Supported borrowing, excluding HRA borrowing for capital expenditure. 3.3 Option 3 and Option 4 can (“Asset Life Method”) (“Depreciation Method”) – only be used to calculate the MRP for new schemes that require the Council to take on unsupported borrowing, excluding HRA borrowing for capital expenditure. 3.4 The preferred option for the Council is option 1 and option 4. MRP Calculation Examples 4.1 The following shows how the MRP figure is calculated under each of the options discussed above: Future supported Borrowing and any Previous Borrowings Option 1 This is the method currently used by the (“Regulatory Method”) – Council, as set out in the 2003 Regulations. Option 1 is calculated as 4% of the total Capital Financing Requirement for all borrowing, excluding HRA borrowing less Adjustment A: 4% (CFR HRA AA) – – Where: CFR = Capital Financing Requirement HRA = HRA borrowing AA = Adjustment A Option 2 Financing Requirement (CFR) this uses the (“Capital Method”) – same formula as Option 1 but does not take account of Adjustment A. 4% (CFR HRA) – Where: CFR = Capital Financing Requirement HRA = HRA borrowing Once calculated Adjustment A remains a fixed variable within the calculation; in the case of Mansfield District Council Adjustment A is £491,000 meaning that the MRP calculated under Option 1 will always be £19,640 (4% of £491,000) less compared to Option 2. The following demonstrates the different MRP calculated under Option 1 and Option 2 based on the Capital Financing Requirement for Council’s 2016/2017:
Supported borrowing, excluding HRA borrowing for capital expenditure. 3.3 Option 3 (“Asset Life Method”) and Option 4 (“Depreciation Method”) – can only be used to calculate the MRP for new schemes that require the Council to take on unsupported borrowing, excluding HRA borrowing for capital expenditure. 3.4 The preferred option for the Council is option 1 and option 4. MRP Calculation Examples 4.1 The following shows how the MRP figure is calculated under each of the options discussed above: Future supported Borrowing and any Previous Borrowings Option 1 (“Regulatory Method”) – This is the method currently used by the Council, as set out in the 2003 Regulations. Option 1 is calculated as 4% of the total Capital Financing Requirement for all borrowing, excluding HRA borrowing less Adjustment A: 4% (CFR – HRA – AA) Where: CFR = Capital Financing Requirement HRA = HRA borrowing AA = Adjustment A Option 2 (“Capital Financing Requirement (CFR) Method”) – this uses the same formula as Option 1 but does not take account of Adjustment A. 4% (CFR – HRA) Where: CFR = Capital Financing Requirement HRA = HRA borrowing Once calculated Adjustment A remains a fixed variable within the calculation; in the case of Mansfield District Council Adjustment A is £491,000 meaning that the MRP calculated under Option 1 will always be £19,640 (4% of £491,000) less compared to Option 2. The following demonstrates the different MRP calculated under Option 1 and Option 2 based on the Council’s Capital Financing Requirement for 2016/2017: