Palmview City Council on Tuesday voted to borrow nearly $ 5 million to start a solid waste service, fix drainage issues and pave streets.
Palmview will buy two garbage trucks, two brush trucks and about 4,000 trash cans, City Manager Michael Leo said. They will form the core of the new solid waste service and replace Republic Services, a private company that manages garbage collection.
“And what is important to note is that the debt for this will be repaid with the income that residents are already paying for garbage collection services,” said Leo, who continued: “As we add more debt, we add an income stream to pay off that debt.
Palmview borrowed the money in two parts.
The city borrowed $ 3,245,000 to purchase equipment under a contract under the Public Property Financing Act, which is less formal than issuing bonds and does not require l approval of voters.
Palmview will spend the money to start the solid waste service and purchase other equipment.
TIB, a Farmers Branch, Texas-based bank, offered the city an interest rate of 1.99%. Palmview will pay off the debt by 2036.
The lowest interest rate will save Palmview thousands.
“TIB came in very, very, very aggressive,” said David Gonzalez, director of PFM Financial Advisors, who advised Palmview on debt issues.
The debt also came with favorable terms.
“Not only can you pay off those bonds, if you can find a better rate, at any time, without penalties, but you can also pay off those bonds earlier without any kind of penalties,” Gonzalez said.
Palmview got the low interest rate thanks in part to clear audits, prudent financial decisions, and over $ 1 million in reserves.
“They look at the city’s finances, the budget, they look at your debt policies, your management policies. They see everything as one unit, ”Gonzalez said. “And that’s a testament to City Council and to the City of Palmview.”
Leo said population growth and rising property valuations have also impressed potential lenders.
“And then we have this whole commercial development around the corner with the sewer project finally finished,” Leo said. “So when the banks hear that, it’s music to their ears.”
The city borrowed another $ 1,750,000 by issuing bond certificates. Unlike general bonds, bond certificates can be issued without voter approval.
Palmview will set aside money borrowed through bond certificates for drainage and street paving projects.
“We already have an engineer online to help us start this,” said Leo.
The city plans to focus on streets that were not paved as part of the sewer project, Leo said, and rural streets annexed by Palmview.
TIB offered the city an interest rate of 1.89% on the bond certificates. Palmview will pay off the debt by 2036.
“We plan to close both of these loans on August 5,” Gonzalez said. “And, on that day, the money will be sent from the bank to the city account so that you can all start working on your plans.”