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Available Funding Sources
<br />9
<br />4 Available Funding
<br />Sources
<br />There are a number of sources available to the City for the funding of the PMR.
<br />This section of the report will discuss these funding sources, their potential
<br />amounts, and their applicability to the City's anticipated projects.
<br />Property Tax Levy The City could designate a portion of its local property tax levy each year to
<br />pay for all or a portion of the cost of implementing the PMR (in 2005, the City
<br />2 levied $236,358 for street maintenance). This is generally referred to as pay -as-
<br />you-go financing. The pay -as- you -go method of financing is useful for smaller
<br />projects where the cost of the capital improvement has a negligible effect on the
<br />property tax rates or where improvements provide very short-term benefits or
<br />I whose useful life is short. The use of pay -as- you -go financing allows the City
<br />3'. to minimize the total acquisition cost of a capital expenditure by using
<br />accumulated funds on hand to avoid interest cost on borrowed funds. However,
<br />3 it can delay the improvement until adequate funds are available which may
<br />result in increased costs due to inflation.
<br />1 We have developed a schedule of the projected property tax levy and tax rate
<br />needed each year to pay for the entire cost of the PMR over the planning period.
<br />'i The tax rate for each year is projected based on three growth scenarios for the
<br />City's property tax base. The first assumes an annual growth rate in the tax
<br />31 base of 5 %, the second 7.5 %, and the third 10 %. This provides the City with a
<br />• range of property tax rates within which the actual rates are likely to occur. The
<br />2005 total levy amount and tax rate impact represents the City's property tax
<br />levy for street maintenance this year. The largest tax rate impact projected
<br />ranges from 15.686% to 19.793% in 2010 when the PMR projects its maximum
<br />annual expenditure of $3,907,500.
<br />31 Projected Projected Projected
<br />Total Tax Capacity Tax Rate Tax Capacity Tax Rate Tax Capacity Tax Rate
<br />31 Year Levy (5% Growth) Impact (7.5% Growth) Impact (10% Growth) Impact
<br />2005 236,538 15,468,021 L529% 15,468,021 1.529% 15,468,021 1.529%
<br />31 2006 347,500 16,241,422 2.140% 16,628,123 2.090% 17,014,823 2.042%
<br />2007 1,800.500 17,053,493 10.558% 17,875,232 10.073% 18,716,305 9.620%
<br />2008 3,135,000 17,906,168 17.508% 19,215,874
<br />16.315% 20,587,936 15.227%
<br />2009 3,437,500 18,801,476 18.283% 20,657,065 16.641% 22,646,730 15.179%
<br />2010 3,907,500 19,741,550 19.793% 22,206,345 17.596% 24,911,403 15.686%
<br />31 2011 2,025,000 20,728,628 9.769% 23,871,820 8.483% 27,402,543 7.390°
<br />2012 2,122,500 21,765,059 9.752% 25,662,207 8.271% 30,142,797 7.041 ° /
<br />3 2013 2,230,000 22,853312 9.758% 27.586,872 8.084% 33,157,077 6.726 °r
<br />2014 2,340,000 23,995,977 9.752% 29,655,888 7.891% 36,472,784 6.416 °'
<br />We also calculated the property tax impacts on a residential home in the City
<br />valued at $228,400 which is the current average value in the City. The 2005
<br />3 property tax impacts represent the City's actual 2005 levy for street
<br />maintenance. The maximum property tax impact occurs in 2010 and is
<br />projected to range from approximately $358 to approximately $452 depending
<br />allon the rate of growth in the City's tax base.
<br />S p r i n g ste d - 17 City of Lino Lakes - Pavement Management Plan Financing R
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