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Debt Service and Financial Obligations <br />The following pages detail the City's financial obligations indicating 1997 expenditures and term <br />schedules. <br />1. The City Council has the power to contract indebtness on behalf of the City by borrowing money <br />or issuing bonds to carry out the objectives or purposes of the City. Pursuant to State law, no <br />debt can be created which at any time exceeds three percent (3%) of the City's statutory actual <br />value, as determined by the County Assessor, except for debt incurred for supplying water. The <br />City's legal debt limit is currently calculated as follows: <br />1996 Actual Value: <br />Debt Limit - 3% of actual value: <br />Total amount of general obligation <br />Debt outstanding applicable to limit <br />$1, 363,146, 555 <br />40, 894, 397 <br />4,135,000 <br />Net Debt limit available $ 36,759,397 <br />2. The majority of the City's obligations are for utility improvements. Utility rates are maintained <br />at a level that provides for adequate debt service coverage. Utility rates may be periodically <br />adjusted to ensure all obligations can be met and operations maintained. <br />20 <br />