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~. .~-- ---..--- ---- of accounting in accordance with generally accepted accounting principles ("GAAP") as applied to proprietary enterprise funds, and are not comparable to the budgetary basis used in the preparation of the District's annual budgets. Table 2-2 presents the District's most recent balance sheets for the years 1990 and 1991. 2.1.8.1 General Oblilation Debt The Board has ~e power to contract indebtedness on behalf of the District by borrowing money or issuing bonds to carry out the objects or purposes of the District. "Debt" or "indebtedness" means, generally, obligations backed by the full faith and credit of the District and secured by the unlimited power of the District to levy ad valorem property taxes for the payment of bonds and the interest thereon. Debt refers only to principal amounts and not to the interest to become due thereon. Debt does not include revenue obligations, debt that has been refinanced, obligations arising upon a contingency, and obligations which do not extend beyond the fiscal year in which incurred. Statutory Authorization - General obligation debt may be incurred only by resolution which is irrepealable until such indebtedness has been fully paid. The resolution also must specify the use of the funds and provide for the levy of a tax which, together with other legally available funds and revenues of the District, will be sufficient to pay the principal of and interest on such debt when due. Although the District may refund existing debt without an election, no new debt may be created unless the question of incurring the indebtedness and a maximum net effective interest rate therefor has been submitted to and approved by a majority of the registered electors of the District voting at an election held for that purpose. Debt Limit - The total principal amount of general obligation debt issued by the District pursuant to Section 32-1-1101(2), C.R.S., on or after July 1, 1991, may not at the time of issuance exceed the greater of $2 million or 50 percent of the district's assessed valuation, except for debt which is rated in one of the four highest rating categories by one or more nationally recognized organizations which regularly rate such obligations; determined by the Board to be necessary for compliance with certain federal or state health or environmental laws or regulations; secured by an irrevocable and unconditional letter of credit, line of credit, or other credit enhancement issued by a depository institution meeting specified criteria; or issued to financial institutions or institutional investors as 2-11 S9.5\PAGOSA\S2.TXT 10/27/92 mm