DALLAS — The South Texas town of Donna has become a growing crossroad for international business since the opening of the Donna-Rio Bravo International Bridge over the Rio Grande last December.
With prospects for rising toll revenue and new business from Mexico via the bridge, the town of slightly less than 18,000 people this week earned a Standard & Poor’s upgrade to BBB from BBB-minus.
“Despite short-term operating and capital pressures, Standard & Poor’s believes the bridge’s expected long-term effects on the local economy and the city’s finances support the upgrade,” ratings analyst Emmanuelle Lawrence wrote. “City officials expect the bridge to provide additional revenue flexibility.”
Although the population of Donna classifies it as a small town, it is part of the four-county Lower Rio Grande Valley that has a population of about 1.2 million. Hidalgo County, which includes Donna and the county seat of McAllen, is one of the most populous with about 680,000 people.
Donna joined with Hidalgo County, the Texas Department of Transportation and the federal government in funding the $71.3 million bridge, covering about half the cost with a 2007 issue of certificates of obligation.
Cross-border trade and natural gas production make up most of the local economy while manufacturing, agriculture, and government provide varied employment opportunities.
The increase in cross-border trade of the past decade has made Hidalgo County one of the nation’s fastest-growing.
The population has increased by 19.7% since 2000.
Like many Texas border towns, Donna is relatively poor. Per capita income is just 65% of the nation’s average.
A market value of $28,628 per capita, which is significantly higher than five years ago, also reflects below-average county wealth levels, according to Standard & Poor’s.
The rating agency lowered its outlook on Donna’s general obligation debt to negative after the 2007 issue for the bridge but lifted that to stable two years later.
Funding for the feasibility studies and other start-up costs related to the bridge project drained the city’s general fund balance in 2006, and Donna has been working to improve its financial position since then.
“In our view, Donna’s financial position has improved,” Lawrence said. “Since ending fiscal 2006 with a low fund-balance position, the city has posted consecutive operating surpluses and improved its financial position.”
