As part of the 2018-19 budget, the Pearland City Council has asked the Pearland Economic Development Corporation to reallocate up to $12.9 million of its $19 million fund balance to pay off debt, a move that could save about $1.2 million in interest payments.
“There’s two ways to pay for projects—you take on debt and pay it off as you go, or you let your cash accumulate and pay directly,” PEDC President Matt Buchanan said.
An action item will likely come before the council in November once bond details are worked out, he said. The PEDC may not be able to allocate all $12.9 million to debt payments.
The debt, which carried a 2.2 percent interest rate, stemmed from projects undertaken before the PEDC board agreed on a strategy to generate a reserve to pay for projects in cash, Buchanan said. For example, the PEDC provided a $2.2 million contribution to rebuild Hooper Road and is fully funding the $6 million Hwy. 35 corridor project.
The PEDC receives almost $12 million a year in sales tax revenue, and its budget and projects must be approved by the City Council.
With the change, Buchanan said if PEDC needs to fund big projects long term, it will have to borrow, potentially at higher interest rates.