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Indian River County, Florida <br />Notes To Financial Statements <br />Year Ended September 30, 2006 <br />NOTE 12 - LONG-TERM LIABILITIES -Continued <br />A. Primary Government - Continued <br />Water and Sewer Revenue Refunding Bonds, Series 2005 <br />Purpose - The Series 2005 Bonds were issued to legally defease $31,680,000 of the County's <br />outstanding Water and Sewer Revenue Bonds, Series 1996. These bonds were issued by the County to <br />provide funds, together with $5,000,000, to retire 95 percent of the 1996 Series and to pay for all bond <br />issuance costs. The September 1, 2005 and 2006 principal installments were not subject to early call <br />and consequently paid at their respective maturity dates. <br />The aggregate difference in debt service between the Series 1996 ($40,585,193) and Series 2005 <br />($39,619,193) is $966,000. The net economic gain was $2,944,661, which included shortening the term <br />of the bonds by four years and lowering average annual debt service by $242,000. <br />Pledge of Revenues - The revenue bonds are collateralized by a pledge of all net revenues derived from L <br />the operation of the system and certain surcharges and special assessments. <br />Bonds Issued - At September 30, 2006, the revenue bonds consisted of the following: O <br />Interest Outstanding at <br />Rates and September 30, <br />Description Date Maturity Issue 2006 <br />Water and Sewer 3-5% <br />Revenue Bonds, 3/1 and 9/1 2022 $ 27,675,000 $ 27,255,000 <br />Series 2005 <br />Less: Current Portion of Bonds 1,275,000 <br />Add: Unamortized Bond Premium 979,739 <br />Long -Term Portion $ 26,959.739 <br />Outstanding In -Substance Defeased Debt - The proceeds from the refunding have been invested in <br />Federal Securities and placed in an escrow account with J.P. Morgan. All of the defeased bonds <br />($31,680,000) were called on September 1, 2006 at 102% of the outstanding principal amount. <br />Optional Redemption - The Series 2005 Bonds maturing after September 1, 2015, are subject to <br />redemption by the County on or after September 1, 2015, in whole or in part, at par, plus accrued <br />interest to date of redemption. <br />76 <br />