Calculating the Estimated Dollar Weighted Life for Local Option Taxes

# (1)

(1) For local option taxes used to fund capital projects, the estimated dollar weighted life of capital projects shall be calculated in the following manner.

(a) The useful life of the project shall be estimated in years.

(b) The cost of the project shall be estimated in dollars and cents.

(c) The estimated useful life of the project shall be multiplied by the estimated cost of the project. This is the weight of the project.

(d) The weight of the project is divided by the cost of the project to come up with the estimated dollar average life of the project. This is the maximum time that may be financed using a local option tax.

# (2)

(2) For a local option tax that only funds one capital project, the estimated dollar weighted life of the project will equal the useful life of the project.

# (3)

(3) For a local option tax that supports more than one capital project, complete (1)(a) through (1)(c) above for each capital project. Sum the cost of all of the projects and sum the weight of all the projects in the local option tax. Then divide the total weight by the total cost to arrive at the estimated dollar average life of the capital project for this tax.

Example: A city decides to go out for a local option for their police department. The local option tax is going to be used to purchase 2 new computers, 2 patrol cars and rewire the station house. What is the estimated dollar average life of the capital projects financed by this local option levy? [Table not included. See ED. NOTE.]

Normal rounding is used in calculating the estimated dollar average life.

# (4)

(4) Local option tax for capital projects cannot exceed 10 years.

[ED. NOTE: To view attachments referenced in rule text, click here for PDF copy.]