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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2011 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Government - Continued Recreational (Golf Course) Revenue Refunding Bonds, Series 2003 - Continued Pledge of Revenues - The revenue bonds are secured by liens, for the remaining term of the bonds, in the following order: (1) the net revenues derived from the operations of the golf course, (2) one hundred percent of racetrack and Jai Alai Fronton funds, and (3) seven percent of the half -cent sales tax accruing annually to the County. The financial strength of our municipal bond insurer, AMBAC, was downgraded to Baal in November 2008. 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 was cash funded. The current principal and interest payments of $639,864 represent sixty-nine percent of net revenues ($923,691) of the golf course. The total principal and interest remaining to be paid on the bonds is $2,959,251. All three pledged revenue sources totaled $1,865,448 for the current fiscal year. The County did not utilize the second and third revenue sources toward the current year principal and interest payments. Rate Covenant — Net revenues shall be sufficient to pay 100% of reserve and current year principal and interest requirements. Bonds Issued - At September 30, 2011, the revenue bonds consisted of the following: Outstanding at Interest Rates September 30, Description and Date Maturi1y Issue 2011 2003 Recreational Revenue 2.00 — 4.125% 9/1/16 $ 6,455,000 2,655,000 Refunding Bonds 3/1 and 9/1 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. 01