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DeSoto explores prepaying callable bonds to steady property tax rate
Summary
City staff proposed options to manage a falling debt-service rate — including prepaying up to $3.5 million of callable bonds to add roughly 3¢ to the debt-service rate — to avoid a potential large tax-rate spike when the city returns to bond sales in 2027.
Finance Director Mary Sutton told council that DeSoto’s final assessed value is about $8.3 billion, up roughly 4% from the prior year, and explained how the city’s maintenance-and-operations (M&O) and interest-and-sinking (I&S) components combine into the total property tax rate.
Sutton said the M&O portion could be around 0.52 based on current valuations and that if the council lets the debt-service rate fall to roughly 0.13, the city would face a steeper tax-rate increase when it returns to the bond market for a planned 2027 sale. She presented four options and said her recommendation — supported by financial advisers — is to prepay callable bonds (potentially up to $3.5 million) to add roughly 3¢ to the current debt-service rate, save interest over time, and hold the overall tax rate more steady.
Council members asked for public education on options and for modeling that looks beyond a single fiscal year; staff said a formal ordinance and options will be brought back to council in August for explicit consideration.
