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San Antonio staff outline debt management plan and options to preserve bond capacity
Summary
City financial leaders reviewed the debt management plan, reported lower bond capacity tied to falling property values and discussed options including stormwater revenue bonds, timing and frequency of bond elections, and airport financing for the terminal development program.
San Antonio officials on Aug. 27 reviewed the city's debt management plan, saying lower property values have reduced near-term capacity for general obligation bonds and prompting staff to recommend options such as adjusting the timing and structure of future bond programs and exploring the city's stormwater revenue bonds as a supplemental funding source.
Troy Elliott, the city's chief financial officer, told the City Council that the debt management plan describes what debt the city has outstanding, what it has issued and "how we're gonna pay for that debt over time." He said property-tax-backed debt (general obligation bonds, certificates of obligation and tax notes) totals roughly $2.6 billion and that the city's overall outstanding debt is about $3.6 billion.
Why it matters: The debt plan determines how much the city can ask voters to approve for large capital programs. Elliott said an important lever is the city's debt service tax rate, which the council has held at 21 cents per $100 of assessed value since 2004. He also said the city keeps about $25 million in a debt service reserve as a "shock absorber" in case of revenue fluctuations.
Key details - Composition and ratings: Elliott said the city issues general obligation bonds (property-tax backed and voter approved), certificates of obligation and tax notes (property-tax backed but not voter approved) and revenue bonds backed by specific revenues such as airport or stormwater fees. He reported that credit ratings remain strong (Moody's triple-A, S&P triple-A, Fitch AA+ stable outlook for the ad valorem-backed debt). - Capacity drop: Elliott said the drop in taxable values since 2022 has reduced the city's capacity under current assumptions from the previous $1.2 billion program to about $500 million in near-term general obligation capacity. - Airport financing: Elliott said the Airport Terminal Development Program (TDP) is expected to require about $1 billion in an initial revenue bond issuance, with additional issuances to follow; temporary tax-note bridge financing of about $469 million is outstanding for the airport and a large payment is due in February that will need financing. - Stormwater revenue bonds: Elliott and staff flagged $24.5 million of existing stormwater revenue bonds with roughly five years left to maturity and said refinancing or calling those bonds could create additional capacity dedicated to drainage projects.
Council questions and next steps Council members pressed staff on sensitivity and capacity analyses. Jeff Coyle, assistant city manager, summarized pending state action that could affect the maintenance-and-operations tax growth cap: "Current state law has what's called a voter approval tax rate of 3.5%." He said draft legislation in the special session proposed lowering that cap to 2.5% and that House floor amendments at one point cut it to 1% with a public-safety carve-out; the chambers had not yet concurred. Staff noted the change would not affect the current-year budget but could affect revenues beginning Jan. 1 of the effective year if passed and signed.
Elliott said staff will perform stress tests on the debt model, varying property-value growth and interest-rate scenarios, to ensure a proposed bond program remains affordable and maintains the city's credit posture. Eric (city staff member who introduced the presentations) and finance staff recommended bringing back an analysis of stormwater bond restructuring and a capacity memo for council feedback. Councilmembers asked staff to return with a targeted memo on stormwater options within 30 to 45 days and a fuller sensitivity/capacity analysis in the weeks that follow.
Ending note: City finance staff framed the choices as trade-offs among timing of bond elections, frequency of bond issuances and the council's policy on the debt service tax rate. They recommended a cautious, data-driven approach to preserve the city's strong ratings while identifying options to address prioritized capital needs.
