certificates of obligation Donna issued then.
Donna also issued COs in 2015 and 2016 that were intended to pay for bridge improvements, as well as infrastructure projects throughout the city.
The city has previously re-funded some of those debts to take advantage of better interest rates; however, the various loans associated with the bridge’s initial construction will continue to mature into the late 2030s and 2040s, according to documents obtained from the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website.
And speaking of interest rates — the city has found itself the unwitting victim of pandemic-related inflation and supply chain shortages, which have caused the bond issuance’s final cost estimates to steadily rise.
During public meetings earlier this summer, officials told stakeholders the bond would be about $45 million. A month later, that figure had risen to $60 million, then $77 million, and now Thursday evening’s estimate of $84 million.
Despite that, Yerena remains confident in the success of the expansion project.
“All the information and all the studies that we have done proves that it’s very feasible for us to move forward,” he said.
