McAllen budgets $21 million to expand City Hall

The city of McAllen may spend $21 million to expand City Hall.

During a meeting on Monday afternoon, the City Commission voted to budget $21 million for the project.

“Traditionally, for an expansion of this magnitude — for a project like this — we would borrow money,” said City Manager Roy Rodriguez. “Except that, in this case, it is the opinion of the City Manager’s Office that we have the cash in hand.”

Under the proposal, McAllen would build an approximately 45,000-square-foot annex behind City Hall.

Under the proposal, McAllen would build an annex behind City Hall. (Image courtesy of the city of McAllen.)

The annex would be five stories tall, with a parking area on the ground floor and four additional floors of office space. Eduardo Mendoza, the city director of engineering, estimated the project would cost about $21 million.

As part of the project, McAllen may also remodel the existing building, which opened for business in 1995. Major changes may include moving the City Commission chambers to the ground floor and restricting public access to parts of the building where employees work.

In December, the City Commission approved a $40,000 contract with Milnet Architectural Services to conduct a feasibility study.

Construction may begin within the next two years.

Rodriguez recommended that McAllen transfer $21 million from the city General Fund to a new construction fund. McAllen will not actually know the exact cost of expanding City Hall until the project is finalized.

“We know we’ve got a lot of work before we establish that number,” Rodriguez said. “But we have the cash.”

The transfer would reduce the General Fund balance from $78.5 million to $57.5 million, according to documents reviewed by the City Commission.

McAllen received millions from the federal government during the pandemic. The money provided the city with an unprecedented financial cushion.

The city, though, must either spend the money or find low-risk investments with a rate of return higher than inflation — a difficult task.

“We have money saved up,” said Mayor Javier Villalobos. “With inflation, the value of that money goes down every day.”

Under the proposal, McAllen would build an annex behind City Hall. (Image courtesy of the city of McAllen.)

City Commissioner Omar Quintanilla had concerns about setting the money aside for City Hall without more discussion.

McAllen could spend $21 million on many other things, Quintanilla said, including an aquatic center or tennis complex. The City Commission discussed both projects Monday during a workshop.

“It’s really the opportunity cost,” Quintanilla said.

City Commissioner Seby Haddad said moving the money to a separate fund would reduce the amount of cash in the General Fund and promote a more conservative approach to spending taxpayer money.

“And it lets the public know where we’re allocating it,” Haddad said.

McAllen isn’t actually spending $21 million, Haddad said. The money will simply be set aside.

If the City Commission decides to cancel the project or spend the money on something else, it can transfer the money back to the General Fund or any other fund.

“Realistically, we’re still holding onto it,” Haddad said.