|
Only have a minute? Listen instead |
In about two years, motorists in the Mid-Valley might start to see a new sight — a stream of fully loaded commercial trucks heading northward along Farm-to-Market Road 493 from the Donna-Rio Bravo International Bridge.
And if they do, it will be because of a resounding decision Donna voters made on Saturday to approve the issuance of some $45 million in general obligation bonds in order to fund the bridge’s expansion.
The money will be used to pay for the final phase of the years-long expansion — the construction of two northbound commercial lanes, as well as all the associated security, inspection and logistical facilities that will be needed.
“We were very happy with the turnout, with the results, and I think it validates the project for our community. It means that now we can complete the project,” a jubilant Carlos Yerena, Donna’s city manager, said on Wednesday.
The northbound expansion had been put on hold for nearly six months after a new majority on the Donna City Council took control and immediately put a halt to a $61.2 million plan to finance the project.
The bulk of that financing would have come from some $58 million in revenue bonds repaid over the course of 30 years using revenues generated by the tolls future truckers would pay to cross at the bridge.
By the time the debt was fully paid off, accrued interest would have put the final price tag on the revenue bonds at about $130 million, according to Donna’s bond financial adviser, Andre Ayala, with Hilltop Securities.
Further, an additional $29.3 million had already been committed to the project thanks to the city’s two economic arms — the 4A and 4B economic development corporations — agreed to commit portions of their sales tax revenues to the project.
Last May, the 4A EDC issued a $15 million sales tax revenue bond while the 4B EDC issued a $14.3 million sales tax revenue bond. Both issuances have 30-year amortization schedules.
However, in December, the newly empowered majority on the council didn’t like the math or the opaque process that had gotten the city to that point in the expansion’s financing plan.
On Dec. 19, 2023, the newly restructured council put a halt to the revenue bond issuance — which had been set to be put on the market that week — and instead instructed city staff to look for alternative funding mechanisms.
Enter the general obligation bond election.
A general obligation bond puts the city’s credit rating — and most importantly, its ability to levy property taxes — at stake when issuing debt.
As Ayala said during a public workshop earlier this spring, it makes for a less risky bet for investors.
As a result, the city will be able to secure more favorable terms on the bond, including a better interest rate, which means the city will pay less over time.
“This is great because I think we’re able to have the best of both worlds. Not only are we getting the funding for the … second phase of the bridge that we need, but we’re also getting it at a discounted rate,” Yerena said.
In this case, that cost savings is estimated to be $51 million over the 30-year life of the loan.
Donna still plans to use bridge toll revenues to repay the debt, but, if worst comes to worst and those revenues fail to meet projections, then the city will be able to raise property taxes to meet the debt obligation.
City leaders have been reticent to consider that possibility, with Ayala, the financial adviser, even calling it a “doomsday scenario” when pressed on the matter.
Instead, Donna leaders have pointed to the findings of “an investment-grade revenue study” that they say show the Donna bridge will be more than capable of reaching the break-even point needed to pay for the project.
Officials say between 85-100 trucks per day will need to cross at the bridge in order for the bridge to break even.
The Monitor filed a Texas Public Information Act request for a copy of the revenue study in mid-April; however, the city is fighting the document’s release, citing security concerns.
On April 25, the city notified the newspaper that it was seeking an opinion from the Texas Attorney General to withhold the document.
Asked on Wednesday if the city will reconsider that stance, given the bond election’s success, Yerena said, “I’m sure we can look at it,” but added that the AG’s office has held similar requests to be exempt from disclosure.
However, bond investors will be privy to that data, Yerena said.
“I think that the study will be made available to the investors when the time comes,” he said.
Things at the bridge are already looking optimistic, though, especially since southbound empty trucks began crossing for the first time in late March.
The city celebrated that milestone — which came about more than two years after construction of the southbound commercial lanes was completed — with much fanfare.
And passenger traffic is on the rise, as well.
Some 69,000 passenger vehicles crossed at the Donna-Rio Bravo bridge in March — more than the number of passenger vehicles that crossed at Pharr and Progreso, Yerena said.
As for what’s next, the city council will have to certify the results of the election at an upcoming meeting.
After that, the bonds will likely be sold on the municipal securities market within four months.
It’ll be another three to four months to put the project out for bid, and then 15 months of construction work from the time the first shovel goes into the ground to when the northbound lanes are ready for traffic.