In a move calculated to save taxpayers money, the Taylor City Council approved issuing Certificates of Obligation that will save the city over $4.6 million in interest expenses on a $5 million loan.
In April, the city published its intent to issue $5,090,000 in COs. After no petitions were received from the public, council authorized issuing the COs at their June 8 meeting.
The issuance of the COs is required to get a preapproved 0% interest loan from Texas Water Development Board. Without the TWDB loan the city staff says they would have had to issue the debt at market interest rates of 4.5%-5%, resulting in almost $5 million in interest expenses over the life of the loan.
The funds can be used exclusively for the Donna Channel/ Mustang Creek Drainage Improvement Project, to include water, wastewater and flood control improvements to Donna Channel and Bull Branch. They can also be used toward professional services such as engineering fees.
The city has received $5,555,330 in grants from Community Development Block Grant Mitigation funds for this project, according to city staff. The TWDB Flood Infrastructure Fund awarded Taylor an $898,044 grant in addition to the interest- free loan.
The city said that the loan is necessary in order to provide immediate funding for purchases and complete the project in a timely manner.
The COs will be dated June 29, and the loan will be repaid over 30 years by property taxes through an Interest and Sinking Fund.
