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March 1, 2007 <br /> r,:. <br /> v <br /> L) <br /> 3 <br /> The Honorable Pete Hoffmann, Chair and Members of the County Council ~ <br /> Hawaii County Council c <br /> Hilo, HI 96720 <br /> Deaz Chairman Hoffmann and Council Members: <br /> Transmitted herewith is the Capital Budget for FY 2007-08 submitted for your review and approval, and the Capital Program for ~ neXf <br /> six years from FY 2007-08 to 2012-13 for your information. The Capital Budget includes 85 projects requiring a total approprtation of <br /> $140,575,000, of which $80,000 is Federal Grants Receivable and $22,334,000 is County-financed through State Revolving Fund (SRF) <br /> loans (see Table 1). <br /> Debt Service <br /> Every year, we strive to present a budget that is fiscally constrained (in terms of prudent debt service planning) and selective based on <br /> rational criteria. The Government Finance Officers Association recommendation, which is generally followed by bond rating agencies, is <br /> that a prudent debt service limit is 15% of general expenditures. However, this administration has stated that our policy is more <br /> conservative and that debt service should not exceed 13% of general expenditures. The lower the interest rate and the greater the <br /> revenues, the more that can be borrowed while staying within the prudent debt service limits. The proposed operating budget for this <br /> coming fiscal year includes debt service of approximately $1,307,000 for $25M in bonds to be floated during the next fiscal yeaz, as well <br /> as $115,000 debt service for new SRF loans. At this budgeted amount, the resulting total debt service is estimated at 10.01 % of the <br /> general expenditures. <br /> Approximately $ 113.9M of the proposed capital budget may require bond funding. ~ Of this amount, two large projects comprise nearly a <br /> third of the total potential bond projects: the Waikoloa Workforce Housing Parks and Community Center ($25M) and Fire Administrative <br /> Support Complex ($14.7M). To fund an additional $70M in bonds, over and above the $25M budgeted, to carry out the projects <br /> requiring bond funding results in a debt service estimated at 11.12% of the general expenditures.Z <br /> Total ($140.575M) -Federal funds ($0.08) -Hwy Fund ($3.389M) -S12F ($22.334M) -Genera] Fund as the assumed source for Discretionary Projects ($0.9M) _ <br /> $113.872M <br /> z The $70M assumes approximately 20% of the total amount requiring bond funding could be delayed or dropped for some reason (e.g., changed needs or priorities): <br /> [$113.9M (total requiring bond funding) - $25M (budgeted bond amount)] x 0.8 (percent required for projects proceeding) =approx. $70M. / <br /> s Comm. No. ~ T <br /> <br /> ~a~r~~\ Ref. To: ~L <br /> / Ref. Date MAR 0 2 2007 <br /> <br />