Bonds/Obligations and Debt Service

Why debt?

The City issues debt in the form of bonds and obligations to finance long-term capital improvements such as streets, buildings, utility systems, etc. Because municipal debt is typically tax-exempt, it usually carries a lower interest rate than other types of financing. Debt proceeds are not used to fund ongoing operating costs. The City uses municipal debt on projects that have at least the same useful life as the length of the repayment schedule. For example, if the City issues a twenty-year bond or obligation, the funded projects have at least a twenty-year expected useful life (e.g., buildings, parks, utility plants, etc.). This allows the City to meet infrastructure needs while paying for the assets (via debt payments) as they are used. 
For complete City of Mesa Executive Budget Plan click here.

Types of Debt

The City uses two main types of bond funding:
  • general obligation bonds finance parks, public safety and street projects.
  • utility systems revenue obligations finance water, wastewater, electric, solid waste and natural gas projects. 

Debt Service

Debt service requirements impact the City’s financial condition and can limit flexibility in responding to changing circumstances or priorities. When debt is issued, it obligates the City to make regular payments for periods of up to 25 years. The outstanding debt balance is paid back over time through annual principal and interest payments (debt service payments). The City’s goal is to have a consistent level of debt service costs, creating a stable financial environment for providing ongoing services.
See the complete debt dataset here.
Image Source: Getty Images

GO Bonds
General Obligation (GO) debt service payments are shown in the chart on the left.
Utility Systems Revenue Bonds and Obligations
Debt service payments for utility revenue bonds and obligations are funded by rate charges paid by utility customers. Utility systems revenue bonds and obligations scheduled debt service payments by year can be seen in the chart to the right.

Debt Service Payments

NOTE: Although Community Facilities District (CFD) debt is tracked in the city's debt management system and therefore included in the dataset, CFD's are separate legal entities and CFD debt is not City of Mesa debt.