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The original item was published from 6/11/2021 9:04:37 AM to 6/11/2021 9:12:02 AM.

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City of Allen Headline News

Posted on: June 11, 2021

[ARCHIVED] Stable economy, strong management earns Allen highest possible bond rating

picture of city hall and numbers

 A stable economy, strong fiscal management and above-average resident incomes helped the City of Allen maintain the best possible bond ratings from both Moody’s Investor Services and S&P Global Ratings. 

For municipalities, the practice of selling bonds is similar to financing a house through a mortgage; the loan is repaid over time to cover the purchase or construction of a new asset. General Obligation (GO) bonds are often used to finance new city facilities; Water/Sewer bonds are used to build or maintain pipes, drainage systems, water storage and other water/sewer infrastructure. 

Allen has maintained an overall bond rating of AAA and Aaa since 2016. Similar to a personal credit score, high bond ratings provide significant savings to Allen taxpayers by helping the City attain the lowest possible interest rates. 

Cash-funded projects 
Both credit agencies affirmed Allen’s fiscally conservative approach for project funding. S&P Global specifically highlighted the City’s practice of cash funding a large portion of capital expenses, limiting the need for significant debt, saying, “...Allen's frequent budget monitoring and robust forecasting positions the city to address potential adverse economic or legislative challenges. The combination of these several factors continues to reinforce stable, strong credit quality.” 

Impact of future development 
Bond funding is sometimes preferred to pay for projects geared toward future residents and businesses—such as streets and drainage infrastructure in a new neighborhood, or a library expansion to meet the needs of a growing population. In these instances, the City may choose to make payments over time to leverage the taxes to be paid by future residents, rather than putting that tax burden on its current population. 

This resident-focused budget approach has helped Allen lower its tax rate for more than 20 consecutive years while creating one of the most coveted communities in the United States. The S&P Global Ratings Report noted: 

With a combination of pay-as-you-go financing from excess revenues, dedicated half-cent sales tax, and debt proceeds, the city has been able to undertake multiple projects to improve the quality of life. Some examples are implementing infrastructure backed by technology, parks and recreation, and facilities for core services. These ongoing urban design and infrastructure initiatives will help Allen improve its overall quality of life and have a positive impact on the community. We assess that the city's advantageous location, coupled with the various developments that have been completed or are in the pipeline, will support long-term economic strength and stability. 

Employment stability
Both reports referenced Allen’s stability through recent recessions, from the dotcom bust to the Great Recession to the more recent impacts of COVID-19. Moody’s also highlighted Allen’s low unemployment rate, which registered lower than both the state (7.2%) and nation (6.2%) in March 2021 with a rate of 5.4%.

“While Allen is favorably located in proximity to the dynamic job market in the Dallas/Fort Worth metro area, the city itself is becoming an employment hub,” noted Moody’s. “As such, unemployment levels have consistently tracked lower than the state and national levels [and]…. has been declining as the pandemic subsides.”

Allen's Finance Department is responsible for planning and maintaining the city's financial health through oversight of the Accounting Division, Budget Division, Purchasing Division and Municipal Court. It has earned The Government Finance Officers Association's (GFOA) Certificate of Achievement in Excellence in Financial Reporting Award for 21 years in a row. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management. Learn more.

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