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V. FINANCING THE CAPITAL IMPROVEMENT PLAN <br />The total principal amount of requested expenditures under this Capital <br />Improvement Plan is $8,000,000. This amount represents the maximum <br />principal amount of CIP Bonds that may be issued to refund the Series <br />2002A and Series 2002B Bonds. Principal and interest on the CIP Bonds <br />will be paid through a tax levy over the term of the CIP Bonds, further <br />described in Appendix A. <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 is $2,250,901,900. <br />Therefore, the total principal amount of outstanding debt cannot exceed <br />$67,527,000 (These values are for 2008/09 tax year). As of October 31, <br />2009, the City has $17,780,771 subject to the legal debt limit (this amount <br />includes the Series 2002A and Series 2002B Bonds that are expected to be <br />refunded under this amendment to the CIP and includes 2/3 of the EDA's <br />G.O. debt issued for the YMCA project). As such, issuance of the refunding <br />CIP Bonds will be well within the overall 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 $3,601,000 for the 2008/09 tax year ($2,250,901,900 x <br />.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, Series 2006C will average approximately <br />$979,000. As such, debt service on the CIP Bonds will be well within the <br />annual limits under the CIP Act. <br />General principal payments, term and debt payments if the CIP Bonds were <br />issued in 2010 and in one series are shown in Appendix A. The form of the <br />public hearing notice and resolution approving the CIP are shown in <br />Appendix B. <br />City of Elk River CIP for Financing Purposes Page 9 <br />