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Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2011 NOTE 11— LONG-TERM LIABILITIES - Continued B. Proprietary Funds Long Term Debt - Continued Recreational (Golf Course) Revenue Refunding Bonds, Series 2003 Purpose - On October 15, 2003, the Series 2003 bonds were issued to redeem $6,735,000 of the Board's outstanding Recreational Revenue Bonds, Series 1993. The Series 2003 bonds are being issued by the Board to provide funds, together with $583,790, to retire all of the outstanding 1993 Series bonds and to pay for all bond issuance costs. The previous bonds were issued to build a County -owned golf course. 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. Pledge of Revenue - 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 Board to fully cash fund the debt service reserve. The Board 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 of $417,500 was cash funded. The current principal and interest payments of $639,864 represent sixty-nine percent of net revenues of $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 Maturi Issue 2011 Recreational Revenue 2.00 — 4.125% 9/1/16 $ 6,455,000 2.655.000 Refunding Bonds, Series 2003 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 Board 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. 270