EWCHEC Funding Requires Bill
It may take an act of state government to break ground at the East Williamson County Higher Education Center.

The complex nature of EWCHEC’s funding structure coupled with the ongoing banking crisis has led to immense problems in securing a $7.5 million loan to construct the 25,000-square-foot phase one building.

“We probably picked the worst time in the history of the United States to sell those bonds. It wasn’t something we did deliberately,” Temple College at Taylor Board Member John Nelson said.

At the heart of EWCHEC’s financial woes is a complicated arrangement that has made many banks skittish to lend money. EWCHEC’s projected annual revenue over the next 20 years consists of pledges from five government and higher education entities totaling $550,000. Those entities are the City of Taylor, the Taylor Economic Development Corporation, Texas State Technical College, Taylor Independent School District and Tempe College at Taylor Foundation.

The makeup of leading members of TISD, city council and TCAT Foundation’s board will change over the course of the 20-year pledge, and banks are worried that a new council or new school board could decide to end funding, and EWCHEC would default on their loan. Each of those three entities will have to re-approve their funding pledge each year.

“Banks couldn’t in good conscience give money because of that stipulation. One party may say no next year,” Jennifer Douglas, the city’s financial advisor, said at Wednesday’s meeting.

The Texas Constitution forbids city council, TISD and the TCAT Foundation from entering into a 20-year rock solid funding pledge. To circumvent that, representatives of those entities will file special local legislation exempting those entities from that law in this case. Bills of that nature usually encounter very little opposition, though the support of local state representatives will be integral to its success.

If that fails, special local elections could be held or the project could be delayed for a year in hopes that the credit market would recover, officials said.

If passed, TEDC would guarantee the bond sale, TEDC President Jason Ford said. TEDC would in effect become a cosigner to the $7.5 million debt. Should numerous parties become unable to contribute, TEDC would be responsible for paying the debt.

TEDC could issue the bonds outright. However, that debt would count against the city’s debt service and cause any future city bond sales to be subject to increased interest rates, Ford said. The city cannot issue more than $10 million in debt each year or else it would lose its “bank qualified” status, a distinction that lowers bond interest rates by about 1 percent.

“The council would be very disturbed if something happened to the city‘s bank qualification because of something TEDC did,” Mayor and TEDC Board Member Rod Hortenstine said. “I don’t want to see the city hamstrung and unable to issue bonds.”

Near the end of last year, the city issued $10 million in bonds for the construction of the East Williamson County Regional Park and completion of two water towers. The city plans to issue at least $7 million in debt this year.

Until legislation is passed, the 68-acre tract of land on which EWCHEC is planned to be built, located at the intersection of FM 973 and Carlos Parker Boulevard, will remain untouched. EWCHEC construction was originally scheduled to break ground in October 2008.

When complete, the center will serve 500 to 600 students, Nelson said. It will be located next door to the new Taylor High School. Eventually, TCAT will be rolled into EWCHEC.