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Indian River County, Florida
<br />Notes To Financial Statements
<br />Year Ended September 30, 2010
<br />NOTE 13 - LONG-TERM LIABILITIES - Continued
<br />B. Primary Government - Continued
<br />Water and Sewer Revenue Refunding Bonds, Series 2005
<br />Purpose - The Series 2005 bonds were issued to defease $31,680,000 of the County's outstanding
<br />Water and Sewer Revenue Bonds, Series 1996. These bonds were issued by the County to provide
<br />funds, together with $5,000,000, to retire 95 percent of the 1996 Series and to pay for all bond issuance
<br />costs. The September 1, 2005 and 2006 principal installments were not subject to early call and
<br />consequently paid at their respective maturity dates. The 1996 bonds were issued to acquire an existing
<br />water and sewer facility, as well as for capital improvements to the existing system.
<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, for the remaining term of the bonds, by a
<br />pledge of all net revenues derived from the operation of the system, certain surcharges, and special
<br />assessments.
<br />Annual principal and interest payments of $2,407,650 represent approximately nineteen percent of net
<br />revenues ($12,755,643) of the utility system. The total principal and interest remaining to be paid on
<br />the bonds is $28,858,950.
<br />Rate Covenant — Net revenues shall be sufficient to pay 100% of the reserve account requirement and
<br />120% of the current year's principal and interest payment.
<br />Bonds Issued - At September 30, 2010, the revenue bonds consisted of the following:
<br />Interest
<br />Rates and
<br />Description Date
<br />Water and Sewer 3-5%
<br />Revenue Refunding Bonds, 3/1 and 9/1
<br />Series 2005
<br />Less: Current Portion of bonds
<br />Add: Unamortized Bond Premium
<br />Long -Term Portion of bonds
<br />Outstanding at
<br />September 30,
<br />Maturity Issue 2010
<br />2022 $ 27,675,000 $ 21,925,000
<br />1,435,000
<br />733,521
<br />21.223.521
<br />Outstanding In -Substance Defeased Debt - The proceeds from the refunding have been invested in
<br />federal securities and were 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 />RN
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