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Rather than get entangled in the transportation department’s requirements for a loan to widen Highway 24, the Paris Economic Development Corp. has elected to pay its $1.45 million share in cash.
“Should we just pay the $1.45 million to TxDOT and not have any obligation and get them out of our business?” PEDC Director Steve Gilbert said during a special meeting Friday.
Texas Department of Transportation has indicated such an arrangement is workable. Many of the details are still being finalized in the agreement. The Sulphur River Regional Mobility Authority hopes to have it all settled in less than two months.
TxDOT will fund most of the $38.6 million project to widen Highway 24 to four lanes in Delta County. SuRRMA has taken a loan from TxDOT’s State Infrastructure Bank to pay for the remaining $4.5 million.
Using a SIB loan is a fairly common practice. But where most regional authorities have toll revenue to pay them back on their own, SuRRMA relies on funding from other regional bodies to pay for the loan – Delta County, Cooper, Paris, Lamar County and PEDC.
PEDC delayed a resolution at a previous meeting that would have solidified its repayment obligation. The resolution had a great deal of language governing PEDC’s debt. TxDOT wanted to make sure payments for the highway project remained on an equal footing with any other debt PEDC might take on. It started largely with existing bond debt the corporation is paying off after an old deal with Paris Packaging.
PEDC had looked at a defeasance process that would remove the bonds from its books, putting $2.37 million in an escrow account for a third party to pay it out.
“The TxDOT lawyers have put a lot of restrictive language in that resolution,” Gilbert said. “They could basically control our ability to do or not do something like the deal with Paris Packaging.”
The defeasance would get the debt off of PEDC’s books, but the cost might not have made it a good deal, Board President Pike Burkhart said. Today’s low interest rates meant it made more sense to pay it out rather than put more than $2 million into an account.
Plus, he said, it wouldn’t gain much for the economic development corporation on the TxDOT side, because the state agency would still want the same restrictions on future debt.
The defeasance would simplify the resolution, Gilbert noted.
“Would that keep them from hamstringing us?” Board member Douglas Wehrman asked.
“No,” Gilbert replied.
If the project winds up coming in under budget, PEDC won’t get any kind of refund. Instead, any leftover funds would be applied to the SIB loan, lowering the payments for the city and county.
“But if there is a cost overrun, we would pay a pro rata share of the overrun,” Gilbert said. “That’s been on the table since the beginning.”
The move did require a $1.45 million amendment for the current budget to pull the money from reserves and pay TxDOT.
In other business, the board: