(7) Short-term and Long-Term Obligations

Under state law and by authorization of the City Council, the City is authorized to borrow on a temporary basis to fund capital project costs incurred prior to obtaining permanent financing through issuance of bond anticipation notes (BAN). Temporary loans are general obligations of the City and carry maturity dates which are limited by statute. Temporary borrowings are recorded as liabilities in the Capital Projects fund. As of June 30, 1996, there were $650,000 of BANS outstanding bearing interest of 4.3% with a maturity date of March 20, 1997. The borrowings were to fund the water pipe replacement project on Shirley and Beechmont Avenue.

The following is a summary of changes in long-term debt for the year ended June 30, 1996:

In June 1995, the City entered into a loan agreement with the Massachusetts Water Pollution Abatement Trust (MWPAT) to borrow $863,853 to finance certain wastewater capital improvements. Remaining scheduled loan repayments are $1,369,910 including interest. The City expects to receive $263,361 of interest subsidies from the MWPAT over the life of the loan. Thus, the net debt service cost remaining to the City is $1,106,549. Since the City is legally obligated for the total remaining amount of debt, such amount has been recorded in the accompanying financial statements.

Annual requirements to amortize all general obligation bonds outstanding as of June 30, 1996, including interest, are as follows:

The Commonwealth of Massachusetts has approved school construction assistance to the City. The assistance program which is administered by the School Building Assistance Bureau (SBAB) provides resources for future debt service of general obligation school bonds outstanding. These resources are subject to annual appropriation by the state legislature and the City's compliance with certain reporting requirements. During 1996, the City received $418,453 of such assistance. Assuming satisfactory audit results and annual appropriations by the state legislature, $418,453 will be received in fiscal year 1997 and $47,450 will be received annually for fiscal years 1998 through 2006.

The City is subject to a dual level general debt limit; the normal debt limit and the double debt limit. Such limits are equal to 2-1/2% and 5%, respectively, of the valuation of taxable property in the City as last equalized by the Commonwealth's Department of Revenue. Debt may be authorized up to the normal debt limit without state approval. Authorizations under the double debt limit, however, require the approval of the Commonwealth's Emergency Finance Board. Additionally, there are many categories of general obligation debt which are exempt from the debt limit but are subject to other limitations.

As of June 30, 1996, the City may issue $44,630,000 additional general obligation debt under the normal debt limit. The City has $6,075,000 of debt exempt from the debt limit.

Authorized and unissued debt at June 30, 1996, is as follows:

The City pays assessments which include debt service payments to other local governmental units providing services within the City's boundaries (commonly referred to as overlapping debt). The primary overlapping debt relates to the Massachusetts Bay Transportation Authority (MBTA) and the Massachusetts Water Resources Authority (MWRA). The following summary sets forth the long-term debt of each entity at June 30, 1996, the estimated share of such debt being serviced by the City, and the total of its share of estimated indirect debt.