With bond counsel onboard, Palmview proceeds with plans to refinance debt
This article originally appeared in the Friday June 7, 2019 issue of the Progress Times.
The Palmview City Council authorized attorneys to “initiate the process of issuing bonds” Tuesday, part of a plan to refinance debt at a lower interest rate.
Muñoz and Frankel, a law firm that consists of state Rep. Sergio Muñoz Jr. and Martin Frankel, an attorney licensed in California, will serve as bond counsel.
“Basically, we’re just trying to see if we can save them money by getting them a lower interest rate,” Muñoz said.
City Finance Director Rachel Chapa said the plan to refinance old debt at lower interest rates — a process called “refunding” — remains preliminary.
Chapa said Wednesday she didn’t know how much money, exactly, Palmview planned to borrow. Whether or not Palmview retained a financial adviser is similarly unclear.
The City Council, however, discussed the proposal with Estrada Hinojosa, a Dallas-based financial services firm, during a workshop in March.
Bobby Villarreal, a vice president with Estrada Hinojosa, suggested that Palmview borrow $2.25 million at a maximum interest rate of 3.5% and pay back the money by 2031. That would allow Palmview to pay off three old loans with higher interest rates.
Interest rates on the city’s existing loans range from 5.25% to 7.25%. Villarreal estimated that Palmview would save at least $211,000 by consolidating the debt at a lower interest rate.
Whether or not that proposal remains on the table isn’t clear.
The City Council hired Muñoz and Frankel on May 28.
“The City of Palmview has had a working relationship with Muñoz & Frankel for years, as they facilitated successful bond issuances for the City in the past,” according to a statement released by City Attorney Eric Flores.
Muñoz and Frankel previously served as bond counsel for the La Joya Independent School District. While the law firm served as bond counsel, a company called Barcelona Strategies LLC served as financial adviser.
Mario Hinojosa, a paralegal who worked for Muñoz and Frankel, owned the company.
“In June 2012, at Frankel’s suggestion, Hinojosa formed Barcelona and registered it as a municipal advisor with the Commission. Hinojosa had no advisory experience—municipal or otherwise—when he formed Barcelona,” according to a Securities and Exchange Commission order published on May 9, 2018. “Throughout the relevant time period, Barcelona shared office space with the Firm and Munoz & Associates. Additionally, Barcelona’s registered address with both the Commission and the Texas Secretary of State is the same address as the Firm and Munoz & Associates.”
The Securities and Exchange Commission concluded that Hinojosa defrauded the school district and slapped him with a $180,000 civil penalty.
Muñoz said the Securities and Exchange Commission order, which didn’t accuse him of wrongdoing, wasn’t relevant to the law firm’s work for Palmview.
Mayor Ricardo “Rick” Villarreal said he trusts Muñoz, who represents Palmview in the Texas House, to handle the bond work.
“We’re helping him,” Villarreal said. “And, hopefully, he can help us help the city.”