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City of Mission liquidity concerns persisted through 2023

Correspondence and documents obtained through open records requests shows that liquidity issues in 2023 rippled further through the city of Mission’s operations than last summer’s deferral of economic development corporation payments.

Signs of cash flow issues popped up on at least one occasion before and after when the city says those funds were deferred.

According to the city, someone decided last June to defer payment of $2.7 million in sales tax money it owed to the Mission Economic Development Corporation to meet commitments on a few substantial road projects and a combination fire/police substation.

It’s not clear who.

The city says those projects are the root of other financial strains it underwent last year that weren’t previously widely known.

“These projects are pretty large for the city of Mission,” Assistant City Manager Andy Garcia said last week. “I mean, Inspiration Road, Taylor Road — those are residential but even to an extent commercial driveways, right. So that was the big, big impact as it pertains to the cash availability.”

At one point last year, the city’s lack of liquidity appears to have put over $8 million in state aid in jeopardy.

According to the Texas Water Development Board, the city submitted an Economically Distressed Areas Program assistance application in February of 2023.

The organization committed about $8.5 million to the city for sewer services northwest of the city, half of that money in loan funding and half in grant financing.

The city had trouble meeting the terms of its application.

Carleton Wilkes, a senior financial compliance advisor, emailed the city several times in early May about whether or not Mission could put up $3 million to be compliant with the project’s terms.

“The current compliance status of the City of Mission is extremely important to the ability of staff to recommend approval on funding applications,” Wilkes wrote in an email on May 1. “With present information, we are not in a position to confirm current compliance status, and cannot recommend going forward with the EDAP application being considered presently by TWDB.”

Garcia said the city was already noncompliant with TWDB on previous projects, and its council had received a letter saying as much as far back as June of 2022.

“It’s not uncommon occasionally to see where cities or municipalities or other entities that are focusing on water and sewer infrastructure to depart from that,” he said.

Garcia said the city enrolled in the board’s noncompliance program at that time. He said the city wasn’t aware of the EDAP’s requirements when it applied in 2023.

The capital improvement projects the city embarked on in 2023 worsened the situation, he said.

“The projects we had on-taken, of course, affected EDAP and it affected the whole deferral with the Mission EDC,” Garcia said.

The city did, ultimately, meet the state’s compliance requirements.

The board says the city received both loan and grant funding in December and should start construction in the fall of 2024.

Documents obtained through open records requests do not, so far, detail city officials’ decision to defer those payments to the MEDC.

Open records do show Assistant Finance Director Ezeiza Garcia asking for money from Texas National Bank in August of last year.

“We are wondering if you can provide us with rates for a line of credit or tax anticipation loan in the amount of $5 Million,” she wrote.

Considering a loan at that time, Garcia said, was perfectly reasonable given its project commitment — though council and City Manager Randy Perez weren’t aware of the loan solicitation at the time. Garcia said there’s not a procedure in place for requesting information on a loan, and that asking about one isn’t unusual.

“It’s not uncommon for municipalities to assess loans or lines of credit during these types of situations,” he said.

Garcia says the city is putting controls in place to address liquidity issues.

“The way we’re resolving this moving forward is we’re reevaluating the way that we handle those types of transactions, and of course we’re looking at expense controls,” he said.

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