3.0. SR 01-21-1997 - Laserfiche WebLink

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LEGAL DEBT LIMIT State statute limits the City's general obligation debt, debt repaid entirely by general property taxes, to two percent of the City's estimated market value (309,273,623) less current outstanding debt not covered by sinking fund reserves. As of January 1, 1990, the City's legal Debt Margin was $5,255,692. This means that the City could issue $5,255,692 of Tax Increment Bonds, Equipment Certificates or other General Obligation Bonds. It is important for the City to retain a minimum reserve of $500,000 in bonding authority at all times. This means that at this time, the largest bond issue possible for the Community Center would be $4,500,000. OTHER BONDING NEEDS The School District recently recieved voter support for a $19,400,000 bonding package for buildings and improvements. Also, the City currently completed a Parks Master Plan whiCh will require substantial funding if the proposed improvements are to be undertaken. Because both the Community Center and park improvements bonding fall under the debt limit, the projects will complete for the same pool of funds. The City also issues Equipment Certificates annually and issues tax increment bonds as the need arises. Although the voters do no need to approve these, there must be bonding authority available which is why a minimum reserve of $500,000 must be maintained.~ The authorization to issue a General Obligation Bond will require voter approval through a referendum. Even with voter approval, Minnesota Statutes limit the amount of debt that a City may issue to two percent of market value less debt specifically excluded from the debt limit. The debt available to the City as of January 1, 1990, was $5,255,000. Additional debt has been issued since that time reducing the amount available. The City must also keep a minimum amount of bonding authority available for other projects and capital equipment needs. At this time, approximately $4.5 million of debt could be issued for the Community Center. Issuance of General Obligation debt will cause an increase in City real estate taxes. In making estimates on the local tax impact several conditions were assumed: , The issue would have a twenty year term. The bond would have a tax exempt interest rate of 7.3 percent. The actual interest rate will change when the bonds are issued.