Eagle Pass City Council Approves Resolution to Establish $75 Million Public Utility District for Private Industrial Park, Citizens’ Pleas Disregarded
By: Ricardo E. Calderon, Eagle Pass Business Journal, Inc., Copyright 2023
After a lengthy public hearing, the City of Eagle Pass, Texas City Council approved by a split vote of 3 in favor and one abstention a resolution authorizing the establishment of the City of Eagle Pass Public Utility Improvement District No. 1 for the use and benefit of a private industrial park at its regular meeting held on Tuesday, November 7, 2023, which may issue up to $75 million in certificates of obligations (bonds) to pay for improvements, infrastructure, and related costs of a private industrial park named Empire Industrial Park while disregarding taxpayers pleas against the resolution and to table the issue for further scrutiny by taxpayers.
The City of Eagle Pass received on August 4, 2023 an application to establish the City of Eagle Pass Public Utility Improvement District No. 1 by the owners of Empire Industrial Park, located at the intersection of FM 1021 (El Indio Highway) and Loop 480, pursuant to Chapter 372 of the Texas Local Government Code. The property owners of Empire Industrial Park include Beyer Junfin, Sonia V. Junfin, Sergio Zamora, and Linda Zamora.
At the meeting, three Eagle Pass citizens spoke against the approval of the resolution establishing the new City-owned Public Utility Improvement District No. 1 or advocated the agenda item be tabled while another citizen spoke during the public hearing itself requesting the City Council first take care of the many public infrastructure problems within the city limits instead of establishing and issuing up to $75 million in bonds to develop the infrastructure and improvements of a privately-owned industrial park located four miles from the city.
During the Citizens Communication on the agenda, longtime Eagle Pass citizen and taxpayer Trinidad Flores requested City Council to deny the resolution establishing the City Public Utility Improvement District No. 1 because it would cause the City to expend additional funds to provide police protection, fire protection and ambulance services, public parks, and other city-services to the industrial park of 2,300 Acres, adding another 30 percent of property to the city limits. Flores noted this demand for increased city services will require hiring of additional city employees, purchasing of vehicles, goods and equipment to provide these services, growing the City’s fiscal budget and increasing taxpayers ad valorem taxes to pay for these increased costs. Flores cautioned City Council should first look out for the interests of citizens, taxpayers, and community, and not serve the interest of land developers or political contributors who are looking to get city approval to take advantage of these limited resources available.
Also during the Citizens Communication, Leticia Mancha-Zuazua echoed the concerns raised by Trinidad Flores and requested City Council not to grant the resolution establishing the City Public Utility Improvement District No. 1 while speaking in the Spanish language for the benefit of Spanish-speaking citizens.
Eagle Pass citizen Javier Mancha also addressed City Council during Citizens Communication requesting the City Council “table” the agenda item to allow the citizens and City more time to review and research the many questions he and the taxpayers have concerning the establishment of the City Public Utility Improvement District No. 1. Mancha asked why does the City Council want to establish the Public Utility Improvement District No. 1? If approved, what will the taxpayers be obligated to provide? Where will the infrastructure come from? Do the private land owners own water rights on these 2,300 acres? What role will the City of Eagle Pass have in this District? Why have the establishment of this District not been socialize among the taxpayers of Eagle Pass even though the City Council is committing millions of taxpayers monies? Has the City paid the $5 million of its share for the new four year Sul Ross State University campus? The taxpayers are owed the courtesy from the City Council to answer these and other questions regarding the establishment of this District?
During the public hearing, Eagle Pass citizen and advocate Jessie Fuentes requested the City Council to deny the resolution establishing the City Public Utility Improvement District No. 1 because the City Council should be taking care of the so many problems within the city limits before those of a private property four miles outside the city limits and be taking care of the “common folks” who helped them get elected. Fuentes recommended the City Council should instead establish a “Community Block District” to improve every block within the city limits on a block by block basis like the previous Model Cities program. Fuentes cites such as McAllen and Harlingen have Model Cities in their communities. “There are so many things we need to improve within our existing city limits before we go investing in a private equity investment” such as the private industrial park.
City Finance Director Jesse Rodriguez presented City Council with a brief explanation of the establishment of the Public Utility Improvement District No. 1 would entail and the obligations of the City.
Rodriguez called upon the City Bond Counsel, Juan Aguilera, to assist him and explain to City Council the process of issuing up to $75 Million of certificates of obligations (bonds) to pay for the improvements and infrastructure of the private industrial park. Both Rodriguez and Aguilera explained to City Council that the City will issue Special Assessment Revenue Bonds subordinated to the investors or bond holders and will not be liable for the bonds in the event of a default.
Rodriguez and Aguilera advised City Council that only individuals or entities that purchase a property within the private industrial park will be assessed an extra assessment (tax) to pay for the bonds, and that up to 80 percent of the special assessment will be used to pay for the bonds while the City would have up to 20 percent to work with.
Mayor Rolando Salinas, an attorney, advocated for the establishment of the Public Utility District No. 1 stating the city is growing and needs industrial parks for satisfying the international trade the city is anticipated to have in the future and the City will not be liable on the bonds in the event of a default, citing Public Utility Improvement Districts are found in large cities such as Laredo and McAllen.
City Councilwoman Monica J. Cruz, a licensed Realtor and Maverick County Planning Director, also advocated in favor of the establishment of the Public Utility District No. 1, citing the taxpayers will not be liable for the bonds in the event of a default, but rather the property owners who purchase properties within the private industrial park through payment of a special assessment fee (tax) and the bond holders.
Cruz stated the Public Utility Improvement District No. 1 is only for 461 acres out of the 2,300 acres within the private industrial park. Thus, if the Public Utility Improvement District No. 1 issues up to $75 million in bonds, those monies will go towards the improvements and infrastructure of the 461 acres only. The remainder of the 2,300 acres may be developed in mixed real estate categories such as residential, commercial, and other uses of land in the future.
Cruz added that “we usually do not say ‘No’ to Developers.” Cruz opined that the risk is on the Developer and the Developer on this project has come forward to take the risk.
Cruz also stated that “I promise to be more transparent and open” with the taxpayers.
One Eagle Passan watching the public meeting on the City’s Facebook Page questioned if this real estate investment is so good, then why don’t they obtain private equity funding in the private market?
Councilman William “Billy” Davis was the only council member to have many questions regarding the establishment of the Public Utility Improvement District No. 1, citing the City Council owed a fiduciary responsibility to look after the best interests of the taxpayers.
After almost an hour long public hearing, the City Council proceeded to the agenda item calling for approval of the resolution of the establishment of the City Public Utility Improvement District No. 1 with Councilman Mario E. Garcia making the motion to approve it and Cruz seconding the motion, passing on a split vote of 3 in favor including Mayor Salinas, Cruz, and Garcia while Councilman Davis abstained from the voting. Councilman Elias Diaz was absent.
The City Council also approved to authorize the Interim City Manager Ivan Morua and Legal Counsel to negotiate an agreement with Empire Industrial Park on the establishment of the Public Utility Improvement District No. 1, however, Council member Davis requested that the proposed agreement be presented to City Council for review and approval.
Many Eagle Pass taxpayers are concerned that the City Council is willing to create a new City-owned legal entity in the form of the Public Utility Improvement District No. 1, issue up to $75 Million in bonds, and take a second-lien on its own debt. No reasonable banker or lender would recommend taking a second lien on any loan or debt because the first lien holder, in this case the bond investors, will have the first lien and priority-calling the shots in the event of a default. Taxpayers have too many questions concerning this project and want the City Council to rescind or reconsider its approval. Some taxpayers have discussed petitioning for a referendum election in May 2024 to decide whether to approve or disapprove the establishment of the Public Utility Improvement District No. 1.
One taxpayer cautioned that establishment of the City Public Utility Improvement District No. 1 is a “Trojan Horse” against taxpayers as it will establish precedent for future private real estate developers to seek public funding for their private investments, while another taxpayer cautioned that what good will it do if the City Economic Development Department and City Council are liberally granting tax abatement agreements to anyone who asks for one. City taxpayers want answers and relief on their rising appraised values and higher ad valorem taxes on their properties.
