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Indian River County, Florida <br />Notes To Financial Statements <br />Year Ended September 30, 2014 <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, which included shortening the term of the bonds by <br />four years and lowering average annual debt service by $242,000, was $2,944,661 and is amortized <br />over the life of the bonds. The unamortized balance of the deferred amount on the refunding at <br />September 30, 2014 is $1,344,917 and is reflected as a deferred outflow of resources on the Statement <br />of Net Position. <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 $2,405,650 represent approximately seventeen percent of net <br />revenues of $13,924,642 of the utility system. The total principal and interest remaining to be paid on <br />the bonds is $19,235,100. <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, 2014, the revenue bonds consisted of the following: <br />Description <br />Interest Outstanding at <br />Rates and September 30, <br />Date Maturity Issue 2014 <br />Water and Sewer 3-5% <br />Revenue Refunding Bonds, 3/1 and 9/1 2022 $ 27,675,000 $ 15,875,000 <br />Series 2005 <br />83 <br />