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The original item was published from 7/13/2016 8:25:25 AM to 7/13/2016 8:29:09 AM.

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City of Allen Headline News

Posted on: July 13, 2016

[ARCHIVED] Financing Saves Allen Millions


The City of Allen will save approximately $5.1 million on interest payments and get a head start on projects thanks to innovative financing.

Similar to the process of refinancing a home, the City will take advantage of lower interest rates on both General Obligation bonds (funded by Allen’s tax rate) and Tax Revenue bonds funded by the Community Development Corporation (CDC), which finances projects such as park and trail enhancements. By refunding these bonds and sticking to the original payback date, the city expects a net present value savings of approximately $5.1 million.

City council has also approved a “reimbursement resolution,” which allows the city to begin work on new projects without taking on immediate debt. Allen will use reserve funds to start work related to the $93 million bond program approved by voters in May—including a new fire station, library expansion, street improvements and a new recreation center. Bonds will be issued later, allowing the city to effectively “reimburse itself.”

“This will allow us the opportunity to begin working on the necessary projects with the lowest possible financial impact to our taxpayers”,” said Eric Cannon, Chief Financial Officer for the City of Allen.

The final financing tool approved by council members on July 12 involves another short-term borrowing strategy. Allen will issue $2 million in tax notes to cover the cost of new radio equipment used primarily by public safety personnel. Because Motorola has informed the City they will stop supporting existing radios, the quote for replacing the equipment is set to expire in December 2016. The city has anticipated covering the cost by maintaining the existing debt service rate.

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