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Capital Zmprovernent Planning -June 11, 2001 <br /> <br />Revenues <br /> <br />· Property taxes. The City can levy property taxes to support almost every form of <br /> capital improvement. Capital improvements will compete with services for <br /> limited tax dollars. If levy limits are reinstated, it may be necessary to incur debt <br /> to levy outside of limitations for capital projects. <br />· Landfill surcharge. Revenues from the operation of the landfill provide a <br /> significant financial asset to the City. Landfill revenues are currently paid into the <br /> Library Maintenance, Street Improvement and Government Building funds. The <br /> amount and duration of these revenues play a significant role in capital <br /> improvements planning. <br />· User fees. The City collects user fees for a variety of purposes. The primary <br /> sources of user revenues include municipal utilities, ice arena, and municipal <br /> liquor operations. <br />· Assessments. Special assessments may be levied against benefited properties to <br /> pay for all or a portion of the cost of public improvements. The infrastructure <br /> needed to open land for development is generally 100% financed by assessments. <br /> Assessments will play an important role in the rehabilitation of streets and <br /> utilities. The rehabilitation of existing improvements cannot be fully supported <br /> by assessments. Other sources of revenue will be needed for these projects. <br />· Capital Charges. The City collects capital (connection) charges from the growth <br /> of the utility system. This money is saved for future improvements. <br /> <br />Fund Balances <br /> <br />The City saves money for capital improvements in a variety of special revenue, capital <br />project and enterprise funds. These funds create important flexibility in the capital <br />improvements planning process. Cash reserves can be used to eliminate or reduce debt. <br />Reserves can be drawn upon to supplement other revenues to support debt. The use of <br />fund balances must be carefully considered in the planning process. Once spent, these <br />monies cannot be recaptured for other purposes. <br /> <br />Debt <br /> <br />It is unlikely that the City will meet its capital improvement needs without debt. <br /> <br />· Debt Limit. State Law limits municipal indebtedness to 2% of the total taxable <br /> market value of property in the City. This limit is misleading because many <br /> forms of debt are excluded from the debt limit calculation. For Elk River, the <br /> debt subject to the debt limit includes general obligation bonds approved by <br /> voters, general obligation notes for equipment, and lease purchase financing over <br /> $1,000,000. <br />· Levy Limits. It is likely that the 2001 Legislature will impose levy limits. While <br /> the precise limitations are not known, all previous forms of levy limits have <br /> allowed the levy of taxes for debt to be outside of levy limits. Under levy limits, <br /> <br />2 <br /> <br /> <br />