05/09/2005 Council Packet - Laserfiche WebLink

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3 3 Available Fund in g Sources 3 3 2 3 3 3 34, 1 1 1 a 1 1 1 1 11 Chapter 475 requires that in the case of general obligations, the issuer must, at the time the bonds are sold (usually in the resolution awarding the sale), levy an irrepealable ad valorem tax for each of the years of the bonds equal to 105% of the principal and interest due in that year. The purpose of the 5% over levy is to cover possible deficiencies in tax collection. The resolution must be filed with the county auditor who must then levy the tax for the years indicated. If, however, other revenues are pledged as security for the bonds (special assessments, tax increments, utility revenues) the amount of reasonably expected revenues from those sources may be subtracted from the 105% levy. If there is excess revenue in the debt service fund for the bonds (from prepayments, investments or irrevocable appropriations) the issuer may notify the auditor of the excess and request that the levy for the ensuing year be reduced by that amount. We developed a projection of the property tax levy and tax rate needed through 2014 to pay for the sealcoating and overlay portion of the PMR on a pay -as- you-go basis and to pay debt service on General Obligation Bonds issued to finance the reconstruction portion of the PMR each year beginning in 2007 when the first reconstruction project is scheduled to occur. The bonds were assumed to have a term of 15 years and an average annual interest rate of 4.675 %. The tax rate for each year is again projected based on three growth scenarios for the City's property tax base to provide the City with a range of property tax rates within which the actual tax rates are likely to occur. The 2005 total levy amount and tax rate impact represents the City's property tax levy for street maintenance this year. The projected tax levy and tax rate for 2006 includes only the street maintenance items of sealcoating and overlays from the PMR. The tax levies and tax rates for 2007 through 2014 include both annual maintenance for sealcoating and overlays and debt service on the G.O. Bonds to be issued for the reconstruction projects each year. The tax rate is projected to increase each year as new debt is issued and is projected to range from 5.936% to 9.022% in 2014 depending on the growth in the City's tax base. Because the bonds are projected to have a term of 15 years, the corresponding debt service payments would affect the City's tax rate through 2029. Additional tax rate impacts after 2014 would depend on how the City decided to fund the PMR in subsequent years. The projected tax levies and tax rates are shown in the table on the following page. 1 Springsted -180 - City of Lino Lakes - Pavement Management Plan Financing F