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Honorable Dominic Yagong March 1, 2011 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, which are used to reduce carrying cost and insure that cash will be available for projects as needed. As budgeted, the resulting total debt service is estimated at 10.6% of the general expenditures. If all debt that has been authorized by the County Council was issued, the debt service percentage would be 12.1% 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 additions to buildings, including related equipment and appurtenances which are integral to the new structure; 4. Nonrecurring rehabilitation, remodeling or expansion of infrastructure and buildings; 5. Planning, feasibility, engineering, or design studies related to capital improvement projects; 6. Information and communications technology infrastructure. Pending vs. New Projects Approximately 20 of the 45 proposed projects are reappropriations of existing projects totaling $127,960,000 because appropriations are lapsing and funds will not be encumbered by June 30, 2011. Generally, appropriations are active for 3 years from the effective date of the ordinance appropriating the project.