McAllen Borrows $49.4 Million More for Its Desalination Plant. About $100 Million More Is Still Needed.

McAllen's City Commission on Monday, Oct. 12, approved a $49,355,000 bond issue to keep building the city's brackish groundwater desalination plant. The McAllen News Tribune, which reported from the meeting transcript, called it the third of five planned yearly issues. The Texas Water Development Board's 2025 commitment lists five series in all: $30 million in 2025, this $49,355,000 in 2026, then $51,350,000, $44,850,000 and $19,680,000 in 2027 through 2029, or $195,235,000 in total.

The terms

The bonds will be sold through the Texas Water Development Board's State Water Implementation Fund for Texas program at a subsidized 4.3 percent rate. Financial advisor Anne Burgerer told the commission the subsidy would save the city more than $6.6 million in interest over the life of the bonds, compared with an estimated open-market rate of 5.10 percent. Counting last year's issue as well, she projected savings of more than $10.6 million.

Burgerer also said about $100 million more will be needed to finish the plant, with three more issues expected in 2027, 2028 and 2029. The state board has committed to the program for five years, with the subsidy locked in for that period.

"This issuance is in furtherance of the incremental debt that we are taking on to build the brackish groundwater desalination plant," Mayor Javier Villalobos said. "That is progressing nicely."

Why it matters

Brackish groundwater is salty water below ground. Treating it gives a city a source of drinking water that does not depend only on the river. For a border city, that is a serious need, and a lower interest rate is a real benefit to ratepayers.

But a cheaper loan is still a loan. The mayor called it "incremental debt," and that is accurate. Residents and McAllen Public Utility customers should keep track of the total as each new piece is added. They should also ask what the finished plant will cost to run every year once it is built.

Other business

The commission moved three firms to the next step in choosing a construction manager for a new City Hall: D. Wilson Construction Company, Small Glass Contractors Inc. and Noble Texas Builders LLC. Staff said the vote creates no financial obligation. The firms will submit pricing, and a final pick is expected in 30 to 45 days. One commissioner asked for a future update on the design and timeline.

The commission also approved:

• A $59,800 contract with Legacy Engineering Group of San Antonio to update the parks master plan for the next 10 years

• A sister city agreement with Tampico, Tamaulipas

• 63 city-initiated rezonings moving properties into the new Unified Development Code

Other Texas governments are borrowing at similar rates; Midland ISD sold $500 million in bonds at 5%.

The new City Hall is the next big-ticket item. Once the firms return with prices, residents will finally see what it costs.

Hero photo: Anthony Acosta via Wikimedia Commons, CC BY-SA 4.0, cropped and resized.