Page 26 - APPROVED ANNUAL BUDGET BOOK FY 21-22

City of McAllen, Texas Adopted Budget 2022

TIRZ #1 Fund

The Tax Increment Reinvestment Zone (TIRZ) #1 Fund was established to account for a portion of the revenues derived
from property taxes levied by the City and County to facilitate the provision of capital improvements within the zone
in the northern area of the City.
TIRZ#1 is expected to receive a total of $575K in revenue, mostly through a transfer from the General Fund� Minimal
administrative expenses of $13k are expected� The fund balance is expected to be $990K�
TIRZ #2A Fund

The Tax Increment Reinvestment Zone #2A Fund was established to account for a portion of the revenues derived
from property taxes levied by the City and County to facilitate the provision of capital improvements within the zone
in the south-central area of the City.
TIRZ #2A is expected to receive a total of $791K in revenue, mostly through a transfer from the General Fund� The
fund will have minimal administrative expenses of $5K and expects to undertake one drainage project for $1�6M�
The fund balance is expected to be $2�2M�

DEBT SERVICE FUNDS

Debt Service Fund - General Obligation Bonds
The Debt Service Fund is established by Ordinances authorizing the issuance of general obligation bonds. The fund
provides for payment of bond principal, interest, paying agent fees, and a debt service reserve as a sinking fund each
year. An ad valorem tax rate and tax levy is required to be computed and levied, which will be sufficient to produce the
money required to pay principal and interest as it comes due and provide the interest and sinking fund reserve.

Legal Debt Limit

The State of Texas limits the ad valorem tax rate to $2�50 per $100 valuation� Other than the amount resulting from
such rate limitation, there is no legal debt limit� The computation of this limit is presented on page 65� The City held
a Bond Election (Series 2014) and issued $45M in Bonds for the construction of a New Performing Arts Facility, a
Sports Facility Complex, and Street Improvements with each major project allocated $15M; after a partial refunding
an outstanding balance of $3.9M remains. The City issued $25M General Obligations for Drainage Improvements;
an outstanding balance of $24.5M remains. The City issued a Certificate of Obligations in the amount of $5.9M
for the construction of a Parks Facility building and the reconstruction of Fire Station #2; an outstanding balance
of $5.5M remains. In addition, the City issued Series 2018 and Series 2019 General Obligations for Traffic and
Drainage Improvements for $4M and $19M, respectively, with an outstanding balance of $3�8M and 18�5M remaining,
respectively. The City issued a General Obligations in 2021 for a partial refunding of the Certificate of Obligation
Series 2014 and General Obligation Series 2014 in the amount of $38�5M� The total outstanding amount for the
current year is $94�6M�

The City also has a $12M Certificate of Obligation for the Performing Arts Facility, which is to be paid with revenue
generated from the Hotel Tax Venue. After a partial refunding, this Certificate of Obligation has a remaining
outstanding balance of $1�1M� In addition, the City has a General Obligation Refunding Bond (Series 2019) in the
amount of $5�6M which will be paid with the Passenger Facility Charge (PFC) Fund� This General Obligation has a
remaining outstanding balance of $5�1M� Therefore, a provision has been made in the Airport Fund to allocate a
portion of the revenues for debt service�

Debt Service Funds – Revenue Bond Issues
Enterprise Fund/Sales Tax Revenue Bonds
The Debt Service Funds other than general obligation bonds are established by Ordinances authorizing the issuance
of revenue bonds. The fund provides for payment of bond principal, interest, paying agent fees, and a debt service
reserve as a sinking fund each year. Revenues of the activity related to the purpose of each bond issue are pledged as
security for repayment of these bonds.
The resources to fund debt service requirements on revenue bonds have been presented as transfers from the
operating funds to which each relates to such as the Water, Wastewater, Airport, or Bridge funds� See page 178-179
for a listing of debt that relates to said funds�

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