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Board of County Commissioners Page 4of5 March 27, 2013 Water & Sewer Revenue Refunding Bonds, Series 2005 The Water & Sewer Revenue Refunding Bonds, Series 2005 were issued in the aggregate principal amount of $27,675,000. These bonds were issued for the purpose of refunding the County's outstanding Water & Sewer Revenue Bonds, Series 1996. The Series 1996 bonds were issued to fund the construction of the North County Reverse Osmosis Water Treatment Plant, acquisition of the Sebastian water and wastewater utility, implementation of an assessment program to serve approximately 9,000 parcels in the Sebastian Highlands, expansion of the Central Wastewater Treatment Plant, expansion of the South County Wastewater Treatment Plant and expanded distribution systems. Debt service for these bonds of approximately $2.4 million per is year secured by a pledge upon the net revenues of the utility system. For fiscal year 2011/12, the debt service coverage for this issue (along with the Series 2009 bonds, which are parity bonds) was 2.50x. Rate covenants for this issue require rates sufficient to maintain coverage of 1.20x. In March 2013, Fitch Ratings affirmed the "AAA" rating for this bond issue as well as the Series 2009 Water & Sewer Refunding Bonds. This follows the affirmation of the "AK rating from Standard & Poor's in December 2012. Moody's Investor Services currently rates these bonds "Aa2" as well. �,.. These bonds are scheduled to reach final maturity in 2022. However, the bonds are callable on September 1, 2015. Currently, the utility is operating with a substantial positive cash flow. Additionally, the capital improvements and renewal and replacement programs are fully funded internally over the next five years. Based upon these factors, staff anticipates refunding this bond issue at the call date in 2015. At that time, the remaining principal outstanding will be $14.2 million. Currently, the Utility has a total cash balance of over $66 million, with unrestricted cash of $38 million. The anticipated refunding of these bonds will potentially allow for a small rate decrease, notwithstanding some adverse impact on operating costs (e.g. chemical cost increases, new regulatory requirements, etc.). Water & Sewer Revenue Refunding Bonds, Series 2009 The Water & Sewer Revenue Refunding Bonds, Series 2009 were issued in the aggregate principal amount of $26,370,000. These bonds were issued for the purpose of refunding the County's outstanding Water & Sewer Revenue Bonds, Series 1993A. The Series 1993A bonds were issued to retire various previous bond issues, and fund system expansions including: expansion of the South County Reverse Osmosis Water Treatment Plant, addition of storage tanks at Roseland and the North Region ROWTP and water distribution lines. Debt service for these bonds of approximately $2.9 million per is year secured by a pledge upon the net revenues of the utility system. For fiscal year 2011/12, the debt service coverage for this issue (along with the Series 2005 bonds, which are parity bonds) was 2.50x. Rate covenants for this issue require rates sufficient to maintain coverage of 1.20x. This issue will reach final maturity in 2024. In March 2013, Fitch Ratings affirmed the "AAA" rating for this bond issue as well as the Series 2005 Water & Sewer Refunding Bonds. This follows the affirmation of the "AK rating for these bonds from 206 G F:\Budget\Jason\agenda 201213\Debt Issues Outstanding - Report to BCC.doc L 0 V