Page 32 - CityofSouthlakeFY25AdoptedBudget

City of Southlake is fortunate Figure 14
to have a AAA credit rating
from Fitch Ratings, Moody’s, FY 2025 Total Debt Service
and Standard & Poor’s. This
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rating the City can receive.
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Budget Overview
The City has been able to
effectively manage its debt
during a period of growth
using cash to partially offset borrowing needs. Additionally, managing debt amortization has been a tool
used to reduce borrowing costs.

Tax Supported vs. Self-Supporting Debt
As you can see in Figure 14, less than half (45%) of the City’s debt service for FY 2025 will be funded
through bonds tied to the City’s property taxes. For FY 2025, property tax supported debt service is about
$7.1 million, the annual payment necessary for a total debt service of $31,573,989. Property tax supported
debt is primarily used for the construction of local roads, sidewalks and storm water infrastructure. The City
estimates that it will be necessary to issue approximately $11 million in property tax supported debt to fund
capital infrastructure needs for roadways and other critical infrastructure planned for FY 2025 in the current
Capital Improvements Program.

So, what does this mean for Southlake property owners? Figure 15 shows the total tax bill for an average
residential property in Southlake, reflecting an annual cost of $482 for property tax supported debt. For
this, the City is able to ensure the necessary infrastructure is updated and maintained proactively and in
alignment with community sustainability standards.

Going back to Figure 14, the remainder of the City’s debt service (55%) for FY 2025 will be funded by self-
supporting debt. These debt payments will be made from special revenue, such as voter-approved sales
tax levies. Why is it important to make the distinction between tax-supported and self-supporting debt?
Because self-supporting debt has specific revenue streams, many of which are voter approved, for the
repayment of the bonds. Also, sales tax-supported debt uses funds collected by shoppers in the City, many
of which reside elsewhere.

For example, the construction of The Marq Phase I was funded using cash from the General Fund and
Southlake Parks Development Corporation (SPDC). Phase II, known as Champions Club was funded through
the voter-approved three-eighths cent sales tax collected by Community Enhancement and Development
Corporation (CEDC). Thanks to these sales tax dollars, the corporation funding is used to pay the debt
incurred from construction and to supplement the operating expenses for The Marq Southlake not recovered
with facility and program fees. Additionally, a portion of the funds are used for economic development
initiatives.

Voter-approved special levy sales tax districts also provide a source of funding for park development

32 FY 2025 City of Southlake | Budget Book