Agenda - 11-17-1998 - 10b - Laserfiche WebLink

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Technical Report 20 The School Capital Projects Reserve Fund was created as part of the FY 1995 -96 budget, with funds being earmarked for land acquisition and other "front -end" costs associated with new school construction. For FY 1996 -97, $494,442 was appropriated and $618,843 was appropriated in FY 1997 -98. It should be noted that no funds have been expended from this account as of the FY 1998 -99 budget writing and that the initial commitment to the fund was for three years (the FY 1998 -99 Budget extends it for one additional year, and it is assumed that appropriations will not continue after FY 1998 -99). Collectively, the average annual tax rate required to generate funding for debt service and capital needs during the ten -year school improvement program period would be $0.2009 per $100 valuation [needs to be updated]. If applied to a single - family home with an average value of $150,000, property taxes would amount to $301. However, payments received in the future have a lower value than in the present. The difference between the future and present value is interest. Using the current bond interest rate of 5.5 percent, a property tax payment of $301 to be received one year from now is worth $286 in the present. The method for calculating the present value is to divide the future amount, $301, by one plus the interest rate (expressed in decimal form), or $301 divided by 1.055 equals $286. The difference, $15, is interest at 5.5 %. The general formulation is thus: Present Value = Future Amount (1 + i) R where n is the number of years between the present and when the amount is to be received, and i is the interest rate. Rather than the calculations above, the present value table shown in Table 10 provides "multipliers" or "factors" that may be multiplied by the annual payment to arrive at the present value of a stream of payments. In the example above, in which the interest rate is seven percent and the term is ten years, the present value factor or multiplier is 7.53763. This means that the annual payment of $301 would be multiplied by 7.53763 to arrive at present value. Thus, the present value of $301 per year for ten years would be $2,269. From Table 8, the capital cost per dwelling unit for new schools in the Orange County School District is $7,323. The net cost for new schools would thus be $5,054, the total capital cost minus the present value of payments toward property taxes for debt service and capital. For the Chapel Ell- Carrboro School District, the net cost would be $12,048 ($14,317 minus $2,269). In order to calculate the credit due for debt service payments, it is necessary to have some basis for estimating the value of dwelling units in Orange County. Using 1995 building permit data, it is possible to calculate the average value of single - family [e.g., owner - occupied] homes. This information is shown in Table 11, and the values, by school district, are listed below. Orange County $114,649 Chapel Hill- Carrboro $175,935