Faced with a tight budget and a lackluster credit rating, the Mission City Council discussed creative ways to pay for the Madero bridge project Tuesday.
The City Council held a joint workshop with the Mission Rail Bridge Action Board on Tuesday afternoon. They discussed ways to build the bridge — a project that will cost about $114 million, according to a feasibility study completed in January — without burdening taxpayers.
McAllen Economic Development Corp. CEO Keith Patridge, who serves on the bridge board, suggested two options: soliciting money from immigrant investors through the EB-5 visa program and creating an Opportunity Fund for the Madero bridge project.
The EB-5 Immigrant Investor Program rewards people who create jobs in the United States with green cards.
“Generally, it is a program where you have wealthy foreign investors,” Patridge said.
Under the program, a person who invests $1.8 million after Nov. 21 in a project that creates 10 permanent, full-time jobs may apply for a green card, according to information published by U.S. Citizenship and Immigration Services, which is part of the Department of Homeland Security.
The amount drops to $900,000 for people who invest in places with high unemployment rates, which the government calls “Targeted Employment Areas.”
“One of the things that investors in EB-5 fear is that they put their money in and then the project goes belly-up or it never gets finished,” Patridge said. “And they have invested their money but they don’t have a project that creates the required number of jobs.”
The Madero bridge project, with the potential to create a large number of jobs and backing from the city of Mission, may be especially attractive to EB-5 investors.
“What’s interesting, though, is it doesn’t require those jobs to be direct. In other words, it can be indirect jobs,” Patridge said. “And from that, when you look at the bridge, you start looking at the number of jobs supported by the trucks using the bridge, the amount of jobs created in customs brokerage houses, truck-related service companies, all of that counts towards those jobs that can be considered in that 10 jobs per investor. So you can stack multiple investors on that to get up to $100 – $200 million.”
The city of McAllen, which created an EB-5 Regional Center to solicit foreign investment, may be able to help Mission with the project.
Patridge also suggested that Mission research the federal Opportunity Zone program, which rewards people who invest in economically distressed areas with tax breaks.
“That bridge site is located in what’s called the ‘Opportunity Zone,’’ Patridge said.
People who want to reduce or avoid federal taxes may place their capital gains in what’s called an Opportunity Fund. The funds invest in Opportunity Zones.
Investors who keep their money in Opportunity Funds for a certain number of years may reduce or eliminate their tax bills.
“So those are just two,” Patridge said, adding later: “I would be more than happy to work with the other members of the committee here to research other options for funding.”
Before the Madero bridge project moves forward, however, the Mission City Council must approve a memorandum of understanding with McAllen and Hidalgo.
When the city of Mission partnered with McAllen and Hidalgo on the Anzalduas bridge, Mission agreed not to build a competing bridge without their permission.
In an attempt to kick-start the Madero bridge project, Mission convinced McAllen and Hidalgo to approve a memorandum of understanding.
Mission, which would own 37 percent of the Madero bridge, would cover all construction costs. McAllen and Hidalgo would pay Mission back with toll revenue, which could take decades.
Mayor Armando “Doc” O’caña supported the memorandum of understanding, but the City Council balked. That left members of City Council in the awkward position of being the biggest obstacle to building the Madero bridge — a project the mayor championed.
Concerns about the memorandum of understanding remain unresolved.
City Councilwoman Norie Gonzalez Garza said they could find alternate financing, but Mission needed to address the memorandum of understanding first. City Councilman Ruben Plata agreed.
“I think it’d be a great project for us to have a second bridge in the city of Mission,” Plata said. “Unfortunately, based on the financial position that we have, I don’t think that’s something we can afford.”
Plata said he would feel more comfortable if McAllen, which manages the Hidalgo and Anzalduas bridges, partnered with Mission.
“Alone is alone. Whether we go through the EB-5 or the Opportunity Zone funding, we’re still responsible for that,” Plata said. “I mean, the investors are going to be relying on us to pay them back.”
Plata suggested that Mission renegotiate the memorandum of understanding.
“If the MOU is not signed, I mean, with all due respect, I think we’re just wasting time,” Plata said.
O’caña agreed to take the memorandum of understanding back to McAllen for additional discussion.
“I understand the issues that are being pressed,” O’caña said. “And I’m going to take it back.”
This article originally appeared in the Friday Sept. 27, 2019 issue of the Progress Times.