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Honorable 1 Yoshimoto May 5, 2009 Page 2 The lower the interest rate and the greater the revenues, the more can be borrowed while staying within the prudent debt service limits. The proposed operating budget for this coming fiscal year includes debt service for short term bond anticipation notes so that cash will be available for projects as needed. As budgeted, the resulting total debt service is estimated at 9.9% of the general expenditures. If all debt that has been authorized by the County Council was issued, the debt service percentage would be 12.2% of the general expenditures. What is a Capital Improvement Project? A project is eligible for funding from the capital budget if it is a major nonrecurring expenditure, such as: 1. Land acquisition; 2. Infrastructure improvement other than buildings that add value to the land or improves utility (roads, drainage, sewer lines, parking, landscape or similar construction); 3. New buildings or structures or addition to a building; including related equipment and appurtenances which are integral to the new structure. 4. Nonrecurring rehabilitation or deferred maintenance of infrastructure and buildings, provided that the cost is $25,000 or more and the improvement will have a useful life of 10 years or more; 5. Planning, feasibility, engineering, or design studies related to individual capital improvement projects or to a program that is implemented through individual capital improvement projects. 6. Information and communications technology provided that the cost is $25,000 or more. Pending vs. New Projects Approximately 16 of the 52 proposed projects require reappropriations totaling $24,455,000 as funds would lapse and cannot be encumbered by June 30, 2009. Appropriations are normally active for three (3) years from the effective date of the ordinance appropriating the project. 4