Statement of Legal Debt Margin. In preparation for a proposed bond sale, the city manager of the City of Appleton requested that you prepare a statement of legal debt margin for the city as of December 31, 2010. You ascertain that the following bond issues are outstanding on that date:
Convention center bonds......... $3,600,000
Electric utility bonds.......... 2,700,000
General obligation serial bonds..... 3,100,000
Tax increment bonds............ 2,500,000
Water utility bonds.......... 1,900,000
Transit authority bonds.......... 2,000,000
You obtain other information that includes the following items:
1. Assessed valuation of real and taxable personal property in the city totaled $240,000,000.
2. The rate of debt limitation applicable to the City of Appleton was 8 percent of total real and taxable personal property valuation.
3. Electric utility, water utility, and transit authority bonds were all serviced by enterprise revenues, but each carries a full-faith-and-credit contingency provision. By law, such self-supporting debt is not subject to debt limitation.
4. The convention center bonds and tax increment bonds are subject to debt limitation.
5. The amount of assets segregated for debt retirement at December 31, 2010, is $1,800,000.