EDINBURG — Financial advisers for Hidalgo County are now tasked with figuring out how to finance the courthouse project without Edinburg’s help after the city failed to respond to multiple requests from the county regarding a $30 million contribution that now seems very unlikely to become reality.
County leaders have been tiptoeing around the issue ever since Edinburg’s leadership changed last year following a hotly contested election, but on Tuesday, they were forced to acknowledge the new leadership is not interested in following through on the previous administration’s agreement to contribute $30 million toward the construction downtown.
“I guess there’s no easy way around it,” Hidalgo County Judge Ramon Garcia said during the commissioners meeting Tuesday. “Ever since the November elections in the city of Edinburg, up until that point in time, the city of Edinburg was totally committed toward being a partner in the construction of the courthouse.”
Garcia said he waited what he thought was “a reasonable time” before reaching out to the city at the end of 2017 to talk about the agreement.
“The city manager advised me that they were not ready yet, but that they needed to look into the financing of the city and some of the commitments that they had before they could meet with us, which sounded very reasonable,” Garcia explained. “And we went ahead and waited.”
He then sent a letter Jan. 25 to Edinburg’s new mayor, Richard Molina, formally requesting a sit down, but this time, the city did not respond, Garcia said. So he waited about three more months before sending Molina another letter dated May 1.
In his second letter, Garcia set a May 10 deadline because “I didn’t want to leave it just hanging,” he said. The deadline, however, came and went and still there was no response from the city.
“I did not receive any letter, any phone call or any communication from Mayor Molina or any member of the new city administration,” Garcia said. “So I have to assume they are no longer interested.”
Hidalgo County Commissioner Eddie Cantu lamented the lack of support from Edinburg and highlighted the help the county has offered the city in economic development incentives totaling about $39 million over the past decade.
“We’ve given up millions of dollars over the years, even though our elected officials have changed,” Cantu said. “We’ve always held tight. We’ve always stuck to the position made by the previous council, and so, you know, I guess we kind of expected the same thing. And till this day, we haven’t seen it.”
‘NOT A PRIORITY’
The Edinburg mayor says he is not shunning county officials.
“I’m not ignoring them by any means,” he told a Monitor reporter Saturday during his Coffee with the Mayor event. “It’s almost like, I got to make sure that our projects are done first before I look at their project. So really, it’s not a priority for me right now.”
Molina equated the $30 million commitment to a “gentleman’s agreement” between the previous administration and the county even though he was part of the council that unanimously executed two interlocal agreements and a memorandum of understanding regarding the donation.
“None of those agreements are something that I’ve really looked at,” he said about the alleged gentlemen’s agreements, “but I can tell you that it will tie up our finances and basically cancel out all of our projects if we committed to the amount that was committed previously.”
The mayor reiterated the construction of the courthouse is “100 percent” a county project, and said people don’t seem to understand that. Still, he said, he wants to be a “team player” and come up with a viable plan to help the county, whether it’s through “permits, infrastructure, or something that is going to benefit all of us.”
“Once we are done with our priority projects, we do want to come up with a resolution that we can present to them,” Molina said. “We just haven’t gotten there.”
The city’s new financial adviser was tasked with coming up with a possible contribution, but the adviser has yet to finish computing the numbers, Molina said, adding he will eventually make his way down to the county to discuss the issue.
“If we could get some kind of a notice, a courtesy call, a phone call, a letter, letting us know what their position is now, we would certainly appreciate that,” Garcia said during the commissioners meeting Tuesday. “But we have yet to hear from them.”
‘THE $64,000 QUESTION’
Hidalgo County leaders were counting on three sources of revenue to help pay for the courthouse: property taxes, court filing fees and the contribution from the city of Edinburg. But now that the city has backed down, the county is left with only two funding sources, said Noe Hinojosa, the county’s financial adviser.
“I think it’s an unfortunate situation that you find yourselves under,” he told county commissioners Tuesday, “but at the end of the day, (it’s) one that we can try to come up with the right answer for you in the next couple of weeks.”
Hinojosa will be tasked with figuring out how to finance the project without the $1.5 million the city was supposed to contribute annually — and also without having to increase the county’s tax rate.
But, can it be done?
“That’s the — I don’t want to say the $64,000 question — but that’s basically where we are,” Hinojosa said after commissioners court. “We think we can, but at the end of the day we got to … do the analysis.”
Previous estimates place the county’s annual payment somewhere between $10 million and $11 million, Hinojosa said. That figure does not take into account Edinburg’s contribution.
The idea was to have the city contribute about $1.5 million per year and to combine that with an estimated $1.5 million in court filing fees to reduce the county’s payment to about $7 million per year, Hinojosa said.
The county already has “a nice savings account” of “less than $4 million” from the court filing fees the Texas legislature allowed the county to collect beginning in 2016 for the construction of the new courthouse, Hinojosa said. So far, those fees have amounted to about $1.2 million per year.
Still, county leaders remain confident they can undertake the project without a blow to the taxpayers.
“We can afford to do this on our own. It’s just unfortunate that we’re not going to have a partner, but we’re ready and willing to do it on our own, and we have that ability,” Cantu said. “We even were able to lower the tax rate last year, and still we have the confidence that we can finance this.”
Sergio Cruz, the county’s budget officer, agreed.
“It will make our work a little bit more difficult — as far as financing this project and knowing that we won’t have that contribution — but I don’t think it’s anything that would make it impossible for us,” he said.
Hinojosa and Cruz are slated to present several funding options for the county commissioners court to consider in the next coming weeks.