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<br />Page 1 of 2 <br />CLARK Debbie D <br /> <br />From: <br /> CUTSOGEORGE Sue L <br />Sent: <br /> Friday, November 07, 2008 3:18 PM <br />To: <br /> CARLSON Becky A; PETERSON Tish A; CRONIN Finn J; GUBANIKHIN Pavel E; MURDOCH Kitty M; <br />SMITH Tammy D <br />Subject: <br /> 2008 GO Bond Measure Budget Stuff <br />Follow Up Flag: <br /> Follow up <br />Flag Status: <br /> Red <br />In preparation for the meeting that Tammy is setting up for budgeting of the 2008 street bonds, I took a look at the implementation <br />plan from the 2006 parks bonds and tweaked it a bit for this measure.  This bond should be implemented in approximately the same <br /> <br />way, so most of what we decided for the 2006 bonds still works just fine, although this one should be a little simpler. <br />  <br />This is a starting place for our discussion (rather than starting with a blank page).  We can discuss these specifics and any others at <br /> <br />the meeting . <br />  <br /> <br />Sue <br />  <br />General Approach <br />  <br />The City will procure a line of credit from a bank.  We will draw on the line of credit throughout the year as needed for <br />projects.  We will  need to make draw on the line equal to what we said we'd levy for property taxes each year, even if <br />we don't expect to spend that amount, because under state law, we can only levy property taxes for a scheduled principal <br />payment.  Drawing on the line allows us to schedule a principal payment of that same amount, which meets the <br />requirement for levying property taxes.   <br />  <br />If we wind up spending less than we expected in a given calendar year, that's OK ... the money will sit in the fund and be <br />the first dollars spent the next calendar year.  This should work as long as we don't get too far behind in spending against <br />what we said in the ballot materials ($6.5 million in 2009 CY, and that amount plus inflation in each subsequent calendar <br />year).  We can adjust each year as we go along, if things go differently than expected. <br />  <br />This approach may change ... I am currently in conversations with our financial advisor and bond counsel about the most <br />cost-effective approach to borrowing money for this purpose.  But whatever method we use, it shouldn't materially <br />change the budget entries needed on the PW side! <br />  <br />Fund Information <br />  <br />When we sell GO Bonds, we place the proceeds in a  separate capital  sub-fund.  In this case, we should create a <br />new Fund 325(?) for the 2008 bond measure. <br />  <br />Repayment on the bonds will occur in Fund 211, and we will levy property taxes for the repayment. <br />  <br />FY09 Actions <br />  <br />Under state law, we do not need an appropriation to spend bond proceeds  for bonds that are approved by voters in the <br />same fiscal year .   For the 2006 parks bonds, we decided that we would enter an appropriation on the general ledger in <br />order to allow spending  that first fiscal year without lots of budget overrides.   PW should provide an estimated spending <br />schedule for that first $6.5 million of projects, and that can be the basis for deciding what the amount of the FY09 <br />appropriation for project spending should be.  We also need to budget $100,000 for bond issuance costs.  At the end of <br />FY09 , any unspent funds would be rolled in the capital rollover process to FY10 . <br />  <br />FY10 Actions <br />  <br />The FY10 budget for the capital fund should include the difference between $6,600,000 million and whatever we decide <br />11/14/2008 <br /> <br />