DALLAS -- Texas will sell the first of $250 million of state-backed bonds next month to finance local water projects in the impoverished colonias along the U.S.-Mexico border.
The Texas Bond Review Board yesterday approved six series of taxable and tax-exempt bonds that include $5.4 mullion of bonds to be sold by the Texas Water Development Board as part of its program to aid the economically distressed areas along the border.
The two tax-exempt series will be the first state general obligation bonds sold under the program that will require general fund money to pay debt service in the early years of the loans on four projects totaling $14 million.
Tom Pollard, executive director of the review board, said the agency's programs have historically been self-supporting, even though they are legally backed by a GO pledge.
Voters, however, in November expanded to $250 million the amount of water board bonds that could be used to bring clean water and sewers to south Texas's dozens of colonias, impoverished and unincorporated areas that together are home to about 300,000 people.
Already, the state is working on 16 projects that will require grants and loans totaling $100 million. Officials say the bond authorization should last up to five years, but they noted that it is still early.
"How quickly we fund the program really has a lot to do with how fast the engineers finish up their work," said Todd Chenoweth, director of the colonias program. "We have some projects that are just getting started."
Dan Black, acting development fund manager for the Texas Water Development Board, added, "After this, we're probably going to issue another $5 million or so in the six to 12 months."
The six series, $37.7 million issue will be sold competitively the week of Jan. 16 with delivery of the proceeds expected by mid-February. The issues will carry the state's double-A rating.
The Series B and D bonds will finance the colonias project, while four other series will fund other water loan programs. Of the total, $10.5 million will be taxable, the rest tax-exempt.
Only the two series for colonias projects will not be self-supporting. They will require up to $4 million from the general fund in the current two-year budget cycle to pay debt service.
Mr. Black said the money will finance loans for projects in Edinburg, Brownsville, and Mission, Tex., and for the El Paso County Lower Valley Water District Authority.
"There is probably another $8 million in grants that will come from other sources," he said.
The colonias program was developed after nearly 10 years of grassroots lobbying by organizations from South Texas. In 1989, voters authorized $100 million of a $500 million state GO bond program to be used to help develop water systems in distressed areas.
Last year, voters modified that, allowing up to $250 million of the 1989 bond authorization to be used for the program.
Up to 75% of that can be used for grants, which means debt service will be paid from the state general fund.
The remaining 25% is to be made available in low-cost loans that will be repaid by the colonias.