Item C: PROS General Obligation Bond

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average over time. Specific analysis of bond amounts and timing cannot be undertaken until there is a final project list with the expected timing of the spending for each project. Impact on Debt Policy Limits The Budget Committee approved revised debt policies in February 2005. At that time, the Committee approved a debt policy limit that states that net direct debt as a percentage of real market value shall be a maximum of 1.0%. The most recent update of the Debt Capacity Analysis was also prepared as of February 2005, with projections of net direct debt outstanding from FY06 through FY11. At that time, it was projected that the City could issue $30 million for PROS projects in FY07 and $70 million for the City Hall replacement project in FY09 within the debt policy limits. Net direct debt outstanding under that scenario would peak in FY09 at 0.9%. Issuance of approximately $30 million of PROS bonds (or less) within the next six years would, therefore, be consistent with the debt policies. Issuance of the higher amount (Option C for $50 million) over the next six years would potentially constrain the amount of debt capacity that might be needed for City Hall. It is possible, however, to approve a $50 million bond measure, but to only issue the debt when it would result in the City’s net direct debt amount outstanding remaining under the 1.0% of real market value limit. In the February 2005 Debt Capacity Study, for instance, that by FY11, there would be additional debt capacity of about $43 million, even after issuance of $30 million of PROS bonds and $70 million of City Hall bonds. That additional capacity would be created from two factors: (1) growth in real market value; and (2) retirements of existing debt.