DONNA, RGV – Ever wondered why there is next to no commercial development along Expressway 83 in Donna? No hotels, no restaurants, no truck stops.
The reason is there was inadequate infrastructure.
Now, all that is about to change with the City of Donna securing a $6 million bond package for infrastructure improvements and investing a further $4 million from its reserves. A new water tower that can hold a million gallons is to be built on the corner of FM 493 and Interstate 2. And new 12-inch water lines will replace the current six-inch lines.
“We need 12-inch water lines to provide the fire flows that are necessary for hotels and restaurants. Without that they cannot locate in Donna because we cannot provide the fire flows for the sprinkler systems,” said Donna City Manager Ernesto Silva.
“Also, we are going to be extending our sewer system so that we can have sewer along the expressway. Right now, there is no sewer. If you are a developer and you want to develop in Donna the cost becomes prohibitive.”
Asked if the demand is there for development along I-2, more commonly referred to as Expressway 83, Silva said: “After we announced we would be making improvements along the expressway we received a tremendous amount of interest from developers. The reason there has been a gap between Weslaco and Alamo is because there has been no infrastructure to support commercial development. That is going to change.”
Silva explained that the City of Donna actually has $10 million for its infrastructure projects. “We have $4 million we set aside for construction that is in our reserves. And, we went out for another $6 million in bonds in order to do the entire project. The interest rate for the $6 million is 2.92 percent. That is an all-time low.”
Asked what development might now spring up along the frontage road in Donna, Silva said: “National chains, truck stops, hotels and restaurants. We will focus on providing services for the Mexican nationals. People that cross on our bridge and stay here. Those who do not want to go all the way to McAllen or Harlingen to stay the night.”
Announcements about commercial development coming to the I-2 frontage road is just part of the positive news Silva shared with the Rio Grande Guardian in an in-depth interview about the city’s economic outlook. The city’s tax rolls are going up sharply, tax rates are going down, revenues are outpacing expenditures, sales tax revenues are up, and vehicular traffic on the Donna-Rio Bravo International Bridge are up. In fact, Donna’s bridge crossings are at an all-time high. Last May, there were 43,228 crossings. This May the figure is at 48,824.
Silva was pleased to report that the City of Donna just received an “A Stable” rating from Standard & Poors.
“When we went out for bonds we had to have a ratings review. I am happy to report S&P rated our city A Stable. The reason that is important is that it shows not only the community but also the business community that Donna has a stable financial future and that it has good financial policies in place,” Silva said. “Some of those policies have been adopted in the last three months. This includes having a 25 percent contingency revenues in our reserves. So if we have a hurricane, we will have revenues in place to continue to operate while we get the city back on a good footing. We also adopted a new procurement policy that means we are more stringent when we go out for bids. There have been a lot of changes to the financial structure of the city and the way it is being operated.”
Here is the explanation S&P gave for giving Donna an “A” and “Stable” long-term rating:
• Weak economy, with projected per capita effective buying income at 42.4 percent and market value per capita of $18,795, that is gaining advantage from access to a broad and diverse metropolitan statistical area;
• Strong management, with “good” financial policies and practices under our financial management assessment methodology;
• Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2015;
• Very strong budgetary flexibility, with an available fund balance in fiscal 2015 of 33 percent of operating expenditures;
• Very strong liquidity, with total government available cash at 102.8 percent of total governmental fund expenditures and 14.3x governmental debt service, and access to external liquidity we consider strong;
• Very weak debt and contingent liability position, with debt service carrying charges at 22.7 percent of expenditures and net direct debt at 290.1 percent of total governmental fund revenue, as well as high overall net debt at greater than ten percent of market value; and
• Strong institutional framework score.
Asked about the point S&P made about Donna having a “weak” economy, Silva said: “Donna is not a wealthy community, not yet, but that is okay because when you look at our financials and our economic indicators, what they point out is that we have people coming into the community to spend money. Which is where the bridge comes in. When you read the report and you look at the indicators, it points to the bridge, it points to trade. And, all of this is happening without commercial trucks. It is going to get even better when we have commercial trucks crossing our bridge.”
Silva provided a series of charts to the Rio Grande Guardian showing Donna’s economic indicators. The charts start in 2007 when the city started to build its international bridge. The bridge was completed at a cost of $30 million and opened in 2010.
The city’s tax roll for 2007 was $278,379,965. Last year it stood at $440,108,919. The projection for 2018 is $540,688,244. Silva puts a lot of the growth down to the international bridge.
“We are crossing about 1,800 vehicles per day, which generates about $2.3 million per year from the tolls levied on southbound traffic. Northbound we get about 2,800 vehicles per day. We do not get any toll revenues from northbound vehicles but those are the people coming here to shop. Our population is about 24,000, but every day our community grows 12 percent, mostly because of the bridge.”
In 2007, the city’s property tax rate stood at 0.98 cents per $100 valuation. It ballooned to $1.25 dollars per $100 valuation in 2012 to 2014 when debt payments for the bridge were at their highest. Now, however, the tax rate is down to 0.98 cents and the projection for 2018 is 0.85 cents.
“In 2010, the city had to start paying debt for bridge,” Silva explained. “Our tax rate continues to go down. It is projected to be at 93 cents in 2017 and 85 cents following year. As our property values have grown our property tax rate has continued to go down. We see that trend continuing in the next several years.”
Donna’s sales tax revenues stood at $1,592,318 in 2007. They dipped to $1,483,691 in 2010 due to the recession. By 2015 they had climbed to $2,600,863 and are projected to be at $3,038,998 this year. The projection for 2017 is $3,494,848. By 2018 sales tax revenues could be at $3,669,590.
“Between 2010 and 2015 we more than doubled our sales tax revenues,” Silva was pleased to report. “We project to be over the $3 million mark this coming year. That trend will continue. It is a big accomplishment for a community that was struggling.”
Editor’s Note: The main image accompanying this story shows a groundbreaking event next to the Walmart superstore in Donna, which is situated on the corner of Salinas Boulevard and Interstate 2.
Editor’s Note: This is the first in a three-part series on the City of Donna and how it turned around its financial fortunes.