The Palmview City Council voted to borrow nearly $5 million Tuesday to start a solid waste department, fix drainage problems and pave streets.
Palmview will buy two garbage trucks, two brush trucks and about 4,000 garbage bins, said City Manager Michael Leo. They’ll form the nucleus of the new solid waste department — and replace Republic Services, a private company that handles trash pickup.
“And what’s important to note is that the debt for this will be paid off with the revenues that the residents already pay for trash collection services,” said Leo, who continued: “While we’re adding debt, we’re adding a revenue stream to pay that debt.”
Palmview borrowed the money in two parts.
The city borrowed $3,245,000 for equipment through a Public Property Finance Act contract, which is less formal than issuing bonds and doesn’t require voter approval.
Palmview will spend the money to jump-start the solid waste department and buy other equipment.
TIB, a bank based in Farmers Branch, Texas, offered the city a 1.99% interest rate. Palmview will pay off the debt by 2036.
The rock-bottom interest rate will save Palmview thousands.
“TIB came in very, very, very aggressive,” said David Gonzalez, a director at PFM Financial Advisors, which advised Palmview on the debt issuances.
The debt also came with favorable terms.
“Not only can you refund these bonds, if you can find a better rate, at any time, without penalties, but you can also pay these bonds off early without any type of penalties as well,” Gonzalez said.
Palmview secured the low interest rate thanks in part to clean audits, conservative financial decisions and more than $1 million in reserves.
“They look at the city’s financials, the budget, they look at your debt policies, your management policies. They look at everything as one unit,” Gonzalez said. “And that’s a testament to the City Council and the city of Palmview.”
Leo said population growth and higher property valuations also made an impression on potential lenders.
“And then we have all this commercial development right around the corner with the sewer project finally finishing,” Leo said. “So when the banks hear that, that’s all music to their ears.”
The city borrowed another $1,750,000 by issuing certificates of obligation. Unlike general obligation bonds, certificates of obligation may be issued without voter approval.
Palmview will set aside money borrowed through certificates of obligation for drainage projects and street paving.
“We have an engineer already lined up to help us kick-start this,” Leo said.
The city plans to focus on streets that were not paved as part of the sewer project, Leo said, and rural streets that Palmview annexed.
TIB offered the city a 1.89% interest rate on the certificates of obligation. Palmview will pay off the debt by 2036.
“We plan to close on both of these loans on Aug. 5,” Gonzalez said. “And, on that day, the money will be sent from the bank to the city’s account so that y’all can begin work on your projects.”