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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 $4,200,000. This amount represents the maximum <br />principal amount of CIP Bonds that may be issued to finance the <br />construction of Fire Station #2. Principal and interest on the CIP Bonds will <br />be paid through a tax levy over the term of the CIP Bonds, further described <br />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 incur <br />debt in excess of 3% of the assessor's estimated market value for the <br />municipality. In the City, the estimated market value for pay 2014 is <br />$1,795,975,400. Therefore, the total amount of outstanding debt <br />cannot exceed $53,879,262. As of February 10, 2015, the City has <br />$20,050,000 subject to the legal debt limit (this amount does not <br />include the 2015A Bonds). If you include the issuance of the 2015A <br />CIP Bonds, the City will still be within the overall statutory debt limit <br />for the City. <br />2. A separate limitation under the CIP Act is that, without referendum, <br />the total amount of principal and interest in any one year on all CIP <br />Bonds issued by the City debt cannot exceed 0.16% of the total <br />estimated market value in the municipality. In the City, that <br />maximum annual debt service amount is $2,873,561 for the Pay 2014 <br />tax year ($1,795,975,400 x .0016). The annual principal and interest <br />payments on the CIP Bonds proposed to be issued under this CIP will <br />average approximately $280,000. If you include other CIP debt <br />outstanding, the annual principal and interest payments on all CIP <br />debt will be approximately $1,608,000. As such, debt service on the <br />CIP Bonds will be within the annual limits under the CIP Act. <br />Details regarding the proposed terms of the CIP Bonds under this CIP are <br />shown in Appendix A. A schedule of events for approval of the CIP and <br />issuance of the CIP Bonds is shown in Appendix B; and the form of the <br />public hearing notice and resolution approving the CIP are shown in <br />Appendix C. <br />Ehlers & Associates, Inc. Page 10 <br />