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V. FINANCING THE CAPITAL IMPROVEMENT PLAN <br />The maximum principal amount of debt under this Capital Improvement <br />Plan is $7,300,000. <br />In the financing of the Capital Improvement Plan, two significant statutory <br />limitations apply. <br />1. Under Chapter 475, with few exceptions, municipalities cannot <br />incur debt in excess of 3% of the assessor's taxable market value for the <br />municipality. In the City, the taxable market value for taxes payable in 2011 <br />is $2,053,301,652. Therefore, the total principal amount of outstanding debt <br />cannot exceed $61,599,000. As of December 31, 2011, the City has <br />$17,124,000 subject to the legal debt limit (this amount includes the existing <br />CIP Bonds and includes 2/3 of the EDA's G.O. debt issued for the YMCA <br />project). As such, issuance of the CIP Bonds will be well within the overall <br />statutory debt limit for the City. <br />2. A separate limitation under the CIP Act is that, without <br />referendum, the total amount of principal and interest in any one year on all <br />CIP Bonds issued by the City cannot exceed 0.16% of the total taxable <br />market value in the municipality. In the City, that maximum annual debt <br />service amount is $3,285,000 for the payable 2011 tax year ($2,053,301,652 <br />x .0016). The annual principal and interest payments on the CIP Bonds <br />proposed to be issued under this CIP plus the existing G.O. Capital <br />Improvement Plan Bonds, will average less than $1,750,000. As such, debt <br />service on the CIP Bonds will be well within the annual limits under the CIP <br />Act. <br />General principal payments, term and debt payments if the CIP Bonds were <br />issued in 2012 and in one series are shown in Appendix A. <br />Continuation of the Capital Improvement Plan <br />This Capital Improvement Plan should be reviewed annually by the City <br />Council using the process outlined in this Plan. It should review proposed <br />expenditures, make priority decisions, and seek funding for those <br />expenditures it deems necessary for the City. If deemed appropriate, the <br />Council should prepare an update to this Plan. <br />City of Elk River CIP for Financing Purposes Page 9 <br />