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assessed valuation of one -third of cost less depreciation, its general obligation debt limitation is <br />one of the most conservative in the United States. <br />The City's debt decreased by a net of $2.8 million from the prior year. This net decrease was due <br />to the issuance of one mortgage and one revenue type bond payable from governmental activities <br />and payment of principal. <br />A detailed listing of this debt can be found in the Notes to the Basic Financial <br />Statements (Note III G). A calculation of the City's legal debt limitation can be <br />found in the statistical section of this document. <br />Economic Factors and Next Year's Budgets and Rates <br />As noted earlier, roperty taxes are the City's largest source of revenue. Under current <br />legislation all Indiana cities assessed values are based on market values. Under this <br />method some properties are still being re- assessed to reflect the changes in values. This <br />process as weIl as the overwhelming amount of appeals is still affecting the amount of <br />property taxes received by the City. Due to these current changes, the percentage <br />increase the City is anticipating in 2005 will be less than in previous years. <br />The new sewer and water rates enacted will tape effect in 2006. These rates will continue to be <br />revised to assure that the municipal water and sewer system has sufficient revenue to cover <br />operating and capital expenses. <br />Many major capital projects are slated for construction in 2006. fart of the list would include <br />downtown development which includes a new condo complex, building dernolition and <br />development, water and sewer infrastructure upgrades and the continuation of major road <br />enhancements. <br />Requests for Information <br />This financial report is designed to provide a general overview of the City of South Bend's <br />finances for all those with an interest in the government's finances. Questions concerning any of <br />the information provided in this report or request for additional financial information should be <br />addressed to the Controller's Office, 227 W. Jefferson, 14 fl, South Bend, IN 46601. <br />12 <br />