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At the July 19, 2018 Budget Workshop, City Council discussed Coppell's Debt Service Fund, which is used to account for the accumulation of financial resources for the payment of principal, interest and related costs for general long-term debt paid primarily from taxes levied by the City. Debt – typically in the form of Certificates of Obligation – is issued as needed to provide for quality of life improvements and projects.
Per the City's Charter and State and Federal law, the City uses debt to finance the construction, acquisition or renovation of infrastructure that will improve the quality of life of residents, as determined by the City Council. The City may also issue bonds to refinance existing debt when there is an opportunity to obtain a better interest rate and decrease interest expense. The City does not issue debt – or use any proceeds from issuing debt – to finance operations or for normal maintenance.
Each year, City staff reviews any outstanding debt to determine whether or not there is an opportunity to refinance the debt at a better rate. By refinancing, the City is able to reduce the amount of its payment on the debt, and this in turn allows the City to use taxpayer funds for other projects. According to current projections, the City will pay off 73% of its debt over the next ten years. Over the next 15 years, 97% of the City's debt will be paid off.
Because the City of Coppell has retained its AAA bond rating, the City is afforded a low interest rate on any debt issued.
"The reaffirmation of the AAA bond rating is significant because it lowers the cost of borrowing for Coppell taxpayers," said Jennifer Miller, Director of Finance. "We will realize significant savings over the life of any Certificates of Obligations issued for upcoming projects. It's also possible that the bonds that we issue will sell at a premium. In this case, we will be able to reduce the amount of debt we have to issue. This means that we are able to be betterstewards of public monies while still taking on projects that will positively impact the lives of our residents."
At the July 24, 2018 meeting, the City Council will issue $46,000,000 in Certificates of Obligation. The bonds will be used to fund the following projects:
About the City of Coppell Budget:
The City of Coppell continues to see positive economic indicators in all areas of finance, including the recently reaffirmed AAA bond rating, growth in the tax base and surging sales tax receipts primarily due to thriving distribution centers and business parks. Expenditures, revenues, and reserves have been managed efficiently and proactively for many years, resulting in appropriate fund balances and a strong financial position.
"The City of Coppell is in a great financial position," said Mayor Karen Hunt. "City staff continue to do a fantastic job managing our public monies. We are very fortunate to live, work, and play in a city that places a high value on community and quality of life while focusing on maintaining what we have built."
The City of Coppell works diligently to be fiscally responsible and transparent, and the City continuously receives accolades from outside agencies regarding its financial planning and prudent budgeting practices. The City strongly encourages residents to get involved, attend public meetings and provide feedback on the proposed budget.
For more information about the FY2018-2019 budget, contact the Finance Department at 972-304-3691 or visit coppelltx.gov/budget.