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DEBT SERVICE FUNS DESCRIPTION: The Debt Service Funds repay the outstanding debt obligations of the City of Gem Lake. Debt service funds use the modified accrual basis of accounting; however, the cash basis of accounting will be used for budgetary purposes only. The. cash basis is used for budgeting to ensure that.sufficient cash will be available to make required payments on.the Co's bonded indebtedness. On pages 77 through 80 are the City's. bond payable schedules as of 12/31 /12. OBJECTIVES: Retire all debtin a timely basis as scheduled, MEASURABLE. WORKLOAD DATA: 2010 .2011 2012 2013 ACTUAL ACTUAL ACTUAL ESTIMATED Bond Rating Non -Rated Non -Rated Non -Rated Non -Rated Dec. 31 Debt Outstanding (in thousands) $1,354 $1,255 $1155 $1,452 Net Debt Per Capita $3,444 $3,194 $2,939 $2 077 DEBT LIMITATIONS: All Minnesota municipalities {co.unties, cities .towns and school districts} are subject to statutory "net debt" limitations under the provisions of Minnesota Statutes., Section 475..53. Linder this provision, the legal debt limit is 3.0% of the assessor's market value of the municipalities' tax base. Bond issues covered by this limit are those that are financed by property taxes unless at least 20% of the annual debt service costs are financed by special. assessments or tax increments. At present the City has one bond issue that is subject to the debt limit: the 2007 Capital Improvement Plan Bonds. The City's current legal debt limit and debt margin is as follows: Legal Debt Limit.(3%. of Estimated Market Value) $2,444,292 Less: Outstanding Debt Subject to Limit _ (775,000) Legal Debt Margin as of January 1, 2013 $1,$$9,292 BUDGET COMMENTARY: The City's debt consists of two improvement bonds, which are repaid through special assessment levied and a.capital improvement plan bond for the construction of Heritage Hall which is repaid from a property tax levy. 34