MEMORANDUM

TO: Pete Sprague, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Borough Mayor

FROM: Jeffrey Sinz, Finance Director

DATE: June 17, 2003

SUBJECT: Notice of Proposed Amendments to Ordinance 2003-27

CPGH Bond Proposition to be Submitted for Voter Approval

This ordinance is on the agenda for introduction at the June 17, 2003 meeting. If the assembly schedules this ordinance for a hearing, the administration recommends that during the hearing, proposed for August 5, 2003, the assembly amend the ballot language proposed in Ordinance 2003-27, Section 4 as follows:

Delete:

[The indebtedness will be repaid from revenues generated by the Central Peninsula General Hospital and from ad valorem taxes levied on all taxable property located within the Central Kenai Peninsula Hospital Service Area. The Central Kenai Peninsula Hospital Service Area will pledge its full faith and credit for repayment of the indebtedness.

Voter approval for this proposition authorizes for each $100,000 of assessed real and personal property value in the Central Kenai Peninsula Hospital Service Area (based on the estimated 2003 tax year assessed valuation) an annual tax of approximately $121 to retire the proposed indebtedness.]

Replace with:

The indebtedness will be repaid from ad valorem taxes levied on all taxable property located within the Central Kenai Peninsula Hospital Service Area. The Central Kenai Peninsula Hospital Service Area will pledge its full faith and credit for repayment of the indebtedness; however, it is expected that a portion of the indebtedness may be repaid from revenues generated by the Central Peninsula General Hospital.

Voter approval for this proposition authorizes an annual tax on real and personal property in the Central Kenai Peninsula Hospital Service Area in an amount sufficient to pay principal and interest on the proposed indebtedness when and as due. Based on the revenues that the Central Kenai Peninsula Hospital Service Area expects to receive from the Central Peninsula General Hospital, the amount of the annual tax would be approximately $50 for each $100,000 of assessed real and personal property in the Central Kenai Peninsula Hospital Service Area (based on the estimated 2003 tax year assessed valuation). Without those revenues the amount of the annual tax would be approximately $121.

The amendment is believed necessary to communicate that hospital revenues are expected to be available as a partial source of bond repayment. At the same time, it must be clear that taxes are pledged as a source of bond repayment in the event that hospital revenues do not materialize as expected. Bond counsel has approved this change.