Page 307 - CityofSouthlakeFY26AdoptedBudget

Debt Service

The City issues general obligation bonds, certificates of obligation, combination tax and revenue
certificates of obligation and tax notes to provide for the acquisition and construction of major capital
facilities and infrastructure. Certificates of obligation are used to fund construction of city facilities and
infrastructure such as buildings, roads and sidewalks. Revenue bonds are used to fund construction of
other city infrastructure such as water and sewer system improvements as well as park improvements. Debt Service

We want to help you understand the City’s use of debt by explaining the types of projects that we fund
by borrowing money, and what kind of bonds we use. This section will also help you understand the
obligations the City currently has, and how we balance the need to implement the City’s Comprehensive
plans with fiscal responsibility.

It is important to note that our debt management strategies receive a rigorous annual review from bond
rating agencies tasked with letting potential borrowers know how credit-worthy the City is. Right now
the City has three AAA ratings, which is the highest credit rating a city can receive — a strong external
endorsement of the City’s financial management.

Tax Supported vs. Self-Supporting Debt

As you can see in Figure 1, less than half of the City’s debt service (45%) for FY 2026 will be funded
through bonds tied to the City’s property taxes. For FY 2026, property tax supported debt service is
about $7.5 million. Property tax supported debt is primarily used for the construction of local roads and
sidewalks.

Figure 1

FY 2026 Total Debt Service

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FY 2026 City of Southlake | Budget Book 307