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23 <br /> CHCCS School Impact Fee Report(DRAFT) <br /> ADJUSTMENT FOR NON-LOCAL FUNDING <br /> To adequately reflect the local share of capacity costs,the impact fees need to be adjusted to account for <br /> State funding for capacity improvements. Orange County estimates that the County receives one percent <br /> of the costs for capacity improvements from the State.Therefore,the local share is adjusted to represent <br /> 99 percent of the total. (Other contributions from the State are used for maintenance and other non- <br /> capacity related improvements.) <br /> CREDIT FOR FUTURE PRINCIPAL PAYMENTS ON SCHOOL I <br /> Because the County debt-financed a portion of recent school capacity expansion construction costs, a <br /> credit is included for future principal payments on outstanding debt. A credit is necessary since new <br /> residential units that will pay the impact fee will also contribute to future principal payments on this <br /> remaining debt through property taxes. A credit is not necessary for interest payments because interest <br /> costs are not included in the costs. <br /> Information on outstanding debt for CHCCS was provided by Orange County Finance Department staff. <br /> School improvements and applicable bond issues are indicated in Figure 13 below. As shown, total <br /> outstanding debt from school capacity expansion projects for CHCCS is estimated at approximately$65.3 <br /> million.Annual principal payments are divided by student enrollment in each year(projected beyond 2018 <br /> using an historical growth rate of 1% annually) to get a per student credit. (For example, in FY 2018, the <br /> total amount of projected principal to be paid of $7.3 million is divided by enrollment of 12,724 for a <br /> payment per student of$575.)To account for the time value of money, annual payments per student are <br /> discounted using a net present value formula based on an average current interest rate of 3.15 percent. <br /> The total net present value of future principal payments per student is $4,246.69. This amount is <br /> subtracted from the gross capital cost per student amount to derive a net capital cost per student for <br /> school facilities. <br /> 16 <br />