At its respective meetings Oct. 12, both the Magnolia Economic Development 4A and 4B corporations approved agreements with the city of Magnolia regarding payment of Texas Department of Transportation state infrastructure bank, or SIB, loans. The loans were also adopted into the corporations’ respective 2023-24 project lists, which need to be approved by Magnolia City Council.

SIB loans can be used to construct, maintain or finance eligible transportation projects, according to TxDOT’s website.

The approval of the agreements avoids the suspension of operations for the 4B Corp., which would have happened had the corporation taken on a fourth SIB loan payment on top of the three it was previously paying for, Magnolia Economic Development Director Rachel Steele said at the Aug. 10 4B Corp. meeting.

In a nutshell

The 4A and 4B corporations receive funding from one-half cent and one-quarter cent of sales tax revenue, respectively, Steele said previously. The corporations are separate entities from any other board or commission of the city of Magnolia and are each overseen by a board of directors and City Council, according to the MEDC's website.



The city of Magnolia has four SIB loans with TxDOT, according to its website.

  • 2011: $2 million used for utility relocation along FM 1774 to north of FM 1488
  • 2017: $1 million used for utility relocation along FM 1774
  • 2021: $892,000 used for utility relocation along FM 1488
  • 2022: $2.8 million used for FM 1488 widening from FM 1774 to FM 149

The 4A Corp. adopted as projects paying the remaining balance of the 2011 and 2017 loans, which totals $951,666.82, Steele said in an Oct. 18 email. Should Magnolia City Council approve the 4A project list, the corporation will pay off the loans in FY 2023-24.

Meanwhile, the 4B Corp. adopted paying the 2021 SIB loan as a project for fiscal year 2023-24. Should Magnolia City Council approve the 4A project list, the corporation will pay this fiscal year’s payment of $1,678.48, according to the agreement.

  • Each year, the 4B Corp. will need to approve the 2021 SIB loan payment as a project on its annual projects list to move forward with that fiscal year’s payment, according to City Attorney Leonard Schneider.

The city will take on paying the 2022 SIB loan, Steele said in an email.

"The city, and 4A and 4B in conjunction with TxDOT are continuing to work together to fund the improvements in infrastructure needed for the growth that our community is experiencing," Magnolia City Administrator Don Doering said in an email Oct. 18.

How we got here



City officials previously asked the 4B Corp., which had been spending $292,994 annually to pay the 2011, 2017 and 2021 SIB loans, to take on the payment of a fourth SIB loan, Steele said at the Aug. 10 4B Corp. meeting.

Had the 4B Corp. taken on paying the fourth SIB loan—the 2022 loan totaling $2.8 million—the payments would have exceeded the corporation’s operating budget, and subsequently, the corporation would have needed to suspend operations, Steele said Aug. 10.

At the Aug. 10 meeting, the 4B Corp. took no action on assuming the payments for the fourth loan to allow Steele to get more information. At the Sept. 14 meeting, the 4A and 4B Corps. established a SIB loan negotiation subcommittee.

That subcommittee is responsible for proposing the loan repayment agreements that both corporations approved, Steele said at the Oct. 12 meeting.


What else?

With the 2011 and 2017 SIB loans off of the 4B Corp.’s balance sheet, it frees up around $262,000 a year, Steele said. With some of that extra money, the 4B Corp. approved:

Magnolia City Council will consider approving the 4B Corp. project list at its Nov. 14 meeting, Steele said.

Also of note

Both the 4A and 4B Corps. approved motions to notify Liles Parker PLLC of a 30-day termination notice for its services at its respective meetings on Oct. 12. Schneider, who works at Liles Parker PLLC, was serving as counsel for both corporations.



Schneider also serves as counsel for the city of Magnolia.

During discussion of the termination notice at the 4A meeting, Schneider’s remarks touched on conflict of interest concerns.

“If I felt there was [a conflict of interest], I would step down and advise y’all to get somebody for that particular project,” Schneider said during the 4A meeting. “So far, I haven’t been pushed to the precipice to do that yet. I’ve always been able to work out agreements, so I appreciate the concern on that, but I would obviously let you know if I thought there was a conflict.”

During the meeting, 4A Corp. President Robert Franklin said there was not a concern on legal advice the corporation had been given.


“I think the biggest thing was the worry about if we did get in a situation where there was a conflict of interest, then we’ve got to go find new representation that may not know as much [about] what’s going on,” Franklin said.

Both the 4A and 4B Corps. approved a letter of engagement with Messer-Fort for legal services. Steele said Messer-Fort will be able to attend the corporations’ November meetings set to take place Nov. 9.

Looking ahead

Schneider said Magnolia City Council will consider approving these loan repayment agreements and the corporations’ project lists at its next meeting Nov. 14.

Learn more

View the 2011 SIB loan repayment agreement below.

View the 2017 SIB loan repayment agreement below.



View the 2021 SIB loan repayment agreement below.