What is the maximum aggregate amount of capital notes outstanding at any one time?

What is the maximum aggregate amount of capital notes outstanding at any one time?

• A. The lesser of $200,000.00 or one-half of one percent of the equalized valuation basis
• B. $400,000
• C. 1% of the equalized valuation basis
• D. $100,000

Answer: (A)

The limit on capital notes outstanding is set to keep short‑term financing in line with the town’s ability to raise revenue. The maximum aggregate amount that can be outstanding at any one time is the lesser of two figures: $200,000 or one-half of one percent of the equalized valuation basis. In other words, you calculate 0.5% of the municipality’s equalized valuation basis and compare it to $200,000; the smaller of the two is the cap. For example, if the equalized valuation basis is $10 million, 0.5% is $50,000, so the cap is $50,000. If the valuation basis is $50 million, 0.5% is $250,000, so the cap is $200,000. This structure lets smaller towns have a lower cap tied to their tax base, while still capping larger towns so the limit isn’t excessive. This limit applies to all capital notes outstanding at once, ensuring the town’s short‑term borrowing remains within a fiscally prudent bound.

The limit on capital notes outstanding is set to keep short‑term financing in line with the town’s ability to raise revenue. The maximum aggregate amount that can be outstanding at any one time is the lesser of two figures: $200,000 or one-half of one percent of the equalized valuation basis. In other words, you calculate 0.5% of the municipality’s equalized valuation basis and compare it to $200,000; the smaller of the two is the cap.

For example, if the equalized valuation basis is $10 million, 0.5% is $50,000, so the cap is $50,000. If the valuation basis is $50 million, 0.5% is $250,000, so the cap is $200,000. This structure lets smaller towns have a lower cap tied to their tax base, while still capping larger towns so the limit isn’t excessive.

This limit applies to all capital notes outstanding at once, ensuring the town’s short‑term borrowing remains within a fiscally prudent bound.