07.03 DEBT. Overview. Bond Register

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1 07.03 DEBT Overview The County Auditor is the general repository for information about debt issued by local governments within the county. If the debt is being repaid by property tax levy, the County Auditor is authorized and obligated to extend those tax levies against future year s tax rolls as provided in the debt instrument. To reduce these levies, the taxing authority must take action allowed under debt statutes, such as irrevocably appropriating funds on hand to repayment of the debt. Absent such action, the County Auditor must extend the debt tax levies against the tax rolls, even if the taxing authority has not included those debt levies in their levy certification for that year. The County Auditor plays an important role in making sure that property taxes are levied when pledged to the repayment of debt. The County Auditor reviews summary debt information from each taxing authority each year to make sure that it matches information in the county s bond register. Debt is then reported to the State Auditor each year for inclusion in state-wide debt summaries by type of taxing authority. In order to issue debt, taxing authorities and bond consultants need information on the tax generation capabilities of the taxing authority. Auditor s certificates fill this role by providing data on a history of market values and tax capacities, tax adjustment and collection patterns, tax rates and debt pledges of overlapping taxing authorities and a list of the largest taxpayers. Many taxing authorities also use the auditor s certificate in the generation of their financial statement. Debt can impact property taxes in fairly obscure ways. Outstanding debt plays a role in determining the decertification date for pre-1979 tax increment districts. It also is a factor in determining duration limit extensions for TIF districts with revenue shortfalls due to legislative action or the payment of delinquent tax collections after TIF decertification. Outstanding debt is a factor in determining the repayment schedule for special assessments deferred under the green acre program. Bond Register Description (from statute) Each county auditor shall keep a register in which shall be entered, as to each issue of such obligations by any municipality located, in whole or in part, in the county, a record of the aggregate amount authorized, the aggregate amount issued, the purpose for which issued, the number, denomination, date, and maturity of each, the rate of interest, the time of payment, the place of payment of principal and interest, and the amount of tax levied for the payment thereof. The auditor shall also enter in said register the date and amount of each debt service loan and capital loan made by the state to any school district situated wholly or partly within the county, in accordance with section 126C.68, subdivision 2, or 126C.69, subdivision 12, and shall enter on or before November 1 in each year thereafter the amount of the maximum effort debt service levy and the additional amount of the levy for interest on state loans to be extended on the tax rolls in that year, as certified by the commissioner of education in accordance with sections 126C.68, subdivision 4, and 126C.69, subdivision 14. DEBT

2 Use(s) Shows debt issued by taxing authorities within the county. Provides debt levies that need to be extended to the tax rolls. Helps determine the decertification dates for pre-1979 tax increment districts. Helps determine whether TIF district duration limits can be extended due to legislative action that caused revenue shortfalls for the TIF district. Helps determine whether delinquent TIF collected can be paid to a TIF district after decertification of the district. Establishes the repayment schedule for special assessments previously deferred under the green acre program. Who Prepares the Document County Auditor Who Gets the Document County Auditor Statutory Cite M.S Timing Updated in an ongoing basis for new debt issued. Debt levies are pulled for both TNT and final tax calculations. Debt balances as typically updated as of 12/31 each year reflecting scheduled payments of principal under the debt maturity schedule and prepayments as noted in annual reports from the taxing authorities received on or before February 1. Source of Data A certified copy of the resolution of the taxing authority issuing the debt with full information about the obligation. Prepayments provided on annual debt reports from the taxing authorities. Sample DEBT

3 Local Government Report of Outstanding Indebtedness Description Provides an annual report of debt outstanding for the taxing authority as shown in its debt records. The report shows a total of bonds outstanding as of 12/31 of the prior year with a total of new debt issued and a total of debt repaid during the prior year. Totals are provided by type(s) of asset pledged for repayment of the debt. Debt service fund balances are also included. The forms are available at Use(s) Comparing taxing authority and county debt records to identify and correct discrepancies. Identifying debt prepayments that occurred during the prior year. Verifying whether debt service funds are on hand in order to allow a reduction in a debt service levy. Who Prepares the Document Local taxing authorities with debt. Who Gets the Document County Auditor Statutory Cite M.S Timing Statutory due date is on or before 2/01. Shows debt as of 12/31 of the prior year. Source of Data Taxing authority records of debt and debt repayments. Sample See next two pages DEBT

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6 Annual Debt Report (County) Description The annual debt report provides a summary of debt outstanding as of 12/31 of the prior year for each taxing authority in the county. Subtotals are shown by asset pledged to the repayment of the debt. The form is available at Use(s) Summarized by the State Auditor to provide annual summaries of debt outstanding by type of tax authority (county, schools, city, and township). Process of generating report provides a reconcilement of county and taxing authority debt records. Provides the debt component for auditor s certificates. Provides debt information for statements of overlapping and underlying debt used in taxing authority financial statements. Who Prepares the Document County Auditor Who Gets the Document MN State Auditor Statutory Cite M.S Timing Statutory due date of 3/01. Debt is determined as of 12/31 of the prior year. Local government reports of outstanding indebtedness (due on or before 2/01) are needed to reconcile taxing authority records to county records. Source of Data County records of debt outstanding bond register. Taxing authority records of debt outstanding annual local government report of outstanding indebtedness. Beginning balances from prior year annual debt report. Sample DEBT

7 Certification of Entry into Bond Register and Tax Levy Description Before debt supported by ad-valorem tax levies can be issued, a certificate from the county auditor must be secured stating that the debt has been entered into the county s bond register and that the associated tax levies have been made. The debt statutes provide that the county auditor is responsible for making sure that these debt levies are extended against tax rolls even if the taxing authority has not included the debt levy with their certified levy for that year. The County Auditor must review the supplied resolution to make sure that it provides full details of the terms of the debt as needed for the bond register. Occasionally, a taxing authority will include a tax levy for a previous tax year. The County Auditor must verify that this previous levy was levied or have the documentation changed to remove the levy. The phrase hithertofore levied may be used to identify a levy of the taxing authority made prior to issuance of the debt and prior to the county auditor s responsibility to enforce a levy. Use(s) Provides assurance to bondholders that debt levies pledged to support bonds that they hold an interest in are, in fact, extended to the tax rolls. Who Prepares the Document County Auditor DEBT

8 Who Gets the Document Taxing authority or bond counsel Statutory Cite M.S Timing This is provided upon request. Source of Data The resolution of the taxing authority authorizing the issuance of the debt which contains full detail of the terms of the debt as required for the bond register. Sample STATE OF MINNESOTA COUNTY OF SPRUCE COUNTY AUDITOR CERTIFICATE AS TO TAX LEVY AND REGISTRATION I, the undersigned, being the duly qualified and acting County Auditor of Spruce County, Minnesota, DO HEREBY CERTIFY that on the 26 th day of May, 2005, there was filed in my office a certified copy of a resolution adopted May 16, 2005, by the City Council of the City of Spruceville of said County, authorizing the issuance of $755,000 General Obligation Improvement Bonds, Series 2005A of said City and levying a tax for payment thereof, together with full information regarding the obligations for which the tax was levied; and said obligations have been entered in my Bond Register, and the tax levy required by law has been made. WITNESS my hand and seal of the County Auditor this 26 th day of May, County Auditor (SEAL) By Deputy County Auditor Auditor s Certificate Description Before a taxing authority can issue debt, information must be supplied to bond raters and potential bond purchasers showing the taxing authority s ability to generate property taxes. Previous to the mid 1980 s, debt consultants would supply their own form and list of needed information. Forms and data definitions varied by company. In the mid 1980 s, the metro counties came up with a standard form and DEBT

9 set of definitions. The counties agreed to charge the same fee for the report with significant additional fees for any forms or requests for information not included in the auditor s certificate. Consequently, there is now a standard form for this report. This information is also helpful to those analyzing the financial position of the taxing authority. Some taxing authorities will request the auditor s certificate when they are preparing their comprehensive annual financial reports ( CAFR ). Types of information included Current year valuations estimated and taxable market values, and net tax capacity by type of property. Includes tax increment, fiscal disparity and powerline adjustments to net tax capacity, if any. Valuation history total estimated and taxable market values, and net tax capacities (both before and after adjustments) for the last five years. For the purpose of generating CAFR s, this may need to be expanded to ten years. 10 Largest Taxpayers only provided upon request, technically is a separate report. Depending on the capabilities of the individual county, this may be the ten largest taxpayers or a list of the largest taxpaying parcels. Typically includes the estimated market value, net tax capacity, total taxes before special assessments and the use of the property. Tax Rate History Shows the tax rates for underlying and overlapping taxing authorities for the last five years. Bonded Indebtedness Shows the underlying and overlapping bonded debt as of 12/31 of the prior year. Also includes the debt service tax rate(s) to support that debt. Levy and collection history Shows the tax levies, credits, collections and adjustments for the taxing authority for the last four years. Tax levies for the current year are included as a separate item. Use(s) Provides information needed for bond prospectus. Provides information needed to determine bond ratings. Provides information needed for taxing authority CAFR s. Helps in analyzing a taxing authority s ability to generate property taxes. Who Prepares the Document County Auditor Who Gets the Document Taxing authority or bond counsel Statutory Cite None Timing Can occur at anytime during the year. There may be more requests at the beginning of each year since this is typically when cities are preparing their CAFR s and new debt is being issued to support activities in the upcoming year. DEBT

10 Source of Data Current and historical valuations Market value and net tax capacity reports at the county. If the county runs an assessment abstract at the point that taxes are extended, that report can be used for determining net tax capacities. 10 Largest Taxpayers Tax Rate History the tax rate summary or other tax rate reports at the county. Bonded Indebtedness Outstanding debt from the annual debt report. Tax capacities from the assessment abstract or other county sources for adjusted net tax capacities. Debt service tax rate(s) from tax rate calculation sources at the county. Levy and collection history the levy book or equivalent. Sample See next page. DEBT

11 STATE OF MINNESOTA ) CERTIFICATE AS TO TAXES AND TAXABLE PROPERTY IN ) SS SPRUCE COUNTY COUNTY OF SPRUCE ) (Herein called the "TAXING DISTRICT") I hereby certify that the TAXING DISTRICT is situated ENTIRELY in this County and that: 1. CURRENT VALUATION-The market value and net tax capacities of all taxable property in the TAXING DISTRICT in this county as assessed in 2005 for the purpose of computing the rates of taxes collectable in 2006 are as follows: Estimated Taxable Net Market Value Market Value Tax Capacity Real Estate: Residential Homestead (Non-Ag) 12,580,137,300 12,028,228, ,265,489 (Class 1a & 1b) Agricultural (Class 1d and 2) 354,050, ,927,650 1,639,709 Commercial & Industrial (Class 3, 5(1), & 4c(2-3)(6-8)) Commercial & Industrial 2,277,280,600 2,274,073,700 43,390,730 Public Utility 25,513,500 25,513, ,904 Railroad operating Property 23,105,400 23,105, ,567 Non-Homestead Residential 1,146,006,550 1,073,043,650 15,143,300 (Class 4a, 4b(1-4), 4bb, 4c(4-5)(9), & 4d) Commercial & Residential Seasonal/Rec. 25,023,300 21,894, ,064 (Class 1c & 4c(1)) Other (Class 5(2)) Total Real Estate 16,431,116,800 15,635,786, ,611,763 Total Personal Property 185,840, ,840,900 3,619,969 Total Real & Personal Property 16,616,957,700 15,821,627, ,231,732 Total Market-based Referendum Value 15,673,784,740 If applicable to the TAXING DISTRICT Subtract: Captured tax capacity of tax increment district 11,586,226 10% of 200 KV transmission lines Fiscal Disparity Contribution Value 15,771,263 Subtotal: Local Tax Rate Determination Value 157,874,243 Add: Fiscal Disparity Distribution Value 27,361,062 Total Adjusted Taxable Net Tax Capacity 185,235,305 Manufactured Homes Valuation (payable 2006) 112,552,400 1,125,928 DEBT

12 Auditor's Certificate for SPRUCE COUNTY 2. Valuation History (Real & Personal Property) Net Tax Capacity Adjusted (Less Tax Inc. & Taxable Levy Payable Estimated Taxable Net Tax Capacity Trans. Line) Net Tax Capacity Year Year Market Value Market Value (A) (B) (C) $14,663,270,900 $14,233,046,300 $229,458,183 $212,946,499 $231,969, $12,894,021,200 $12,678,690,400 $200,812,271 $187,124,399 $202,945, $11,702,257,800 $11,530,061,800 $183,924,456 $170,208,208 $184,753, $10,822,850,300 $10,642,696,100 $181,032,178 $167,737,773 $182,755, $9,804,492,800 $9,703,598,700 $183,317,918 $170,509,150 $183,317, Ten Largest Taxpayers (Optional)* Pay 2006 Estimated Net Property Taxpayers Market Value Tax Capacity Classification Connexus Energy/SPRUCE Electric Coop 74,422,400 1,480,105 Utility Medtronics 63,878,400 1,273,818 Manufacturing Glimcher Northtown Venture 55,549,300 1,110,236 Mall Northern States Power 53,267,400 1,062,220 Utility Target Corp 49,683,700 1,009,924 Retail Minnegasco Inc. 36,479, ,603 Utility Coon Rapids Riverdale 31,499, ,189 Retail Shamrock Investments LLC 27,714, ,788 Commercial/Industrial Riverdale Crossing 26,830, ,358 Retail Inland/Ryan 26,129, ,092 Commercial/Industrial Shamrock Investments LLC 11,135, ,175 Starmark NW Realty LLC 10,500, ,926 Retail Great River Energy 10,394, ,794 Utility Wal-Mart Stores Inc 10,021, ,597 Retail * A list of the ten largest taxpayers in the TAXING DISTRICTS in SPRUCE County may be available upon request for Auditor's certificate for SPRUCE COUNTY 4. Taxing Authority and Local Tax Rate History The TAXING DISTRICT has power to tax property situated in the following county or counties: SPRUCE Local Tax Rate History (Levy Year/Coll.Year) Governmental Unit: 2001/ / / / /2006 SPRUCE County Without Library % % % % % With Library % % % % % Hilltop % % % % % Cities: Andover % % % % % Andover/Lower Rum River WS % % % % % SPRUCE % % % % % Bethel % % % % % Blaine % % % % % Blaine/Six Cities WS % % % % % Centerville % % % % % Circle Pines % % % % % Columbia Heights % % % % % Columbia Heights/Six Cities WS % % % % % Coon Rapids % % % % % Coon Rapids/Six Cities WS % % % % % Coon Rapids/Six Cities & Pleasure Ck % % % % % Coon Rapids/Six Cities & Spring Brk Storm Drn % % % % % DEBT

13 5. Bonded Indebtedness Auditor's Certificate for SPRUCE COUNTY The TAXING DISTRICT and all the governmental units listed in section 4 having bonded debt, have such debt as shown below. Values shown are Adjusted Taxable net Tax Capacities which have been adjusted for Fiscal Disparity Contribution and Distribution, Tax Increment Captured Tax Capacity and 200 KV Transmission Lines. Taxable Net Taxable Net Tax Capacity Tax Capacity Taxable Net Tax 2005/2006 of ENTIRE of Governmental Capacity of Portion Bonded Debt Debt Service Governmental Unit in in TAXING DIST. as of Local Tax Government Unit Unit SPRUCE County in SPRUCE County 12/31/2005 Rate SPRUCE County 185,235, ,235, ,235,305 $103,700, % Cities: Andover 16,573,713 16,573,713 16,573,713 $32,740, % SPRUCE 10,424,063 10,424,063 10,424,063 $3,695, % Bethel 240, , ,104 $459, % Blaine-joint SPRUCE Cty Home Auditor 29,028,909 28,738,939 28,738,939 $34,125, % Centerville 2,071,728 2,071,728 2,071,728 $4,550, % Circle Pines 2,616,973 2,616,973 2,616,973 $955, % Columbia Heights 9,707,976 9,707,976 9,707,976 $2,635, % Coon Rapids 38,054,392 38,054,392 38,054,392 $36,084, % East Bethel 6,290,570 6,290,570 6,290,570 $1,695, % Fridley 18,879,878 18,879,878 18,879,878 $16,880, % Ham Lake 9,178,786 9,178,786 9,178,786 $6,020, % Hilltop 347, , ,413 $ % Lexington 1,086,723 1,086,723 1,086,723 $1,145, % Lino Lakes 10,913,995 10,913,995 10,913,995 $20,346, % Oak Grove 4,449,649 4,449,649 4,449,649 $1,715, % Ramsey 10,916,002 10,916,002 10,916,002 $16,096, % St. Francis 2,813,370 2,813,370 2,813,370 $5,975, % Spring Lake Park-joint SPRUCE Cty Home Aud 4,026,870 3,942,007 3,942,007 $5,336, % Towns: Burns 2,450,450 2,450,450 2,450,450 $312, % Columbus 2,792,308 2,792,308 2,792,308 $150, % Linwood 2,746,266 2,746,266 2,746,266 $ % 185,610, ,235, ,235,305 Schools: 11-joint SPRUCE Cty Home Auditor 122,643,761 97,462,653 97,462,653 $199,799, % 12 16,710,018 16,710,018 16,710,018 $72,935, % 13 13,994,417 13,994,417 13,994,417 $31,800, % 14 9,784,729 9,784,729 9,784,729 $17,420, % 15-joint SPRUCE Cty Home Auditor 16,134,511 14,963,644 14,963,644 $65,764, % 16 19,745,861 19,745,861 19,745,861 $28,235, % 624-joint Ramsey Home Auditor 0 1,247,601 1,247,601 $41,765, % 728-joint Sherburne Home Auditor 0 2,418,556 2,418,556 $129,668, % 831-joint Washington Home Auditor 0 8,907,828 8,907,828 $56,405, % 916-joint Washington Home Auditor 0 46,611,308 46,611,308 $17,955, % 185,235, ,235,307 DEBT

14 Auditor's Certificate for SPRUCE COUNTY 6. Tax Levies and Collections: Levy Year/Collection Year 2001/ / / /05 Original Certified Tax Levy $68,866,339 $72,292,017 $76,348,822 $80,984,995 Property Tax Credits $11,809,049 $12,079,638 $13,159,930 $13,489,942 Adjustments to Levy (Excess TIF, rounding) $62,570 $78,928 $34,063 $19,087 Net Tax Levy $57,119,860 $60,291,307 $63,222,955 $67,514,140 Current Year Adj (Abatements, Additions) $123,778 $18,309 $16,627 $129,032 Amount Collected During Collection Year $56,373,712 $58,922,977 $62,503,179 $66,440,121 Amount Delinquent at End of Collection Year $622,370 $1,350,021 $703,149 $944,987 Delinquencies Collected as of: $472,278 $981,946 $397,088 $0 Delinquencies Abated or Canceled as of: $88,831 $302,130 $84,956 $0 Total Delinquencies Outstanding as of: $61,261 $65,945 $221,105 $944, /2006 Final Gross Tax Levy $86,440,110 Final Net Tax Levy $65,859,965 WITNESS my hand and official seal this 11th day of July, 2006 (SEAL) Deputy If you have any questions about information contained in this certificate, please contact John Doe at (555) DEBT

15 Largest Taxpayers Description The diversity of a taxing authority s largest taxpayers is one factor in estimating the future ability of a taxing authority to generate property taxes. If one taxpayer or industry represents a relatively large portion of the tax base, there may be higher risk in issuing debt to that authority. The report of largest taxpayers provides the data to help with this evaluation. The high volume of parcels in a taxing authority can make the determination of the largest taxpayers difficult without a computer program designed for that purpose. Differences in taxpayer names (i.e. NSP vs. Northern States Power vs. Northern States Power Co. vs. Excel Energy ) or different ownership relationships (i.e. John Smith vs. John & Mary Smith vs. John Smith & Sons vs. John Smith Inc ) can complicate the accumulation of taxes and value by taxpayer. In computer systems that provide for a common taxpayer ID to represent each taxpayer, this task can be easier - but the results depend on the quality of the taxpayer ID s assigned by staff receiving documents transferring ownership of property. Because of these difficulties, some counties supply lists of the largest taxpaying parcels and let the taxing authorities or bond consultants accumulate a largest taxpayer list as they see fit. Some counties have computer systems that facilitate linking by name or taxpayer ID that make the generation of the largest taxpayer list relatively easy. It s important to check the results for reasonableness. Company names change or companies acquire or sell property so it is not enough to update the list of largest taxpaying parcels from the prior year with current year information. Also, while the title of the report is largest taxpayers, this may not represent the entity actually making payments to the county. For example, a property management company may make payments for a number of properties but for this report the taxpayer would be the owner of the property rather than the company performing the physical act of paying taxes. In the case of contracts for deed, the county will need to determine whether the fee owner or contract purchaser best represents the entity being requested for this report. Use(s) Provides information needed for bond prospectus. Provides information needed for determining bond ratings. Provides information needed for taxing authority CAFR s. Helps in analyzing a taxing authority s ability to generate property taxes. Can help in determining whether a taxing authority s tax base is over reliant on a particular company or industry. Who Prepares the Document County Auditor. Who Gets the Document Taxing authority or bond counsel. Statutory Cite None DEBT

16 Timing Can occur at anytime during the year. There may be more requests at the beginning of each year since this is typically when cities are preparing their CAFR s and new debt is being issued to support activities in the upcoming year. Source of Data Lists of taxes in a taxing authority sorted in inverse order by amount or grouped in inverse order by taxpayer name or ID. Sample Parcel Num ber Address 1 Taxable M kt Value Est. M kt Value Property Type Net Tax capacity Net Tax R C A R D IA C P A C E M A K E R S IN C 6 7,3 0 5, ,3 0 5,9 0 0 C O M M P R E F ,3 9 3, R L A N D O L A K E S IN C 1 6,7 4 4, ,7 4 4,1 0 0 C O M M P R E F , R M U T U A L S E R V L IF E IN S C O 1 1,0 0 0, ,0 0 0,0 0 0 C O M M P R E F , R P H A R M A C IA D E L T E C IN C 9,8 0 0, ,8 0 0,0 0 0 C O M M P R E F , R T E A C H E R S R E T IR E M E N T S Y S O F IL 8,0 0 0, ,0 0 0,0 0 0 C O M M P R E F , R A rd e n H ills In d u s tria l L L c 7,6 8 8, ,6 8 8,8 0 0 C O M M P R E F , P N O R T H E R N S T A T E S P O W E R CO 7,4 1 0, ,4 1 0,7 0 0 G A S U T IL IT Y , R IN T E R N A T IO N A L P A P E R C O M P A N Y 7,2 4 6, ,2 4 6,0 0 0 IN D U S T P R E F , R T rin e t E s s e n tia l F a c ilitie s X I 6,0 0 0, ,0 0 0,0 0 0 C O M M P R E F , R L O D G IA N IN C /S E R V IC O 5,5 0 0, ,5 0 0,0 0 0 C O M M P R E F , R A rd e n H ills In d u s tria l L L c 5,3 6 8, ,3 6 8,7 0 0 C O M M P R E F , R A R D E N P L A Z A L L C 5,0 6 0, ,0 6 0,0 0 0 C O M M P R E F , R C S M C O R P O R A T IO N 5,0 0 0, ,0 0 0,0 0 0 C O M M P R E F , R L A N D O L A K E S IN C 4,9 1 1, ,9 1 1,0 0 0 C O M M N O N P R E F , R Arden H ills Industrial LLc 4,895,700 4,895,700 C O M M N O N P R E F , R J O S E P H L A D R IA N 4,6 0 0, ,6 0 0,0 0 0 C O M M P R E F , R A R D E N W O O D S L L C 4,6 0 0, ,6 0 0,0 0 0 C O M M P R E F , U N IT E D P R O P E R T IE S C O M M N O N R IN V E S T C O 4,2 5 0, ,2 5 0,0 0 0 P R E F , R U N IT E D P R O P E R T IE S IN V E S T C O 4,2 5 0, ,2 5 0,0 0 0 C O M M P R E F , R C O R P O R A T E E X P R E S S O F F IC E 4,1 8 3, ,1 8 3,1 0 0 C O M M P R E F , R S T P A U L P R O P E R T IE S IN C 4,0 3 7, ,0 3 7,8 0 0 IN D U S T N O N P R F , R C S M C O R P O R A T IO N 3,7 5 0, ,7 5 0,0 0 0 C O M M N O N P R E F , R A M B P R O P E R T Y L P 3,7 6 0, ,7 6 0,4 0 0 C O M M P R E F , R S C H O L L S IN C 3,6 6 0, ,6 6 0,3 0 0 C O M M P R E F , # Taxpayer Type of Business Estimated Market Value Net Tax Capacity Total Property Tax Before Assessments % of Total Property Tax In County # of Parcels 1 Northern States Power (Xcel Energy) Utility $ 391,033,700 $ 7,808,804 $ 12,696, % M Corporate Headquarters/ 284,202,300 5,677,654 9,604, % 49 Manufacturing 3 Compass Retail Inc Real Estate Investing 109,430,000 2,187,100 3,559, % 2 (Rosedale) 4 CSM Corporation & Investors Property Management/ 91,630,300 1,820,606 2,989, % 27 Real Estate Investing (Commercial/ Office/ Hotel/ Townhome) 5 Minnesota Mutual Life Insurance Insurance 86,701,700 1,731,034 2,904, % 6 6 Guidant (Cardiac Pacemakers Inc) Medical Manufacturing 85,000,000 1,699,250 2,768, % 1 7 Target Corp Retail 82,683,200 1,648,414 2,724, % 13 8 Maplewood Mall Associates LP Real Estate Investing 76,500,000 1,529,250 2,616, % 1 (Maplewood Mall) 9 US Bank Corp Prop & US Bancorp Corp Office Building & Banking 78,629,000 1,545,153 2,599, % Heritage Property Investment Trust Inc. (Bradley Operating LP) Real Estate Investing (Har-Mar & others) 78,436,800 1,565,736 2,566, % 11 DEBT

17 Overlapping & Underlying Debt Report Description The overall level of payments for debt for property within a taxing authority can be an indicator of the possible risk of issuing additional debt. If the level is high, taxpayers may be less willing to make payments for more debt. This report shows the total debt supported by property taxes allocated to the taxing authority based on proportionate shares of the adjusted net tax capacity available for the rate determination for that year. Use(s) Analyzing the ability of a given tax base to absorb additional debt payments. Determining whether a taxing authority is under net debt limits contained in M.S Providing information needed for bond prospectus. Providing information needed to determine bond ratings. Providing information needed for taxing authority CAFR s. Who Prepares the Document County Auditor Who Gets the Document Taxing authority or bond counsel. Statutory Cite None Timing Typically needed when a taxing authority is generating their CAFR. Source of Data Net tax capacities from assessment abstract or similar source are used to determine the percentage of the overlapping debt attributable to property in the taxing authority. Cross-county values are needed from counties that share overlapping tax authorities. Debt as of 12/31 is taken from the annual debt report. Sample See next page. DEBT

18 Spruce County, Minnesota Computation of Direct, Overlapping and Underlying Debt Year Ended December 31, 2005 Total Debt Applicable to Spruce County Outstanding* Percent** Amount DIRECT DEBT Spruce County $ 109,970, % $ 109,970,000 OVERLAPPING DEBT City of Elm 670, % 659,280 City of Pine 175, % 157,850 School District #123 20,360, % 15,310,720 School District # , % 193,390 Metro Council 86,620, % 16,371, ,240,000 32,692,420 UNDERLYING DEBT City of Spruceville 97,560, % 97,560,000 City of Oak 90, % 90,000 Town of Aspen 2,630, % 2,630,000 School District #369 22,300, % 22,300,000 Spruceville HRA 2,290, % 2,290, ,870, ,870,000 Total $ 343,080,000 $ 267,532,420 * Total Debt Outstanding - That portion of the debt which is financed by tax levies. ** Determined by the ratio of net tax capacity of property subject to taxation in overlapping taxing authority to net tax capacity of property subject to taxation in the taxing authority. Debt Levy Certification Description Once debt backed by ad-valorem taxes is issued, the County Auditor is responsible for making sure that the levies pledged for payment of the debt are extended to the tax rolls. The statutes are specific about the actions a taxing authority must take in order to reduce these levies. The County Auditor must make sure that these steps take place or must levy the debt levies, even though the taxing authority has not included those debt levies in their certified levy. The debt levy certification is a tool for notifying taxing authorities of the debt levies shown on the county s records that will be extended to the tax rolls for the upcoming year. This gives the taxing authority the ability to verify that the debt levies match their records, make sure that all debt levies are included in the certified levy and/or take action to increase or decrease debt levies as allowed by statute. DEBT

19 Use(s) Making sure that debt levies are extended to the tax rolls as required by statute. Protecting bondholders. Who Prepares the Document County Auditor. Who Gets the Document Taxing authorities with debt outstanding that is supported in whole or in part by ad-valorem tax levies. Statutory Cite None but relates to County Auditor responsibilities under M.S Timing Typically generated in late July/early August for TNT levy determinations. If there are new bonds issued, a new list should be generated in November for final levy determinations. This certification and resolutions increasing or decreasing debt levies are needed for checking the final levy certification. Source of Data The Bond Register. Sample DEBT