Debt Service Fund
Coppell's Debt Service Fund is used to account for the accumulation of financial resources for the payment of principal, interest and related costs for general long-term debt paid primarily from taxes levied by the City. Debt – typically in the form of Certificates of Obligation – is issued as needed to provide for infrastructure improvements and public safety projects.
Per the City's Charter and State and Federal law and with City Council approval, the City uses debt to finance the construction, acquisition or renovation of infrastructure. The City may also issue bonds to refinance existing debt when there is an opportunity to obtain a better interest rate and decrease interest expense. The City does not issue debt – or use any proceeds from issuing debt – to finance operations or for normal maintenance.
Debt Refinancing and Repayment
Each year, City staff reviews any outstanding debt to determine whether or not there is an opportunity to refinance the debt at a better rate. By refinancing, the City is able to reduce the amount of its payment on the debt, and this in turn allows the City to use taxpayer funds for other projects.
AAA Bond Rating
Because the City of Coppell has retained its AAA bond rating, the City is afforded a low interest rate on any debt issued.
The City's AAA bond rating is significant because it lowers the cost of borrowing for Coppell taxpayers. The City will realize significant savings over the life of any Certificates of Obligations issued for projects. It's also possible that bonds issued by the City will sell at a premium. In this case, the City will be able to reduce the amount of debt issued.