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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2010 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Government - Continued Recreational (Golf Course) Revenue Refunding Bonds, Series 2003 - Continued The financial strength of our municipal bond insurer, AMBAC, was downgraded to Baal in the previous year. This downgrade required the County to fully cash fund the debt service reserve. The County elected to pledge the Racetrack and Jai Alai Fronton funds to meet this bond covenant. The total annual amount of the required debt service reserve is $417,500. The current principal and interest payments of $643,889 represent eighty-four percent of net revenues ($763,556) of the golf course. The total principal and interest remaining to be paid on the bonds is $3,599,115. All three pledged revenue sources totaled $1,695,118 for the current fiscal year. The County did not utilize the second and third revenue sources toward the current year principal and interest payments. The aggregate difference in debt service between the Series 1993 debt ($9,284,290) and Series 2003 debt ($8,060,911) is $1,223,379. The net economic gain was $348,450. Rate Covenant — Net revenues shall be sufficient to pay 100% of reserve and current year principal and interest requirements. Bonds Issued - At September 30, 2010, the revenue bonds consisted of the following: Description 2003 Recreational Revenue Refunding Bonds Less: Current Portion of bonds Unamortized Bond Discount Long -Term Portion of bonds Interest Rates and Date 2.00 — 4.125% 3/1 and 9/1 Maturi Issue 9/1/16 $ 6,455,000 Outstanding at September 30, 2010 $ 3,175,000 520,000 27,386 $ 2.627,614 Optional Redemption - The revenue bonds, maturing on or after September 1, 2014, are subject to redemption prior to maturity, at the option of the County on and after September 1, 2013, in whole or in part, at any time thereafter at the redemption price of par, plus interest accrued to the date of redemption. Water and Sewer Revenue Bonds, Series 1993A Purpose - The Series 1993 bonds were issued to defease all of the County's outstanding Water and Sewer Revenue and Refunding Bonds, Series 1986 and 1986A, Series 1989, Series 1991, and Special Assessment Revenue Bonds, Series 1989 and Series 1990, and to provide funds to make certain capital improvements to the utility system. Previously issued bond proceeds were utilized to expand facility and line capacity. M.