Financial advisor talks airport terminal financing - Brownsville Herald: Local News

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Financial advisor talks airport terminal financing

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Posted: Monday, August 20, 2018 9:15 am

Financing a major capital project can be a complicated business, and the Brownsville airport’s new terminal building is no exception.

Noe Hinojosa Jr., the city’s financial advisor and CEO of Dallas-based Estrada-Hinojosa & Co., shed some light on the financial structure the city is proposing to pay for its new, $44 million terminal for Brownsville South Padre Island International Airport, a project in the works for more than one decade.

The city commission recently authorized the issuance of $25 million worth of certificates of obligation, a type of long-term bond often used by local governments to finance major projects. Unlike general obligation bonds, COs are not subject to voter referendum. The $25 million in COs would be paid off with interest over 25 years.

The first five years of debt payments would be covered by the Brownsville Community Improvement Corp. and the Greater Brownsville Incentives Corp. (each funded by a quarter-cent city sales tax), plus revenue from Passenger Facility Charges collected by the airport.

Hinojosa said that means no property tax would be levied during the first five years. In Year 6, if BCIC, GBIC or others opt not to continue covering the debt, then property taxes would kick in, though it would be a minimal impact on property owners, he said.

“Six years from now, if GBIC or BCIC says, ‘We’re not going to pay for it,’ it would require two cents of today’s property values,” Hinojosa said. “It’s not going to be a huge burden.”

sclark@brownsvilleherald.com

A more complete version of this story is available on www.myBrownsvilleHerald.com

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