EDINBURG, RGV – CPA Noel Garza says Edinburg Economic Development Corporation’s annual audit for the year ending Sept. 30, 2016, was performed in accordance with accounting principles generally accepted in the U.S.A.
Edinburg EDC, which uses a one-half cent economic development sales tax for creating jobs and improving quality of life in the city, is required by law to have an annual audit. Garza’s firm, Noel Garza, CPA, PC, conducted the independent audit.
“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Edinburg Economic Development Corporation, as of September 30, 2016, and the respective changes in financial position, the respective budgetary comparison for the general fund thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America,” Garza said.
Edinburg EDC’s total assets for the year ending Sept. 30, 2016, were $19 million. However, in a discussion at a recent EEDC board meeting, Garza said this number is somewhat deceiving because EEDC has an outstanding receivable from Santana Textiles of $14.5 million.
“These were funds borrowed by the EDC and loaned to Santana Textiles. Initially, it was a combination of loans from the Comptroller but was then consolidated and a bond was issued to consolidate that debt,” Garza said. “I do not want people to walk away thinking there is $18 million available. It is kind of confusing.”
Garza said the biggest component of the general fund is the fund balance. In Edinburg EDC’s case, the fund balance is $18.8 million.
“That is typically difference between what you have and what you owe. The fact that you have this (Santana Textiles) loan receivable kind of skews the fund balance number. In reality, you don’t have 18 million at your disposal, because $14.5 million is tied up in this receivable. In reality, you have got a $4.3 million fund balance available in cash and investments and temporarily restricted cash.”
Edinburg Mayor Richard Garcia is president of EEDC. In an interview with the Rio Grande Guardian, Garcia said he was not too concerned that Santana Textiles, a Brazilian company with a large denim manufacturing plant in Edinburg, owes so much money to the EDC.
“We backed up a loan. The amount is $10 million, the investment on the ground is $68 million. So, we are well covered. Of course, we don’t want to be in textile business. The good news is on a resale we would make a killing. But that will not be necessary,” Garcia said.
“There was another little slump, with regard to NAFTA, because Mexico had put a stop on their orders. Santana has between 200 and 300 employees, they are fully operational. The good news is they have resolved things with Mexico and they are selling again. Their product is growing, constantly. Their bank contacts have told them, once they have a positive cash flow for a period of six months to a year, that they would be interested in doing what is called a take-out loan, so they could pay off that loan. I see that happening soon. We intervened to help them get that $10 million loan get finished.”
The Edinburg EDC Board of Directors is comprised of Mayor Garcia as President, Harvey Rodríguez, Jr. as Vice President, Elías Longoria, Jr., as Secretary/Treasurer, and Richard Ruppert and Dr. Peter Dabrowski as Members. Gus Garcia, not related to the mayor, is executive director of the EDC.
CPA Garza listed what he considered the financial highlights of the independent audit:
- At fiscal year-end, total fund balance for the General Fund was $18,898,105.
- General Fund revenues were $6,528,976 and General Fund expenses were $5,173,595.
- General Fund other resources were $746,165.
- EEDC’s governmental activities reported program expenses of $17,085,952. General revenues totaled to $7,787,984 resulting in a decrease in net assets of $9,297,968.
- At year end, EEDC’s governmental activities reported combined total net assets of $8,343,479.
Mayor Garcia said he is proud of the work Edinburg EDC has been doing in developing the city’s economy.
“I am a business major. I went to Pan Am and got my undergraduate degree in business management. You learn about business risk and how you always take calculated risk. You look at the market. We utilize the university. They will give us predictions for the future, where growth is going to be, what is going to happen. We make investments,” Garcia said.
Garcia gave his interview following a groundbreaking ceremony for a new transit terminal the City of Edinburg, Edinburg EDC, and Valley Metro are building between City Hall and UT-Rio Grande Valley on University Drive.
“This property we are standing on today, we spent $350,000 on this and I remember being criticized when we bought the property. But, every property that we have worked with, that we have developed, for example, where the new Marriott Hotel is, there are some huge apartments to the rear of it, they were all leased before they were finished. These were investments we made as an EDC. They have paid off ten-fold,” Garcia said.
“The people that have been successful in our area, that is what they do, they buy and sell properties. I think we have gotten it right. The powers that be, the auditors, the people that know numbers, have given us the certification of approval. I think that is important.”
Garcia added that since his time on the EDC board, the entity has been exceptional stewards of taxpayer dollars.
“To this date, I know that, at least since I have been working with the EDC, we have not had a negative yet. We have had situations where people have got bogged down for a little bit, for example, Santana. They came in, just like The Shoppes, right when the bottom fell out of the market, in ’08, and they survived it and now they are thriving.”