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(Financing the purchase of Capital Equipment) <br />• Referred to as Certificate of Indebtedness or Capital Notes. <br />o Simple Definition - Borrowing Funds to Purchase Equipment. <br />• Under Minnesota Statue 475.61, the City Council may issue debt to <br />purchase capital equipment. <br />• For this purpose Capital Equipment means: <br />• Public Safety Vehicles and Equipment. <br />• Road Construction & Maintenance Equipment. <br />• Computer Hardware & Software. <br />• The Equipment may be new or used, however the expected life must be <br />at least as long as the terms of the certificate. <br />• Term of the Debt = cannot be more than 10 years. <br />o Most Cities issue 5 -Year Certificates. <br />• The payment of principal and interest is supported by the Tax Levy. <br />• Increases taxes: (See Attached for $400,000 & $550,000) <br />5 -Year Certificate <br />• Example: <br />• $400,000 Certificate — 5 -Year <br />• $238,000 Valuation (Median Value) <br />• Property Owner pays: City Levy <br />• $ 30.96 — First year $ 96,320 <br />• $ 29.62 —Second Year $ 92,132 <br />• $ 30.83 —Third Year $ 95,912 <br />• $ 30.23 — Fourth Year $ 94,038 <br />• $ 31.23 —Fifth Year $ 97,146 <br />$152.87 $475,548 <br />• 2003C - $320,000 Equipment Certificate (Fire Truck). <br />• 1990A - $300,000 Equipment Certificate: <br />o Front End Loader. <br />o Backhoe. <br />o Pick -Up Trucks for Public Works (3). <br />o 2 -Ton Trucks for Public Works (2). <br />• Variety of Tools for Public Works Garage. <br />• Squad Cars (2). <br />• Computer Equipment for Police Department. <br />