The Dallas City Council will decide Wednesday whether to send voters a $960 million bond package that the city’s proposed ballot estimates would require about $1.75 billion in principal-and-interest repayment if the debt is issued under current market assumptions.
The proposed ordinance divides the package into three propositions and places the words “THIS IS A TAX INCREASE” above each one.
Proposition A would authorize $443 million in general obligation bonds for public safety facilities, with an estimated repayment of $629.62 million. Proposition B would authorize $17 million for fleet maintenance facilities, with an estimated repayment of $24.16 million. Proposition C would authorize $500 million in pension obligation bonds for the Dallas Police and Fire Pension System, with an estimated repayment of $1.097 billion.
Together, the city’s current estimates total $1,751,028,271 in repayment, about $791 million above the $960 million principal. The ordinance says the figures are based on current market conditions and do not guarantee a particular interest rate or tax rate because Dallas expects to issue any approved bonds over time.
Dallas already carries billions in tax-supported debt
The ordinance lists $2.798 billion in outstanding tax-supported debt principal and another $1.217 billion in outstanding interest. Dallas’ current property tax rate is 69.88 cents per $100 of taxable value, including 19.13 cents dedicated to debt service.
The proposed package would come little more than two years after Dallas voters approved a $1.25 billion general obligation bond program in May 2024. The Dallas Express previously reported during that process that bond funds are borrowed money and Dallas taxpayers pay interest on the debt.
City documents differ by $2 million
Dallas’ posted materials do not agree on the size of the public safety proposition. The current agenda page says the public safety proposition provides $441 million. The city’s June 24 authorization also described a combined public safety capital need of $441 million.
The attached ordinance and proposed ballot, however, specify $443 million. The posted Item 73 materials do not explain the $2 million difference.
The public safety proposition would provide gap financing for the new Dallas Police Department Law Enforcement Training Center at UNT Dallas, advance a separate Public Safety Training Complex, replace Fire Station No. 4 and fund relocation of the city’s 911 and Emergency Operations Center. Dallas officials identified $40 million for the 911 and emergency operations relocation during the June 10 council briefing.
That 911 component overlaps with the unresolved debate over the future of Dallas City Hall. The Dallas Express previously reported that the council authorized due diligence for possible relocation of 911 and emergency operations in June without approving a final relocation.
Council Member Cara Mendelsohn warned during the June 24 discussion that including the 911 relocation in the same public safety proposition could jeopardize the broader package, calling it a “poison pill for this entire proposition.” She also said she would work to defeat the bond if the projects remained combined.
Pension bonds hinge on investment returns
The $500 million pension proposition would not automatically result in Dallas issuing the full amount if voters approve it. The agenda materials say the Finance Committee must first receive notice and the City Council must separately authorize issuance. Dallas could issue the bonds in tranches of at least $125 million.
The city says it would issue pension obligation bonds only when the expected borrowing cost is at least two percentage points below the pension system’s expected rate of return, currently 6.5%. City staff says the potential benefit depends on investment returns exceeding the interest Dallas pays on the bonds.
The Government Finance Officers Association takes the opposite policy position and recommends that state and local governments not issue pension obligation bonds, citing investment risk, increased bonded debt and the possibility that investment returns fail to exceed borrowing costs.
Wednesday’s vote would only call the November 3 special election. If council members approve the ordinance, Dallas voters would decide whether to authorize each proposition separately.
The City Council meeting begins at 9 a.m. Wednesday at Dallas City Hall.
