| | |  Business News | November 2009 
Development Bank Funds over US$1b in Border Projects
 Kent Paterson - Frontera NorteSur
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November 24, 2009
In a milestone of sorts, the North American Development Bank (NADB) recently exceeded the billion dollar mark in financing projects for the US-Mexico border region. Chartered as a result of the environmental side agreement to the North American Free Trade Agreement (NAFTA), the NADB provides loans and grants to both US and Mexican communities.
The latest projects funded by the bank include road paving in Tijuana, wastewater treatment and systems in Nuevo Laredo, and storm water systems in El Paso, Texas. In El Paso, the bank has agreed to purchase $53 million in 20-year municipal revenue bonds at a 5.38 percent interest rate.
Juan Antonio Flores, NADB spokesperson, told Frontera NorteSur the deal was a good one for the Texas border city, since 35 percent of the interest payments on the loan will be reimbursed to El Paso by federal stimulus funds. "They get interest brought down," Flores said.
The NADB official said construction of the system, which should help El Paso withstand flooding disasters like the one that struck the city in 2006 as well recharge the stressed Bolson Hueco Aquifer, is expected to commence in January 2010.
Besides the Tijuana road paving contracted out to the Cemex company, the NADB has agreed to finance a $22 million water and wastewater project for both the Baja California border city and Playas de Rosarito to the south.
The NADB has been especially active on the Mexican side of the border. In Nuevo Laredo, for instance, a $57.7 million wastewater treatment plant and system was recently inaugurated in a ceremony attended by Tamaulipas Governor Eugenio Hernandez Flores, Nuevo Laredo Mayor Ramon Garza Barrios, and NADB Deputy Managing Director Hector Camacho.
The San Antonio-based bank channeled $25.4 million for the project, including $20 million in grant funds from the Border Environment Infrastructure Fund, which is supported by funding from the US Environmental Protection Agency (EPA). The new wastewater treatment system is expected to reduce contamination of the Rio Grande shared by both Mexico and the US. Additionally, NADB is providing $84 million to Nuevo Laredo for storm water collection and street paving purposes.
"In addition to the obvious environmental benefits for Nuevo Laredo, these projects will also help from an economic development standpoint and strengthen competitiveness," the NADB's Hector Camacho said in a statement.
According to Flores, several factors are behind the surge in NADB funding in northern Mexico, including a greater willingness on the part of Mexican governments to take on debt, the availability of matching funds from the EPA, and the Calderon administration's drive to increase wastewater treatment capacity in the country.
"We're more active in Mexico," Flores said. "There's always been a greater need in Mexico and the terms of loans are affordable in Mexico."
NADB loans, which charge Mexican clients between 8.6 and 10.5 percent in interest, are less expensive than those offered by commercial banks south of the border, Flores said. Although the NADB rates would be considered high for US communities, which get lower interest rates from the bank because they are pegged to the US Treasury indexes, current bank interest rates for Mexico are "still good" for the country, he maintained.
Back in the Paso del Norte borderland, NADB funding of nearly $23 million in grants from the EPA-sponsored Border Environment Infrastructure Fund is in the pipeline for four water quality and wastewater treatment projects in Dona Ana County, New Mexico. A project planned for the town of Anthony south of Las Cruces, New Mexico, includes arsenic removal.
In the entire border region, the NADB is helping fund 132 environmental infrastructure projects valued at $1.07 billion, according to a bank tally issued this month. In terms of the geographic breakdown of the projects, about 70 percent are situated in Mexico and 30 percent in the United States, according to Flores.
Kent Paterson is the editor of Frontera NorteSur Center for Latin American and Border Studies at the New Mexico State University, Las Cruces, New Mexico.
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