Dallas finance committee hears overview of city debt, planned bond issuances and pension rating impacts

The Dallas Finance Committee received a city treasury and budget briefing on outstanding debt and planned issuances, including planned general obligation, revenue and refunding bonds, commercial paper and state‑loan financings.

Budget staff and the city’s financial advisers told the committee the city’s total general obligation debt outstanding is roughly $2.5 billion in principal, with annual debt service of about $434 million. City staff reported the city’s tax rate for fiscal year 2026 at 69.88 cents per $100 of taxable value, of which 19.13 cents is allocated for debt service. Staff said the city’s average interest rate on outstanding debt is approximately 3.06% with an average maturity of seven years and that 76.7% of outstanding principal will be repaid within 10 years under the current schedule.

Planned and proposed issuances described to the committee included a series of general obligation bonds (not to exceed $252 million) to fund the second $250 million tranche of the 2024 voter‑approved $1.25 billion bond program; equipment notes up to $35 million for vehicles and specialized equipment; a $52.9 million master lease for public safety, IT and fleet; and plans to reestablish or replace the general obligation commercial paper program supported by a credit facility. Treasury staff said the current commercial paper program is supported by a $350 million credit agreement with JPMorgan that is expiring and staff are evaluating replacement structures.

Water and stormwater financing items included a planned $34 million in Waterworks and Sewer System bonds through the Texas Water Development Board (SWIFT) as part of a multi‑year commitment and a potential $5 million drainage loan/grant under the state Flood Infrastructure Fund for the Mill Creek Drainage Relief System. Staff also described a possible spring refunding that would refund approximately $297.9 million of outstanding water bonds to generate an estimated $13.4 million in net present‑value savings.

Convention center and Fair Park financing plans were discussed at a high level. Staff said senior‑lien bonds for Convention Center improvements are being structured and could total up to $1.5 billion (subject to final project costs) and that Fair Park venue bonds up to about $72 million are being planned; those financings would be issued via negotiated sale with an underwriting syndicate. Airport staff reported plans for targeted refundings and potential federal loan and grant resources tied to the airport master plan. Treasury staff said all of these plans are subject to change and will return to council for ordinance approvals.

Credit rating and pension impact: city staff and the city’s financial adviser emphasized that the city’s unfunded pension liability has been the principal factor cited by ratings agencies. Jack Ireland, the city’s chief financial officer, and Steven Johnson, the financial adviser, said the city has adopted a multi‑decade plan to reduce unfunded pension liabilities and that rating improvements will likely take years to materialize; they also noted different rating agencies weigh pension exposure differently and that S&P and Fitch (used by the city for recent issues) currently rate the city investment grade. Moody’s has assigned a negative outlook that staff and advisers said is more punitive on pension exposure than the city believes is warranted.

Staff timelines and next steps: treasury and budget staff asked the committee to approve ordinances on the Oct. 22 council agenda enabling preparation and competitive or negotiated sale of the items listed above, and to brief the committee on replacement commercial paper program design before it is brought to council. Staff reiterated they follow the city’s Financial Management Performance Criteria and provide annual compliance reporting to market investors.

Quotations in context: Jeanette Wheaton, Director of Budgeting and Management Services, said the city’s debt plan “spreads the cost over the lifecycle of the asset,” and Steven Johnson of Hilltop Securities said some public coverage overstates the amount the city must pay immediately by including enterprise and third‑party secured debt in consolidated totals.

No formal votes were taken during the debt briefing; staff will return to council with ordinances and sale documents as required by ordinance and procurement rules.