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Home My WebLink About1989-0424101 INDIAN RIVER COUNTY, FLORIDA RESOLUTION NO. 89 - 42 A RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT FOR THE SALE AND AWARD OF $6,510,000 AGGREGATE PRINCIPAL AMOUNT OF WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 1989, OF INDIAN RIVER COUNTY, FLORIDA, AT PRIVATE SALE BY NEGOTIATION, TO THE PURCHASER THEREOF; AUTHORIZING AND APPROVING CERTAIN TERMS OF SAID BONDS; RATIFYING THE DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT; AUTHORIZING THE EXECUTION AND DISTRIBUTION OF AN OFFICIAL STATEMENT IN CONNECTION WITH THE MARKETING OF SAID BONDS; AUTHORIZING ALL OTHER NECESSARY, DESIRABLE AND/OR APPROPRIATE ACTIONS IN CONNECTION WITH THE ISSUANCE AND DELIVERY OF SAID BONDS; APPOINTING A PAYING AGENT AND BOND REGISTRAR FOR SAID BONDS; AUTHORIZING THE PURCHASE, REDEMPTION AND RETIREMENT OF CERTAIN BONDS OF THE COUNTY; AUTHORIZING ALL NECESSARY, DESIRABLE AND/OR APPROPRIATE ACTIONS IN CONNECTION THEREWITH; AND SPECIFYING THE EFFECTIVE DATE HEREOF. WHEREAS, the Board of County Commissioners of Indian River County, Florida (the "Board" and the "County", respectively), by Resolution No. 89-19, duly adopted on February 14, 1989, heretofore authorized the issuance of Water and Sewer Revenue Refunding Bonds, Series 1989, of the County in an aggregate principal amount not to exceed $7,500,000 (the "Bonds"); WHEREAS, the County deems it in its long term best interest that the Bonds be sold at this time at private sale by negotiation; WHEREAS, it is necessary and desirable to authorize and approve certain terms and provisions with respect to the Bonds and t the sale thereof; WHEREAS, the County desires to appoint a Paying Agent and Bond Registrar for the Bonds, to ratify the distribution of a Preliminary Official Statement and to authorize the execution and distribution of an Official Statement therefor; WHEREAS, Gulfstream Financial Associates, Inc., as manager (the "Purchaser"), has offered to purchase the Bonds on the terms and conditions hereinafter described; and WHEREAS, it is necessary and desirable to authorize the purchase, redemption and retirement of certain outstanding bonds of the County. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA: SECTION 1. The Bonds shall be in the aggregate principal amount of $6,510,000, shall be dated as of April 15, 1989, shall be in fully registered form, shall be in denominations Of $5,000 or any integral multiple thereof, shall bear interest payable semiannually on May 1 and November 1 of each year, commencing November 1, 1989, until the principal amount thereof is paid, by check mailed by the Paying Agent to the Registered Owner thereof at his address as the same appear on the registration books kept by the Bond Registrar on behalf of the County at 5:00 p.m. local time at the location of the Bond Registrar on the fifteenth (15th) day of the month immediately preceding the applicable interest payment date, at the interest rates per annum set forth in the Preliminary Official Statement hereinafter referred to, shall 2 4 mature on May 1 of the years and in the principal amounts set forth in the Preliminary Official Statement and shall be subject to optional and mandatory redemption as set forth in the Preliminary Official Statement. SECTION 2. Florida National Bank, St. Petersburg, Florida, is hereby appointed Paying Agent and Bond Registrar for the Bonds. SECTION 3. The Bonds are hereby awarded and sold to the Purchaser at a total price of $6,367,357.50 plus accrued interest from April 15, 1989 to the date of delivery thereof. The Bond Purchase Agreement dated April 27, 1989 by and between the Purchaser and the County, in the form attached hereto as Exhibit "A" (the "Bond Purchase Agreement"), is hereby approved and accepted and the proper officers of the County are authorized and directed to execute the acceptance thereof in the space provided therefor on the Bond Purchase Agreement. SECTION 4. The Preliminary Official Statement with respect to the Bonds, in the form attached hereto as Exhibit "B" (the "Preliminary Official Statement"), is hereby approved and ratified by the County, and the County hereby approves and ratifies the use by the Purchaser of the Preliminary Official Statement in connection with the sale and public re -offering of the Bonds. The Official Statement with respect to the Bonds, in substantially the form of the Preliminary Official Statement, with such omissions, insertions and variations as may be necessary and/or desirable and approved by the Chairman of the Board prior to 3 the execution thereof (the "Official Statement'), is hereby approved by the County and the proper officers of the County are hereby authorized to execute the Official Statement and to deliver the same to the Purchaser for use by it in connection with the sale and distribution of the Bonds, the necessity and/or desirability and approval of any such omissions, insertions and variations as may be reflected in the Official Statement shall be conclusively presumed by such execution and delivery. SECTION 5. The proper officers of this County are hereby authorized and directed to execute the Bonds, when prepared, by manual or facsimile signatures, and to deliver the same to the Purchaser upon payment of the purchase price without further authority from the Board. The Chairman, the Vice -Chairman and the Clerk of the Board and the proper officers of the County are each hereby authorized to take all other actions on behalf of the County as may be necessary, desirable and/or appropriate in connection with the sale, issuance and delivery of the Bonds, including without limitation to execute and deliver any and all documents and instruments on behalf of the County. SECTION 6. It is hereby found, ascertained, determined and declared by the Board that a negotiated sale of the Bonds is in the long term best interest of the County. SECTION 7. In compliance with Subsection 218.385(4), Florida Statutes, as amended, there has been provided to the County, prior to the adoption of this Resolution, a disclosure statement containing the information required by paragraphs (a) 4 through (g) of said Subsection 218.385(4). A copy of said disclosure statement is attached hereto as Exhibit "C". SECTION S. The proper officers of the County are hereby authorized and directed to execute and deliver on behalf of the County an Investment Certificate, in order to comply with certain provisions of the Internal Revenue Code of 1986, as amended, with respect to the Bonds. The Chairman of the Board and the County Attorney are each designated agents of the County in connection with the execution and delivery of said Investment Certificate, and are authorized and empowered, collectively or individually, to take all other actions as may be necessary or appropriate to execute and deliver the same. SECTION 9. The purchase, redemption and retirement of the outstanding Original Bonds, as defined in Resolution No. 89-19, pursuant to and as more fully described in the letter dated January 10, 1989 to the County from the Government, as defined in Resolution 89-19, is hereby authorized, the price thereof less deposit plus accrued interest through May 4, 1989 being approximately $5,487,678.47. The Chairman, the Vice -Chairman and the Clerk of the Board and the proper officers of the County are each hereby authorized to take all actions on behalf of the County as may be necessary, desirable and/or appropriate in connection with the purchase, redemption and retirement of the Original Bonds, including without limitation to execute and deliver any and all documents and instruments on behalf of the County. SECTION 10. This Resolution shall take effect 5 I immediately upon its adoption. The foregoing resolution was offered by Commissioner Egizert who moved for its adoption. The motion was seconded by Comm ssioner Bowman and, upon being put to a vote, the vote was as follows: Chairman Gary C. Wheeler Aye Vice Chairman Carolyn K. Eggert Ave Commissioner Don C. Scurlock _ Ave Commissioner Richard N. Bird Ave Commissioner Margaret C. Bowman Ave The Chairman thereupon declared the Resolution duly passed and adopted this 27th day of April , 1989. ' BOARD OF COUNTY COMMISSIONERS OF INDIANRIVERCOUNTY, FLORIDA By: rte' Gary C. heeler, A(� -16 „ Chairm AAttestR $ art, Clark APPROVE, JAS TO FORM AND U D LEGAL BU,,$F(I�CIrENCCYY `..J�-t�/lfCaa 1 v lilil/ter Charles P. V tunac Attorney for the County 6 256/444 042689 BOND PURCHASE AGREEMENT $ 6,5-I0,00o Indian River County, Florida Water and Sewer Revenue Refunding Bonds, Series 1989 G April 2 , 1989 Indian River County, Florida 1840 25th Street Vero Beach, Florida 32960 Ladies and Gentlemen: The undersigned (the "Underwriter") offers to enter into the following agreement (the "Agreement") with Indian River County, Florida (the "Issuer"), which, upon the written acceptance of this offer by the Issuer, will be binding upon the Issuer and the Underwriter. This offer is made subject to the Issuer's written acceptance by execution of this Agreement and its delivery of same on or before 5:00 p.m., Eastern Standard Time, today. This Bond Purchase Agreement is hereinafter referred to as the "Agreement." Section 1. Upon the terms and conditions and upon the basis of the representations, warranties and covenants set forth herein, the Underwriter agrees to purchase from the Issuer for offering to the public, and the Issuer agrees to sell to the Underwriter for such purpose, all (but not less than all) of the $Lrl01000.oa aggregate principal amount of the Issuer's Water and Sewer Revenue Refunding Bonds, Series 1989 (the "Bonds"). The Bonds shall be dated, mature and bear interest at the rate and be subject to redemption as set forth in the Official Statement referred to below. The purchase price of the Bonds shall be $ 6,3(-7,3s7so(representing an aggregate discount from the initial public offering prices of $ 01 ,04Z.r# plus accrued interest (calculated on the basis of a 360 -day year comprised of twelve 30 -day months) on the Bonds from April it 1989 to the date of delivery of the Bonds pursuant to this Agreement (with such payment and delivery collectively referred to as the "Closing"). The Official Statement of the Issuer dated the date of this Agreement and relating to the Bonds, together with the cover page, summary statement, and all appendices and exhibits as attached thereto, and with only such changes, amendments and supplements as shall be approved by the Issuer and the Underwriter prior to the Closing, is hereinafter called the "Official Statement." Such document in the form distributed on April 14, 1989 is hereinafter called the r oc��v�.51 �st� ca�s�ounf Cx►�►� �T ''A'� � 33,Goo•uo o -,.d, �� "Preliminary Official Statement." The Bonds are being issued pursuant to the authority of the Constitution and laws of the State of Florida, including Chapters 125 and 159, Florida Statutes, and other applicable provisions of law (the "Act"). The terms and provisions of the Bonds shall be as described in, and the Bonds shall be issued and secured under and pursuant to, a Bond Resolution adopted by the Issuer on February 14, 1989 as amended and supplemented from time to time (the "Resolution"), substantially in the form heretofore delivered to us, with only such changes therein as shall be mutually agreed upon between us. The Underwriter agrees to make a bona fide public offering of the Bonds not in excess of the initial public offering prices (which may be expressed in terms of yield) set forth on the cover page of the Official Statement. The Bonds may be offered and sold to certain dealers (including the Underwriter and other dealers depositing such Bonds into investment trusts) at a price or prices lower than such public offering prices. Section 2. The Underwriter represents and warrants that it is and has been authorized to execute this Agreement as Underwriter. The payment for, acceptance of, and delivery and execution on behalf of the Underwriter of any receipt for the Bonds and any other instruments upon or in connection with the Closing by the Underwriter shall be valid and sufficient for all purposes and binding upon the Underwriter. Section 3. There is herewith delivered to you a certified or official bank check, to the order of the Issuer in the amount of $ & iluu.00 (the "Good Faith Deposit"), as a good faith deposit for the performance by the Underwriter of its obligations to accept and pay for the Bonds at the Closing in accordance with the terms and provisions of this Agreement. In the event that the Issuer does not accept this offer, the Good Faith Deposit shall be immediately returned to the Underwriter. If this offer is accepted, the Issuer shall hold the Good Faith Deposit uninvested until the Closing and dispose of such Good Faith Deposit as follows: (a) At the Closing and upon the delivery of the Bonds and payment of the purchase price therefor, the Good Faith Deposit shall be forthwith returned to the Underwriter; (b) In the event the Issuer shall fail to deliver the Bonds to the Underwriter on the Closing Date (hereinafter defined) or if the Issuer shall be unable at or prior to the Closing Date to satisfy the conditions to the obligations of the Underwriter contained herein, or if the obligations of the Underwriter shall be terminated for any reason permitted hereby, the Good Faith Deposit shall forthwith be returned to the Underwriter by the Issuer; and (c) If the Underwriter shall fail (other than for a reason permitted hereby) to accept and pay for the Bonds upon tender thereof by the Issuer as provided herein, the Good Faith Deposit shall be retained by the Issuer as and for full liquidated damages for such failure and for any and all defaults on the part of the Underwriter, and the Underwriter shall be fully released and discharged of all claims and damages for such failure and for any and all such defaults. Section 4. You shall deliver or cause to be delivered tc the Underwriter promptly after your acceptance hereof (a) two copies of the Resolution, certified by the Chairman or Vice Chairman of the Board of County Commissioners of the Issuer, and (b) two executed copies of the Official Statement signed by the Chairman of the Board of Commissioners of the Issuer and the County Administrator of the Issuer. You authorize the use of copies of the Official Statement and the Resolution in connection with the public offering and sale of the Bonds. You ratify the use by the Underwriter, prior to the date hereof, of the Preliminary Official Statement in connection with the public offering of the Bonds. Definitions of terms in the Official Statement and the Resolution shall apply to this Agreement unless the terms are otherwise defined herein. After the Closing and during the shorter of (1) the period during which the Underwriter is offering the Bonds that constitute the whole or part of its unsold participation or (2) the period ending 90 days after the Closing, the Issuer will prepare forthwith and furnish to the Underwriter a reasonable number of copies of any amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which is necessary, because of the occurrence of an event relating to or affecting the Issuer or the issuance of the Bonds or the application of the proceeds thereof, in order that the Official Statement will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. The Issuer promptly will notify the Underwriter of the occurrence of any event that, in its opinion, requires an amendment or supplement to the Official Statement. Section 5. The Issuer represents, warrants and agrees with the Underwriter as follows: (a) Both at the time of acceptance of this offer by the Issuer and at the date of Closing, the statements and information contained in the Preliminary Official Statement (except as changed by the Official Statement) and in the Official Statement (except for information furnished to the Issuer by the Underwriter or by others as specifically indicated in the Official Statement) are and will be true, 3 correct and complete in all material respects and the Official Statement does not and will not omit any statement or information that is necessary to make the statements and information therein, in the light of the circumstances under which they were made, not misleading in any material respect; (b) The Issuer is and will be at the date of Closing, a duly organized and existing County under the laws of the State of Florida (the "State"); (c) In accordance with the Act, (i) the Issuer has full legal right, power and authority (1) to approve and deliver the Preliminary Official Statement and to enter into, execute and deliver this Agreement, the Resolution and the Official Statement, (2) to sell, issue and deliver the Bonds to the Underwriter as provided herein, and (3) to carry out and consummate the transactions contemplated by this Agreement, the Resolution, and the Official Statement; and (ii) the Issuer has complied with, and will at the Closing be in compliance in all respects with, the terms of the Act and the Resolution and with the obligations on its part contained in the Resolution, the Bonds and this Agreement; (d) When delivered to and paid for by the Underwriter at the Closing in accordance with the provisions of this Agreement, the Bonds will have been duly authorized, executed, issued and delivered and will constitute valid obligations of the Issuer, in conformity with, and entitled to the benefit and security of, the Act and the Resolution; (e) The adoption of the Resolution and the authorization, execution and delivery of this Agreement, as described in the Official Statement, and compliance with the provisions thereof under the circumstances contemplated hereby, will not in any material respect conflict with or constitute on the part of the Issuer a breach of or default under any agreement or other instrument to which the Issuer is a party (including, without limitation, other resolutions adopted by the Issuer and any loan agreements or similar documents between the Issuer and the Farmers Home Administration, United States Department of Agriculture ("FmHA")) or any existing law, ordinance, administrative regulation, court order or consent decree to which the Issuer is subject; (f) The Issuer will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; (g) Between the date of this Agreement and the time of Closing, the Issuer will not, without the prior written consent of the Underwriter which consent shall not unreasonably be withheld, offer or issue any bonds, notes or other obligations for borrowed money or incur any material liabilities, direct or contingent, except such obligations and liabilities as may be described in the Official Statement, nor will there by any adverse change of a material nature in the financial position, results of operations or conditions, financial or otherwise, of the Issuer other than (i) as contemplated by and described in the Official Statement or (ii) in the ordinary course of business; (h) There is no action, suit, proceeding, inquiry or investigation of any nature at law or in equity, before or by any court, governmental agency, public board or body pending or, to the knowledge of the Issuer, threatened, seeking to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or the performance of any of the covenants contained in this Agreement or the Resolution or in any way questioning or affecting (i) the transactions contemplated by this Agreement, the Resolution, or the Official Statement, (ii) the right or authority of the Issuer to pay the Bonds or to carry out the terms and provisions of this Agreement and the Resolution, or (iii) the validity of the Bonds or any provision made for the payment of principal of, premium, if any, or interest on the Bonds or the power of the Issuer to perform its obligations under this Agreement and the Resolution; and neither the existence of the Issuer nor the titles of the Chairman or any of the other members of the Board of County Commissioners (the "Board"), to their respective offices nor the titles of the officers of the Issuer to their respective offices are being contested, and no authority or proceeding for the issuance of the Bonds has been repealed, revoked or rescinded; (i) As of the date of this Agreement, all approvals required pursuant to the Act with regard to the issuance of the Bonds and pursuant to any agreement with FmHA have been obtained and have not been repealed, revoked or rescinded; (j) The Issuer shall use the proceeds it receives from the issuance of the Bonds for the purposes set forth in the Official Statement; and (k) Any certificate signed by any officer of the Issuer and delivered to the Underwriter will be deemed to be a representation by the Issuer to the Underwriter as to the truth of the statements contained in such certificate. Section 6. At 10:00 a.m., Eastern Standard time, on May _J,1989 or at such other time or on such earlier or later date as we mutually agree upon (herein called the "Closing Date"), the Issuer will deliver or cause to be delivered to the Underwriter at New York, New York, or at such other place as we may mutually agree upon, the Bonds in definitive form (all the Bonds to be printed with steel engraved borders), duly executed and authenticated, in authorized denominations and forms requested by us, together with the other documents hereinafter mentioned; and the Underwriter will accept such delivery and pay the purchase price thereof as set forth in Section 1 hereof by certified or official bank check or checks or wire transfer payable in either case in Federal or other immediately available funds to the order of the Issuer. It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept delivery of and pay for the Bonds in accordance with the terms hereof. The Bonds will be made available for checking and packaging in New YorkNew York, two business days prior to the Closing. The Bonds will be delivered as fully registered bonds in such authorized denominations and registered in such names and in such amounts as the Underwriter may request not less than five business days prior to the Closing. Section 7. The Underwriter has entered into this Agreement in reliance upon the representations, warranties and agreements of the Issuer herein and the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter's obligations under this Agreement are and shall be subject to the following further conditions: (a) At the time of Closing, (i) the Official Statement and the Resolution shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, (ii) the proceeds of the sale of the Bonds shall be applied as described in the Official Statement, (iii) the Issuer shall have duly adopted and there shall be in full force and effect such resolutions of the Issuer as, in the opinion of either Rhoads & Sinon, Bond Counsel or Gunster, Yoakley, Criser & Stewart, Counsel for the Underwriter, shall be necessary in connection with the transactions contemplated hereby and by the Resolution, and the Official Statement, (iv) the Issuer shall perform or have performed all of the obligations required under or specified in this Agreement, the Resolution and the Official Statement to be performed at or prior to the Closing; and (v) the representations, warranties and agreements of the Issuer contained in this Agreement shall be true, complete and correct on this date and on the Closing Date, as if then made; (b) The Underwriter shall have the right, pursuant to written notice given to the Issuer, to cancel its obligations to purchase the Bonds, if between the date hereof and the Closing any of the following occurs: (i) legislation shall have been introduced or enacted by the Congress of the United States or by the State or adopted by either House of the Congress or favorably reported for passage to either House of the Congress or any Committee of such House to which such legislation has been referred for consideration or recommended to Congress or otherwise endorsed for passage or proposed for consideration by press release, other form of notice or otherwise by the President of the United States, the United States Treasury Department, the Internal Revenue Service, the Joint Committee on Taxation of the United States Congress or the Chairman or Ranking Member of either the Committee on Finance of the United States Senate or the committee on Ways and Means of the United States House of Representatives, or by any member or by the staff of any of the foregoing Committees, or legislation pending in the United States Congress shall be amended, or a decision shall have been rendered by a court of the United States or the State, including the United States Tax Court, or a ruling shall have been made or a regulation shall have been proposed or promulgated or a press release or other form of notice shall be issued by the United States Treasury Department or the Internal Revenue Service or other federal or state authority, with respect to federal or State taxation upon revenues or other income of the general character to be derived by the Issuer, or by any similar body, or upon interest on obligations of the general character of the Bonds, that may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated in connection herewith or that, in the reasonable opinion of the Underwriter, affects materially and adversely the market price for the Bonds, or the market price generally of obligations of the general character of the Bonds; or (ii) a stop order, ruling or regulations by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all the underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of any provision of the federal securities law, the Securities Act of 1933, as amended and as then in effect (the "Securities Act"), the registration provisions of the Securities Exchange Act of 1934, as amended and as then in effect (the "Securities Exchange Act") or the qualifications provisions of the Trust Indenture Act of 1939, as amended and as then in effect ("Trust Indenture Act"); or (iii) legislation shall be enacted by the United States Congress, or a decision by a court of the United States of America shall be rendered, to the effect that obligations of the general character of the Bonds, including all the underlying obligations, are not exempt from registration under the Securities Act or the Securities Exchange Act; or (iv) there shall exist any event that requires an amendment or supplement to the Official Statement which would materially and adversely affect the marketability of the Bonds; or (v) there shall have occurred any outbreak of hostilities or other national or international calamity or crisis, the effect of such outbreak, calamity or crisis on the financial markets of the United States of America being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; or (vi) there shall be in force a general suspension of trading on the New York Stock Exchange, whether by virtue of a determination by that exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; or (vii) a general banking moratorium shall have been declared by federal, New York or Florida authorities having jurisdiction and be in force; or (viii) any rating of the Bonds or any other obligations of the County shall have been downgraded or withdrawn by Standard & Poor's Corporation or Moody's Investors Service, and such action, in the opinion of the Underwriter, will materially adversely affect the marketability of the Bonds or the market price thereof; or (ix) any appeal is taken, or the appeal period has not expired, with respect to the validation and confirmation of the Bonds by judgment of the 19th Judicial Circuit in and for Indian River County, Florida on March 27, 1989; and (c) At or prior to the Closing, we shall receive the following documents in such numbers as shall be reasonably requested and in form and substance satisfactory to the Underwriter and to Counsel to the Underwriter: (i) The unqualified approving opinion of Rhoads & Sinon, Bond Counsel, dated the Closing Date, substantially in the form included as Appendix B to the Official Statement, and a letter of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to them; (ii) An opinion of Rhoads & Sinon dated the Closing Date and addressed to the Underwriter, to the effect that (1) the Bonds are exempted securities within the meaning of Section 3(a)(2) of the Securities Act, and the Resolution is exempt from qualification under the Trust Indenture Act and (2) the statements in 8 the Official Statement under the sections entitled "Purpose", "Future Financing Plans", "Description of Bonds", "Security and Sources of Payment", "Summary of Certain Provisions of the Resolution", "Tax Exemption","Non Arbitrage Bonds", "Appendix B" and "Appendix D," insofar as such statements constitute summaries of provisions of the Bonds, Resolution, the Act or the documents executed and delivered in connection with the issuance and delivery of the Bonds, or refer to opinions they have given, are correct in all material respects and do not omit any statements which should be included or referred to therein in order to describe fairly the matters described therein. In addition, such counsel shall state in its letter containing the foregoing opinion or in a separate letter dated the Closing Date and addressed to the Underwriter to the effect that, without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement except as set forth in (2) above, based upon their participation as Bond Counsel in the preparation of the Official Statement, and as of the Closing Date, such counsel has no reason to believe that the Official Statement as of its date contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading (except for any economic, financial, technical and statistical data included therein and information contained in or summarized from summary reports of engineers included therein, as to which no view need be expressed), or that the Official Statement (together with any amendments or supplements thereto) as of the Closing Date contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading (except as aforesaid); (iii) An opinion of Gunster, Yoakley, Criser & Stewart, P.A., Counsel to the Underwriter, dated the Closing Date and addressed to the Underwriter, to the effect that the Bonds are exempted securities within the meaning of Section 3(a)(2) of the Securities Act and the Resolution is exempt from qualification under the Trust Indenture Act, and it is not necessary, in connection with the public offering and sale of the Bonds, to register any security under the Securities Act or to qualify any indenture under the Trust Indenture Act. In addition, such counsel shall state in its letter containing the foregoing opinion or in a separate letter dated the Closing Date and addressed to the Underwriter to the effect that, without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement based upon their participation as counsel to the Underwriter in their preparation of the Official Statement, and as of the Closing Date, such counsel has no reason to believe that the Official Statement as of its date contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading (except for any economic, financial, technical and statistical data included therein and information contained in or summarized from summary reports of engineers included therein, as to which no view need be expressed), or that the Official Statement (together with any amendments or supplements thereto) as of the Closing Date contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading (except as aforesaid); (iv) A certificate, dated the Closing Date, of the Chairman of the Board of the Issuer to the effect that (1) the representations and warranties of the Issuer contained herein are true and correct on and as of the Closing Date as if made on such date, (2) no litigation is pending or, to the best of his knowledge, threatened in any court challenging the creation, organization or existence of the Issuer, or seeking to restrain or enjoin the issuance or delivery of any of the Bonds, or in any way contesting or affecting the validity of the Bonds, the Resolution or the pledge thereof of any funds, moneys or securities under the Resolution, or in any way contesting or affecting the validity of this Agreement or any other transaction contemplated by this Agreement or the Official Statement, and that, except as described in the Official Statement, there is no litigation pending or, to the best of his knowledge, threatened against the Issuer or involving any of the property or assets under the control of the Issuer which involves the possibility of any judgment or liability, not fully covered by insurance, which may result in any material adverse change in the business, properties or assets or in the condition, financial or otherwise, of the Issuer, which certificate shall be in the form and substance acceptable to the Underwriter (but in lieu of a portion of such paragraph (2), the Underwriter may in its sole discretion accept opinions by counsel to the Issuer and by Bond Counsel, acceptable to the Underwriter in form and substance, that in the opinions of each such counsel, the issues raised in any such pending or threatened litigation are without substance or that the contentions of any 10 plaintiffs therein are without merit), (3) to the best of his knowledge, neither the Official Statement nor any amendment or supplement thereto, as of their respective dates, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, (4) no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to be disclosed therein in order to make the statements and information therein not misleading in any material respect and (5) the Issuer has complied with all of the agreements and satisfied all the condition on its part to be performed or satisfied at or prior to the Closing; (v) An opinion of Charles P. Vitunac, County Attorney, dated the date of the Closing, and in form and substance acceptable to Counsel for the Underwriter, to the following effect: (1) This Agreement has been duly authorized, executed and delivered by the Issuer and constitutes a valid, legal and binding agreement of the Issuer enforceable in accordance with its terms; (2) The Issuer is a county duly organized and existing under the Constitution and laws of the State and is a Subdivision thereof and has good right and lawful authority to operate, maintain and improve the System, and to fix and establish fees and other charges in respect of such System and collect revenues therefrom, as required by the Resolution and to perform all of its obligations under the Resolution in those respects; (3) No consent, waiver or any other action by any person, board or body, public or private, other than the approval of the Board which has been duly and validly obtained, is required as of the date of the Closing for the County to adopt the Resolution or issue the Bonds or this Agreement, or to perform its obligations under any of the foregoing; (4) The execution and delivery of this Agreement and the Bonds and the adoption of the Resolution and compliance with the provisions of each do not and will not conflict with or constitute a breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, 11 resolution, ordinance, agreement or other instrument to which the Issuer is a party or is otherwise subject; and (5) There is no litigation or proceeding, pending or threatened, challenging the creation, organization or existence of the Issuer, or the validity of the Bonds, this Agreement or the Resolution or seeking to restrain or enjoin any of the transactions referred to therein or contemplated thereby, or under which a determination adverse to the Issuer would have a material adverse effect upon the financial condition or revenues of the System, or which in any manner questions the right of the Issuer to issue the Bonds. (6) The information in the Official Statement under the Caption "Litigation" fairly and accurately summarizes the information presented therein. In addition, such counsel shall state in its letter containing the foregoing opinion or in a separate letter dated the Closing date and addressed to the Underwriter to the effect that, without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official statement except as set forth in (6) above, based upon his participation as County Attorney in the preparation of the Official Statement, and as of the Closing Date, such counsel has no reason to believe that the Official statement as of its date contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading (except for any economic, financial, technical and statistical data included therein and information contained in or summarized from summary reports of engineers included therein, as to which no view need be expressed), or that the Official Statement (together with any amendments or supplements thereto) as of the Closing Date contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading (except as aforesaid); (vi) A "comfort letter" from each of Arthur Young & Co. and Coopers & Lybrand dated the Closing Date covering such financial information reasonably requested by the Underwriter and their counsel; and (vii) Evidence, satisfactory to the Underwriter, dated the date of Closing, to the effect that payment 12 for the insurance policy of Financial Guaranty Insurance Company ("FGIC") described in the Official Statement has been made by the County and received by FGIC, that FGIC has received all documents that it has deemed necessary to review and that such insurance policy is in full force and effect; (viii) A certificate of FGIC or opinion of Counsel to FGIC, dated the date of Closing, addressed to the Underwriter, to the effect that (A) FGIC is duly qualified to do business in the State of Florida, (B) FGIC has full corporate power and authority to execute and deliver the insurance policy for the Bonds (the "Policy") and the Policy has been duly authorized, executed and delivered by FGIC and constitutes a legal, valid and binding obligation of FGIC enforceable in accordance with its terms, and (C) the statements contained in the Official Statement under the heading "MUNICIPAL BOND INSURANCE" insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements purport to describe FGIC, fairly and accurately describe FGIC; (ix) A letter from each of Moody's Investors Service and Standard & Poor's Corporation to the effect that the Bonds have been assigned a rating no less favorable than "Aaa" and "AAA," respectively, which ratings shall be in effect as of the date of Closing; (x) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may deem necessary to evidence compliance by the Issuer with applicable legal requirements, the truth and accuracy in all material respects as of the time of the Closing of your representations and warranties contained herein and in the Official Statement and the due performance or satisfaction by you at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by you. If the Issuer shall be unable to satisfy the conditions to the Underwriter's obligations contained in this Agreement or if the Underwriter's obligations shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the Issuer shall have any further obligation hereunder, except that the check referred to in Section 3 hereof shall immediately be returned to the Underwriter by the Issuer and the respective obligations of the Issuer and the Underwriter for payment of the expenses, as provided in Section 8 hereof, shall continue in full force and effect. 13 Section 8. (a) The Issuer shall pay all expenses incident to the performance of its obligations hereunder including, but not limited to (i) the fees and disbursements of Bond Counsel; (ii) the cost of the wire transfer of federal funds; (iii) the cost of engraving and signing the Bonds; (iv) the cost of the preparation, printing and distribution of the Preliminary Official Statement and the Official Statement; (v) fees and disbursements of the Paying Agent; (vi) the fees and other disbursements of the accounting firms furnishing comfort letters pursuant to Section 7(c)(vi); (vii) any and all premiums charged for the Policy; and (viii) the fees and disbursements of any other counsel, experts or consultants retained by the Issuer. (b) The Underwriter shall pay (i) the cost of preparation of Blue Sky Memoranda, if any; (ii) all advertising expenses in connection with the public offering of the Bonds; (iii) expenses in connection with the assignment of CUSIP numbers; (iv) computer-related charges; (v) the fees and disbursements of counsel retained by the Underwriter and (vi) all other expenses incurred by them or any of them in connection with their public offering and distribution of the Bonds. Section 9. Any notice or other communication to be given to the Issuer under this Agreement may be given by delivering the same in writing to the Indian River County, 1840 25th Street, Vero Beach, Florida 32960, to the attention of Mr. damn Chandler, County Administrator, and such notice or other f communication to be given to the Underwriter may be given by delivering the same in writing to Gulfstream Financial Associates, Inc., 2500 Military Trail, Boca Raton, Florida 33431, Attention: Arthur H. Ziev. Section 10. (a) To the extent permitted by law, the Issuer agrees to indemnify and hold harmless the Underwriter and each person if any, who controls the Underwriter against any and all losses, claims, damages and liabilities (i) arising out of any untrue statement of a material fact contained in the Official Statement, as the same may have been duly supplemented or amended, or the omission therefrom of a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except any such statements as were based on information furnished to the Issuer by the Underwriter in writing for inclusion in the Official Statement or by others as specifically indicated in the Official Statement, and (ii) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or 14 omission if such settlement is effected with the written consent of the Issuer. In case any such claim shall be made or action brought against the Underwriter or person controlling the Underwriter based upon the Official Statement, in respect of which indemnity may be sought against the Issuer, the Underwriter shall promptly notify the Issuer in writing setting forth the particulars of such claim or action and the Issuer shall assume the defense thereof including the employment of counsel satisfactory to the Underwriter (who shall not, except with the consent of the Underwriter, be counsel of the Issuer), and the payment of all expenses. The Underwriter or any such controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Underwriter or such controlling person unless the employment, and payment by the Issuer, of such counsel has been specifically authorized by the Issuer or unless in the opinion of counsel to the Underwriter, the Underwriter has a defense or defenses not available to the Issuer. (b) To the extent permitted by law, the Underwriter agrees to indemnify and hold harmless the Issuer to the same extent and in the same manner as the foregoing indemnity from the Issuer, but only with respect to any untrue statement of a material fact contained in the Official Statement, as the same may have been duly supplemented or amended, or the omission therefrom of a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, made in reliance upon and in conformity with information furnished to the Issuer in writing by the Underwriter expressly for use in the Official Statement (or any amendment or supplement thereto). Section 11. This Agreement is made solely for the benefit of the Issuer and the Underwriter (including the successors or assigns of the Underwriter) and no other person, partnership, association or corporation shall acquire or have any rights hereunder or by virtue hereof. All representations and agreements of the Issuer in this Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any of the Underwriter and shall survive the delivery of and payment for the Bonds. Section 12. Any approval of the Underwriter, when required, shall be in writing signed by Gulfstream Financial Associates, Inc. and delivered to you. 15 Section 13. The validity, interpretation and performance of this Agreement shall be governed by the laws of the State of Florida. Accepted by the Issuer April 2i , 1989 INDIAN RIVER COUNTY, FLORIDA By:e-, e Name : G.f„ a whecly Title: _ C%MM 256/444 GULFSTREAM FINANCIAL ASSOCIATES, INC. By: Name: A-Atew Title: _U,,A Fet,44 16 In the opinion of Bond Counsel, assuming continuing compliance by the County with certain covenants to comply with provisions of the internal Revenue Code of /986, as amended, interest on the Series 1989 Bonds is exempifrom presentfederal income tares under existing statutes, regulations anddecisions, except as ser forth under "TAX EXEMPTION" in this Official Statement; and interest on the Series 1989 Bonds is exempt from taxation under the laws of the State of Florida, except as to estate rates and races imposed by Chapter 220, Florida Statutes, on interest, income, or profits on debt obligations owned by corporations, banks and savings associations (see "TAX EXF,MPTIAV— herein for further information). NEW ISSUE $6,510,000 INDIAN RIVER COUNTY, FLORIDA Water and Sewer Revenue Refunding Bonds, Dated: April 15, 1989 Series 1989 Due: May 1 as shown below The Water and Sewer Revenue Refunding Bonds, Series 1989 (the "Series 1989 Bonds") are being issued by Indian River County, Florida (thu "County") in fully registered form in denominations of $5,000 and any integral mulliple thereof. Interest on the Series 1989 Bonds is parable scmi- annnally O8 May I a11d NAV,,rA6r I. eommeneing November I. 1091), 6y cheek or d—A n1` Florida National Bank, St. PL—mburg. Florida. os Paying Agent, made out and railed to the Registered Owner, as shown on the registration books of the County maintained by Florida National Bank. St, Petersburg, Florida, as Bond R99isirar, on 1119 fift99nth day next preceding the applicable interest payment dates and as otherwise deseribed herein. The principal of the Series 1989 Bonds, when due, will be payable upon presentation and surrender thereof at the principal corporate trust office of the Paying Agent. The Series 1989 Bonds are subject to redemption, at the option of the County, prior to maturity as set forth herein. The Series 1989 Bonds due May 1, 2004, May 1, 2009 and May I, 2019 are subject to mandatory redemption prior to maturity as described herein. The Series 1989 Bonds are being issued pursuant to the authority of the Constitution and laws of the State of Florida, including Chapters 125 and 159, Florida Statutes, and other applicable provisions of law (the "Act") and Resolution No. 89-19, adopted by the County on February 14, 1989, as the same may be amended and supplemented (collectively, the "Resolution"). The proceeds of the Series 1989 Bonds together with certain other available funds of the County will be used to (i) retire certain bonds of the County held by Farmers Home Administration, United Slates Department of Agriculture ("FmHA") pursuant to loan agreements with the County, (ii) fund the Reserve Account established for the Series 1989 Bonds, and (iii) pay certain costs incurred in connection with issuance of the Series 1989 Bonds, all as more particularly described herein. The payment of the principal of, and interest on the Series 1989 Bonds when due will be insured by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 1989 Bonds by FINANCIAL GUARANTY INSURANCE COMPANY FIGIC _ Service mark used by Financial Guaranlylnsurance Company, a private company not affiliated %ilh any U.S. government agency. THE SERIES 1989 BONDS ARE LIMITED OBLIGATIONS OF INDIAN RIVER COUNTY, FLORIDA. THE SERIES 1989 BONDS ARE PAYABLE BY THE COUNTY FROM AND SECURED BY A LIEN UPON AND PLEDGE OF THE NET REVENUES OF THE SYSTEM INCLUDING AMOUNTS ON DEPOSIT IN THE SINKING FUND, THE 13OND AMORTIZATION ACCOUNT AND THE RESERVE ACCOUNT ESTABLISHED UNDER THE RESOLUTION, ALL AS DESCRIBED HEREIN. IT IS ANTICIPATED THAT SUCH LIEN AND PLEDGE OF THE NET REVENUES OF THE SYSTEM WILL IN THE FUTURE BE SUBORDINATE TO A LIEN TO BE GRANTED FOR CERTAIN BONDS TO BE ISSUED TO FmIIA PURSUANT TO RESOLUTION 82.61 OF THE COUNTY AS FURTHER DESCRIBED HEREIN. NEITHER THE COUNTY, THE STATE OF FLORIDA NOR ANY POLITICAL SUBDIVISION THEREOF HAS PLEDGED ITS FAITH OR CREDIT OR TAXING POWER TO THE PAYMENT OF THE SERIES 1989 BONDS. NO HOLDER OF THE SERIES 1989 BONDS SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER OF THE COUNTY OR TAXATION IN ANY FORM OF ANY REAL PROPERTY THEREIN TO PAY THE SERIES 1989 BONDS OR THE INTEREST DUE THEREON NOR BE ENTITLED TO PAYMENT OF THE SERIES 1989 BONDS FROM ANY FUNDS OF THE COUNTY EXCEPT AS DESCRIBED HEREIN. MATURITIES, AMOUNTS, RAPES AND YIELDS $1,045,000 Serial Bonds Principal Interest Yield or Principal Interest Yield or Due Amount Rate Price Due Amount Rate Price 1990 $65,000 6.70% 100% 1996 $100,000 7.10%: 100%n 1991 70,000 6.80 100 1997 105,000 7.10 too 1992 75,000 6.90 too 1998 115,000 7.15 100 1993 80,000 6.95 100 1999 125,000 7.20 100 1994 85,000 7.00 100 2000 130,000 7.25 100 1995 95,000 7.05 100 $ 625,000 7.40% Tbrm bonds due May 1, 2004 — Price 100% $1,080,000 7.40% Term bonds due May 1, 2009 — Price 991/2% $3,760,000 7.40% Term bonds due May 1, 2019 — Price 991/4% (Accrued interest to be added) The Series 1989 Bonds are offered when, as and if issued and received Ir), the Underwriter, subject to the approml of legality by Rhamd s & Siuon, Boca Raton, Florida, Bond Counsel to the Comity. Certain legal inatters• will be passer/ uponfor the County by Charles P Vit untie•, Esquire, Courcy Attorney, and for the Undenvrirer by Gunter, Yoakley, Criser & Stewart, P.A., West Print Beach, Florida. It is expected that the Series 1989 Bonds will be available for delivery in New York, New York, in defhnitiveforret ()It or about May 4, 1989. GULFSTREAM FINANCIAL ASSOCIATES, INC. April 27, 1989 A Kemper Financial Company INDIAN RIVER COUNTY, FLORIDA Board of County Commissioners Gary C. Wheeler, Chairman Carolyn K. Eggert, Vice -Chairman Don C. Scurlock, Jr. Richard N. Bird Margaret C. Bowman Clerk of Court & Clerk of the Board of County Commissioners Jeffrey K. Barton County Administrator James E. Chandler County Attorney Charles P. Vitunac Director of Utilities Terrance G. Pinto Director of Management and Budget t Joseph A. Baird Bond Counsel Rhoads & Sinon Boca Raton, Florida Financial Advisor Fishkind & Associates, Inc. Winter Park, Florida Certified Public Accountant Coopers & Lybrand Orlando, Florida i No dealer, sales representative or any other person has been authorized by the County or the Underwriter to give any information or to make any representation, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy and there shall be no sale of the Series 1989 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the County and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the Underwriter or, as to information from other sources, the County. The information and the expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County since the date hereof or the earliest date as of which such information is given. THE UNDERWRITER HAS ADVISED THE COUNTY THAT IN CONNECTION WITH THE OFFERING OF THE SERIES 1989 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 1989 BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ii TABLE OF CONTENTS Page INTRODUCTION................................. 1 PURPOSE 2 ESTIMATED SOURCES AND USES OF FUNDS 2 DESCRIPTION OF THE BONDS................................ 3 REDEMPTION PROVISIONS 3 Mandatory Redemption 3 Optional Redemption 4 Notice of Redemption 5 SECURITY AND SOURCES OF PAYMENT 5 Pledge of Net Revenues.............. I .................. 5 Insurance.....................................7 Rate Covenant ..................... 8 Flow of Funds for Series 1989 Bonds ..... 8 Flow of Funds Under Senior Lien Bond Resolution . 11 FUTURE FINANCING PLANS 13 Prior Pledge to and Lien for Series 1986 Bonds 13 Issuance of Additional Parity Bonds 13 MUNICIPAL BOND INSURANCE................................ 16 DEBT SERVICE SCHEDULE....... 17 THESYSTEM .............................................. 17 General................................................ 17 System Staff................................ 18 Water and Sewer Customers 18 RateStructure......................................... 18 Outstanding Debt................................19 Selected Financial Data...... 19 THE COUNTY.............................................. 21 Description............................................ 21 ......... Government .................................... 21 Population............................................. 22 Industry............................................... 23 Employment........................................... 24 ........ Transportation................................. 26 Health Care................................... 26 Education ................... 27 Communications and Electric Utilities 27 SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION.....,.... 27 TAX EXEMPTION ........................................... 32 Corporate Alternative Minimum Taxes; Environmental Tax; Branch Profits Tax................. 32 Financial Institutions' Cost of Carrying Tax-Exempt Bonds. 33 Other Federal Income Tax Consequences.......... 33 NON-ARBITRAGE BONDS ...................................... 34 LITIGATION............................................... 34 RATINGS................................................. 34 UNDERWRITING............................................. 35 LEGALITY....................................35 MISCELLANEOUS............................................ 35 iii ADDITIONAL INFORMATION ................................... 36 AUTHORIZATION OF OFFICIAL STATEMENT ...................... 36 APPENDIX A - FINANCIAL STATEMENTS OF THE COUNTY.......... A-1 APPENDIX B - FORM OF OPINION OF BOND COUNSEL ............. B-1 APPENDIX C - SPECIMEN MUNICIPAL BOND INSURANCE POLICY . C-1 APPENDIX D - CERTAIN DEFINED TERMS USED HEREIN .......... D-1 iv OFFICIAL STATEMENT $6,510,000 INDIAN RIVER COUNTY, FLORIDA Water and Sewer Revenue Refunding Bonds, Series 1989 INTRODUCTION The purpose of this Official Statement, which includes the cover page and the appendices hereto, is to furnish information in connection with the sale by Indian River County, Florida (the "County") of $6,510,000 aggregate principal amount of its Water and Sewer Revenue Refunding Bonds, Series 1989 (the "Series 1989 Bonds"). The Series 1989 Bonds are being issued pursuant to the authority of the Constitution and laws of the State of Florida, including Chapters 125 and 159, Florida Statutes, and other applicable provisions of law (the "Act") and Resolution No. 89-19, adopted by the County on February 14, 1989, as the same may be amended and supplemented (collectively, the "Resolution"). The Series 1989 Bonds were validated and confirmed by judgment of the 19th Judicial Circuit in and for Indian River County, Florida on March 27, 1989. The appeal period for validation of the Series 1989 Bonds expires on April 26, 1989. The Series 1989 Bonds and any additional obligations of the County issued on a parity with the Series 1989 Bonds pursuant to the Resolution are herein referred to as the "Bonds." The Series 1989 Bonds are limited obligations of Indian River County, Florida, payable by the County from and secured by a lien upon and pledge of the Net Revenues of the System, including amounts on deposit in the Sinking Fund, the Bond Amortization Account and the Reserve Account established under the Resolution, all as described herein. It is anticipated that such lien and pledge of the Net Revenues of the System will in the future be subordinate to a lien on the revenues and receipts of the System to be granted to secure payment of certain bonds to be sold to FmHA pursuant to Resolution 82-61 of the County (the "Senior Lien Bond Resolution") and certain loan commitments between FmHA and the County. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Neither the County, the State of Florida nor any political subdivision thereof has pledged its faith or credit or taxing power to the payment of the Series 1989 Bonds. No holder of the Series 1989 Bonds shall ever have the right to compel the exercise of any ad valorem taxing power of the County or taxation in any form of any real property therein to pay the Series 1989 Bonds or the interest due thereon nor be entitled to payment of the Series 1989 Bonds from any funds of the County except as described herein. Terms not specifically defined herein shall have the meanings ascribed to such terms in Appendix D attached hereto. PURPOSE The proceeds of Series 1989 Bonds together with certain other available funds of the County will be used to (i) retire the County's Water and Sewer Revenue Bonds, Series 1979, dated August 30, 1979, the Water and Sewer Revenue Bonds, Second Series 1979, dated May 21, 1981, the Water Revenue Bonds, Series 1980 (South County Water System), dated September 30, 1982, and the Water and Sewer Revenue Bonds, Series 1982, dated April 30, 1985 (collectively, the "Original Bonds") which are held in their entirety by Farmers Home Administration, United States Department of Agriculture ("FmHA") pursuant to loan agreements with the County, (ii) fund the Reserve Account established for the Series 1989 Bonds, and (iii) pay certain costs incurred in connection with issuance of the Series 1989 Bonds, all as more particularly described herein. The County has previously issued the Original Bonds to FmHA pursuant to (i) loan agreements to finance the costs of acquisition and/or construction of the System and, (ii) Resolution 82-61, as amended. As of April 1, 1989, the aggregate outstanding principal balance of the Original Bonds was $8,878,200. By letter dated January 10, 1989, FmHA has offered the County the opportunity to participate in FmHA's Discount Purchase Program for 1989. Under the Program, the County may purchase the outstanding Original Bonds at a discount from the remaining outstanding principal amount thereof, subject to certain conditions and restrictions. $5,931,638.47 of the principal amount raised hereby and other legally available funds will be used to retire the Original Bonds. ESTIMATED SOURCES AND USES OF FUNDS Sources: Principal Amount of Series 1989 Bonds $6,510,000.00 Accrued Interest 25,233.58 Other Available Funds 319,035.00 Total Sources $6,854,268.58 Uses: Retire Original Bonds $5,931,638.47 Deposit to Reserve Account 564,359.33 Accrued Interest 25,233.58 Original Issue Discount 33,600.00 Underwriters' Discount 109,042.50 Issuance Expenses and Municipal Bond Insurance Premium 190,394.70 Total Uses $6.854.268.58 DESCRIPTION OF THE BONDS The Series 1989 Bonds will bear interest at the rates, and shall mature in the years and amounts, set forth on the cover page hereto. The Series 1989 Bonds will be issued in fully registered form in denominations of $5,000 or integral multiples thereof. Interest on the Series 1989 Bonds is payable semiannually on May 1 and November 1, commencing November 1, 1989, to the Registered Owner thereof from the interest payment date next preceding the date of registration and authentication thereof, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from such interest payment date; or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date first preceding November 1, 1989, in which event such Bond shall bear interest from April 15, 1989; or (d) as shown by the records of the Paying Agent, interest on such Bond is in default, in which event such Bond shall bear interest from the date on which interest was last paid on such Bond, until the principal amount thereof is paid. The interest on the Series 1989 Bonds will be payable by check drawn on the Paying Agent and will be mailed to each Registered Owner thereof. Payment of the interest on the Series 1989 Bonds shall be made to the Registered Owners thereof whose names and addresses appear, at the close of business on the fifteenth (15th) day next preceding each interest payment date (the "Record Date") on the registration books maintained by the Paying Agent, unless the County is in default in the payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the persons in whose names the Series 1989 Bonds are registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the Registered Owners of the Series 1989 Bonds not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the persons in whose names the Series 1989 Bonds are registered at the close of business on the fifth (5th) day preceding the date of mailing. The principal of the Series 1989 Bonds will be payable upon surrender of the Series 1989 Bonds at the principal corporate trust office of the Paying Agent or any successor to the Paying Agent as paying agent under the Resolution. REDEMPTION PROVISIONS Mandatory Redemption The Series 1989 Bonds due May 1, 2004 are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price equal to 100% of principal amount. Accrued interest is also payable on the redemption date. Mandatory Redemption Requirements Principal Principal Year Amount Year Amount 2001 $140,000 2003 $160,000 2002 150,000 2004 175,000 The Series 1989 Bonds due May 1, 2009 are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price equal to 100% of principal amount. Accrued interest is also payable on the redemption date. Mandatory Redemption Requirements The Series 1989 Bonds due May 1, 2019 are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price equal to 100% of principal amount. Accrued interest is also payable on the redemption date. Principal Principal Year Amount Year Amount 2005 $185,000 2008 $230,000 2006 200,000 2009 250,000 2007 215,000 2015 The Series 1989 Bonds due May 1, 2019 are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price equal to 100% of principal amount. Accrued interest is also payable on the redemption date. Optional Redemption The Series 1989 Boads maturing on or after May 1, 1959, are subject to redemption at the option of the County in whole or, from time to time, in part, on May 1, 1998, or on any date thereafter at the respective redemption prices expressed as percentages of the principal amount of the Series 1989 Bonds set forth below, plus accrued interest to the date of redemption. Redemption Redemption Period Price May 1, 1998 through April 30, 1999 101h% May 1, 1999 through April 30, 2000 100%% May 1, 2000 and thereafter 100% 4 Mandatory Redemption Requirements Principal Principal Year Amount Year Amount 2010 $265,000 2015 $380,000 2011 285,000 2016 410,000 2012 310,000 2017 440,000 2013 330,000 2018 475,000 2014 355,000 2019 510,000 Optional Redemption The Series 1989 Boads maturing on or after May 1, 1959, are subject to redemption at the option of the County in whole or, from time to time, in part, on May 1, 1998, or on any date thereafter at the respective redemption prices expressed as percentages of the principal amount of the Series 1989 Bonds set forth below, plus accrued interest to the date of redemption. Redemption Redemption Period Price May 1, 1998 through April 30, 1999 101h% May 1, 1999 through April 30, 2000 100%% May 1, 2000 and thereafter 100% 4 If fewer than all of the Series 1989 Bonds are to be so redeemed, the County may select the maturity or maturities to be redeemed. If fewer than all of the Series 1989 Bonds of any maturity are to be redeemed, the Bond Registrar will select by lot the particular Series 1989 Bonds or portions of Series 1989 Bonds (in fully registered form) of such maturity to be redeemed. The portion of any fully registered Series 1989 Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple of that sum. Notice of Redemption Notice of the intention to redeem the Bonds in whole or in part will be mailed by the Paying Agent, by first class mail, to the Registered Owners of the Bonds to be redeemed in whole or in part not more than 45 days and not less than 30 days prior to the date fixed for redemption, at their respective addresses as shown on the registration books, in accordance with the terms of the Resolution. Such notice is to specify the series, maturities and numbers of Bonds to be redeemed (including the CUSIP number); the date fixed for redemption; the redemption price or prices applicable to the Bonds to be redeemed; and that on the date fixed for redemption such Bonds will be payable at the principal corporate trust office of the Paying Aqent and that after such date interest shall cease to accrue on such Bonds. If holders or Registered Owners of all such Bonds to be redeemed file written waivers of notice with the Paying Agent, such Bonds may be redeemed on the redemption date without necessity of notice by mailing. Failure to mail any notice of redemption or any defect therein or in the mailing thereof will not affect the validity of any proceeding for redemption of other Bonds so called for redemption. SECURITY AND SOURCES OF PAYMENT Pledge of Net Revenues The Series 1989 Bonds are limited obligations of the County. The Series 1989 Bonds will be payable solely by the County from and secured by a lien upon and pledge of the "Net Revenues" of the System, together with such other revenues and funds which the County may choose to pledge by subsequent resolution as described below. Subject to the release of security as discussed below, "Net Revenues" for purposes of the Series 1989 Bonds means Revenues less Operating Expenses. "Revenues" as used herein means: (i) all receipts and revenues of the County derived from the imposition, collection and enforcement of uniform water and sewer service rates, fees and charges for the use of and the services furnished or to be furnished by the facilities constituting the System, including the earnings and interest income derived from the investment of moneys on deposit in various funds and accounts established in connection with the System, but excluding Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees (the "Uniform Charges"); (ii) with the consent of the Bond Insurer so long as any Series 1989 Bonds are outstanding, such Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees as the County, by resolution, may pledge specifically in connection with the Series 1989 Bonds; and (iii) with the consent of the Bond Insurer so long as any Series 1989 Bonds are outstanding, such other revenues of the County as the County, by resolution, may pledge specifically in connection with the Series 1989 Bonds. THE REVENUES PLEDGED IN CONNECTION WITH THE SERIES 1989 BONDS INCLUDE ONLY THE UNIFORM CHARGES OF THE SYSTEM AND DO NOT INCLUDE ANY SURCHARGES, IMPACT FEES, SPECIAL ASSESSMENTS, FRANCHISE FEES, FEES IN LIEU OF FRANCHISE FEES OR OTHER REVENUES OF THE SYSTEM, The County may, by resolution of the Board filed with the Clerk of the Board of County Commissioners, except and release from the foregoing pledge and lien, and the phrase "Revenues" as used in connection with the Series 1989 Bonds shall no longer include, the receipts and revenues of the County derived from the Uniform Charges for the use of and services furnished or to be furnished by any water and/or sewer facilities constituting a physically independent system of the County, or any Impact Fees, Special Assessments, Surcharges, Franchise Fees, Fees in Lieu of Franchise Fees or other receipts and revenues (other than Uniform Charges) theretofore pledged in connection with the Series 1989 Bonds, if there shall be filed with the Clerk of the Board of County Commissioners the following: (1) A certificate of an independent firm of certified public accountants of suitable experience and responsibility: (i) stating that the books and records of the County relating to the collection and receipt of the Revenues and the Operating Expenses have been audited by them for the Fiscal Year immediately preceding the date of the proposed release of such receipts and revenues from the pledge hereunder or for any twelve (12) consecutive month period out of the eighteen (18) consecutive months immediately preceding such date; (ii) setting forth the Revenues, the Uniform Charges, the Operating Expenses and the Net Revenues for the audited period referred to in (i) above, with respect to which such certificate is made; and (iii) stating that the Net Revenues, adjusted to give effect to the proposed release of such receipts and revenues as if the same had occurred at the beginning of such audited period, were equal to at least 1.20 times the largest amount of principal and interest which will mature and become due in any Fiscal Year thereafter on all Bonds then outstanding. For purposes of (iii) above (A) Revenues, Uniform Charges and Operating Expenses may be further adjusted so as to fairly represent the operation of the System, provided that the amount and a detailed reason for such adjustment is set forth in such certificate; (B) Net Revenues may also be adjusted for (I) the pro forma effect of rates implemented prior to the proposed release of such receipts and revenues and (II) new customers added to the System during the test period; and (C) any amounts owed to the issuer of a Reserve Account Credit Instrument (hereinafter defined) as a result of a draw thereon, as appropriate, shall be added to the principal and interest payable on Bonds to determine compliance with the foregoing test; (2) A certificate of the chief financial officer of the County stating that the County has established and will maintain a separate accounting of all revenues and expenses in connection with any such independent system or with respect to such Impact Fees, Surcharges, Special Assessments, Franchise Fees, Fees in Lieu of Franchise Fees or other receipts and revenues to be released, apart from the Pledged Funds; and (3) Written consent of the Bond Insurer, if the Bond Insurance Policy is then in effect. For purposes of the foregoing, payments during the Fiscal Year for: (i) principal and interest on senior lien bonds (the "Senior Lien Bonds") to be issued in the future to FmHA pursuant to the Senior Lien Bond Resolution ("Senior Lien Bonds Debt Service"), (ii) any renewal and replacement fund created in connection with the Senior Lien Bonds Resolution (the "Required Renewal Fund Payments") and (iii) any Reserve Account created in connection with the Senior Lien Bonds (the "Senior Lien Reserve Account Payments"), shall be treated as Operating Expenses. All or any part of the certificate required under subparagraph (1) above may be rendered by consulting engineers, consultants or other persons with requisite knowledge and experience who are not reasonably objected to by the Bond Insurer. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Neither the County, the State of Florida nor any political subdivision thereof has pledged its faith or credit or taxing power to the payment of the Series 1989 Bonds. No holder of the Series 1989 Bonds shall ever have the right to compel the exercise of any ad valorem taxing power of the County or taxation in any form of any real property therein to pay the Series 1989 Bonds or the interest due thereon nor be entitled to payment of the Series 1989 Bonds from any funds of the County except as described herein. Insurance The scheduled payment of principal and interest on the Series 1989 Bonds will be insured by Financial Guaranty Insurance Company ("Financial Guaranty"). The County has made no investigation and makes no representation with respect to Financial Guaranty and the policy, and reference should be made to the information under the caption "MUNICIPAL BOND INSURANCE" herein and Appendix C attached hereto for a description of Financial Guaranty and its specimen insurance policy. The material tinder said caption and in Appendix C has been furnished by Financial Guaranty. Rate Covenant The County covenants in the Resolution to establish and maintain such Uniform Charges and, as applicable, such Surcharges, Impact Fees, Special Assessments, Franchise Fees, Fees in lieu of Franchise Fees and such other receipts and revenues in connection with the System, so as to always provide either of the following: (1) Uniform Charges less Operating Expenses sufficient to pay (a) one hundred percent (100%) of all required deposits into the Reserve Account, and (b) one hundred twenty percent (120%) of the amount of principal and interest becoming due in such Fiscal Year on the Bonds outstanding, or (2) When the Revenues include receipts and revenues in addition to Uniform Charges, Net Revenues in each Fiscal Year sufficient to pay (a) one hundred percent (100%) of all required deposits into the Reserve Account, and (b) one hundred twenty percent (120%) of the amount of principal and interest becoming due in such Fiscal Year on the Bonds outstanding; provided, however, that Uniform Charges less Operating Expenses are sufficient to pay (a) one hundred percent (100%) of all required deposits into the Reserve Account, and (b) one hundred percent (100%) of the amount of principal and interest becoming due in such Fiscal Year on the Bonds outstanding. For purposes of the foregoing rate covenant, Senior Lien Bonds Debt Service, Required Renewal Fund Payments and Senior Lien Bonds Reserve Account Payments shall be treated as Operating Expenses. In addition, any amounts owed by the County to the issuer of a Reserve Account Credit Instrument (hereinafter defined) as a result of a draw thereon, as appropriate, shall be added to the principal and interest payable on the Bonds to determine compliance with this rate covenant. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Flow of Funds for Series 1989 Bonds Under the Resolution, the County has covenanted that all Revenues shall upon receipt thereof be deposited in the "Water and Sewer Revenue Fund" (the "Revenue Fund"). The Revenues are subject to the prior pledge and lien granted with respect to the Senior Lien Bonds, when issued, under the Senior Lien Bond Resolution. Subject to the prior pledge and lien granted with respect to the Senior Lien Bonds and the flow of funds with respect thereto (See "SECURITY AND SOURCES OF PAYMENT - Flow of Funds under Senior Lien Bond Resolution"), all Revenues on deposit in the Revenue Fund for the Series 1989 Bonds shall be disposed of by the County subject to the following order of priority: (1) First, the Countv shall transfer in each month to the Operation and Maintenance Fund the amount required to be deposited therein to pay the Operating Expenses due or to become due for such month, provided, however, that credit shall be given for funding of such month's Operating Expenses under the Senior Lien Bond Resolution to fund an Operation and Maintenance Fund. (2) Second, the County shall deposit in each month to a fund to be known as the "Water and Sewer Revenue Bonds Sinking Fund" (the "Sinking Fund"), one-sixth (1/6th) of such sum as will be sufficient to pay interest on the Bonds as the same shall become due on the next interest payment date, together with the amount of any deficiency in prior deposits for interest on Bonds, and one --twelfth (1/12th) of the principal of Bonds maturing or subject to mandatory call for redemption on the next principal payment date with respect to the Bonds. Such deposits shall take into account the sums, if any, in the Bond Amortization Account (hereinafter defined) attributable to such payments and the sums, if any, deposited in the Sinking Fund out of proceeds from the sale of Bonds to pay interest thereon. In addition, there shall be deposited in the Sinking Fund amounts sufficient to pay the fees and charges of the Paying Agent. (3) Third, the County shall deposit into an account in the Sinking Fund to be known as the "Bond Amortization Account," such sums as are required by resolution of the County to be deposited therein at such times as are required thereby for each series of Term Bonds for purposes of the mandatory redemption thereof. (4) Fourth, the County shall deposit into an account in the Sinking Fund to be known as the "Reserve Account," a sum at least equal to and sufficient to pay the maximum amount of principal and interest on all outstanding Series 1989 Bonds becoming due in any ensuing Fiscal Year. A sum to be specified by subsequent resolution of the County will be deposited in the Reserve Account out of the proceeds of the sale of Series 1989 Bonds. To the extent the amount deposited in the Reserve Account out of the proceeds of the sale of the Series 1989 Bonds is less than the maximum amount of principal and interest on all outstanding Series 1989 Bonds becoming due in any ensuing Fiscal Year, the County will make such additional required payments or substitutions therefor as described herein. Provided, however, in no Fiscal Year shall Net Revenues in excess of twenty percent (20%) of the maximum amount of principal and interest on all outstanding Bonds becoming due in any ensuing Fiscal Year be required to be deposited in the Reserve Account, except as may be required by Section 16, subsections P or Z of the Resolution. No further deposits shall be required to be made into the Reserve Account as long as there shall remain on deposit therein (including any Reserve Account Credit Instrument as described below) a sum equal to the maximum amount of principal and interest on all outstanding Bonds becoming due in any ensuing Fiscal Year. The value of the Reserve Account, including investments on deposit in the Reserve Account, shall be determined annually on the first day of the Fiscal Year by an independent firm of certified public accountants, who may be the accountants for the County, in accordance with generally accepted accounting principles. Notwithstanding the foregoing, in lieu of, in whole or in part, the required deposits into the Reserve Account, the County may cause to be deposited into the Reserve Account any of the following (each a "Reserve Account Credit Instrument"): (a) A surety bond or insurance policy issued to the Paying Agent, as agent of the Bondholders, by a company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Bonds (a "municipal bond insurer"), if the claims paying ability of the issuer thereof shall be rated "AAA" or "Aaa" by Standard & Poor's Corporation ("S&P") or Moody's Investors Service ("Moody's"), respectively; (b) A surety bond or insurance policy issued to the Paying Agent, as agent of the Bondholders, by an entity other than a municipal bond insurer, if the form and substance of such instrument and the issuer thereof shall be approved by the Bond Insurer; or (c) An unconditional irrevocable letter of credit issued to the Paying Agent, as agent of the Bondholders, by a bank, if such bank is rated at least "AA" by S&P. Any such Reserve Account Credit Instrument shall meet the further terms and conditions described in Section 16, subsection Z of the Resolution and shall be payable or available to be drawn upon, as the case may be (upon the giving of notice as required thereunder), by the Paying Agent on any interest payment date on which a deficiency exists which cannot be cured by money in any other fund or account held pursuant hereto and available for such purpose. It shall be the duty of the Paying Agent to, and the Paying Agent shall, without further authorization or direction from the County, ascertain the necessity for a claim or draw upon any Reserve Account Credit Instrument and provide notice to the issuer of the Reserve Account Credit Instrument in accordance with its terms not later than three days (or such appropriate time period as will, when combined with the timing of required payment under the Reserve Account Credit Instrument, ensure payment under the Reserve Account Credit Instrument on or before the interest payment date) prior to each interest payment date. If a disbursement is made under any such Reserve Account Credit Instrument, the County may reinstate the maximum limits of such Reserve Account Credit Instrument immediately following such disbursement, otherwise the amount of credit toward the Reserve Account 10 requirement for such Reserve Account Credit Instrument shall be appropriately reduced. Furthermore, the County may at any time and from time to time cause to be deposited in the Reserve Account such Reserve Account Credit Instrument and cause an appropriate amount to be withdrawn from the Reserve Account and released to the County. Moneys in the Reserve Account shall be used only for the purpose of the payment of maturing principal of or interest on Bonds when the other moneys in the Sinking Fund are insufficient therefor, and for no other purpose. However, upon the valuation of the Reserve Account in each year, if the moneys applied and allocated to the Reserve Account (except the investment income thereon) exceed the amount required, such excess may be withdrawn and released to the County. If the Reserve Account requirement shall at any time be satisfied in whole or in part with a qualifying letter of credit and such letter of credit is about to expire or terminate, the County authorizes and directs the Paying Agent to draw upon such letter of credit prior to its expiration or termination to the extent required to fully fund the Reserve Account requirement unless a replacement Reserve Account Credit Instrument is in place or the Reserve Account is otherwise fully funded in its required amount. (5) Fifth, moneys in the Revenue Fund shall be applied to the payment of current debt service and reserve requirements of any obligations of the County issued to finance the cost of additions, acquisition, extensions and improvements to the System which are junior and subordinate to the lien of the Series 1989 Bonds on the Pledged Funds. (6) Sixth, the balance of any moneys remaining in the Revenue Fund after the above required payments have been made may be (a) deposited into a special fund to be known as the "Sewer and Water Renewal and Replacement Fund," which shall be used only for the purpose of paying the costs of extensions, enlargements, or additions to or the replacement of capital assets of the System, and for emergency repairs thereto or (b) used by the County for any lawful purpose. No further deposits to the Sinking Fund, the Bond Amortization Account or the Reserve Account shall be required when the aggregate sums deposited therein are and remain at least equal to the sum of all of the principal and interest then due and thereafter becoming due in all ensuing years for the Series 1989 Bonds then outstanding. Flow of Funds under Senior Lien Bond Resolution While any Senior Lien Bonds are outstanding, the gross revenues and receipts of the System pledged for payment of the Senior Lien Bonds, which include the Revenues pledged in connection with the Series 1989 Bonds, will be utilized by the County in the following 11 order of priority before the Revenues are available under the Resolution for payment of the Series 1989 Bonds or any Additional Parity Bonds: (1) First, the County shall transfer each month to the sinking fund for the Senior Lien Bonds created under the Senior Lien Bond Resolution, if any Senior Lien Bonds are then outstanding, the amount required by the Senior Lien Bond Resolution to be deposited therein monthly to provide for timely payment of the principal and interest on the Senior Lien Bonds currently becoming due and payable. (2) Second, while any Senior Lien Bonds are outstanding, the County shall transfer and deposit to the credit of the reserve account in the Sinking Fund for the Senior Lien Bonds under the Senior Lien Bond Resolution, the sum of 1/12 of lo% of the "Maximum Bond Service Requirement," as that phrase is defined in the Senior. Lien Bond Resolution, on the Senior Lien Bonds until such time as the funds and investments therein shall equal such Maximum Bond Service Requirement, and monthly thereafter such amount as may be necessary to maintain in such reserve account the Maximum Bond Service Requirement, but not exceeding 1/12 of the Maximum Bond Service Requirement monthly. In connection with Senior Lien Bond Resolution and the Senior Lien Bonds, the County may be required to fully fund the Maximum Bond Service Requirement prior to making any payment with respect to the Series 1989 Bonds. Under the Resolution, the County has covenanted that in such event it will promptly fully fund such Maximum Bond Service Requirement of the Senior Lien Bonds with available revenues and funds other than the Revenues pledged to secure the Series 1989 Bonds or ad valorem taxes, unless the Bond Insurer shall agree otherwise. (3) Third, the County shall transfer in each month to the Operation and Maintenance Fund the amount required to be deposited therein to pay the Operating Expenses due or to become due for such month. (4) Fourth, while any Senior Lien Bonds are outstanding, the County shall transfer and deposit into a special fund to be known as the "Indian River County Water and Sewer System Renewal and Replacement Fund," an amount equal to 1/12 of 5% of the gross revenues of the System (excluding Impact Fees) for the preceding Fiscal Year. Such fund shall be used only for the purpose of paying the cost of extensions, enlargements, improvements or additions to or the replacement of capital assets of the System, and for emergency repairs thereto. Impact Fees on deposit in the Renewal and Replacement Fund shall only be used to pay the cost of extensions, enlargements, improvements or additions to the System made necessary by the inclusion of new customers of the System. 12 (5) Fifth, the balance of any moneys remaining after the above required payments have been made may be used by the County for any lawful purpose. FUTURE FINANCING PLANS Prior Pledge to and Lien for Series 1986 Bonds In December 1987 the County issued 6 3/8% Water and Sewer Revenue Bonds, Anticipation Notes in an aggregate principal amount of $9,200,000 ("1986 Anticipation Notes") in anticipation of the receipt by the County of the proceeds from the sale of its $9,200,000 Water and Sewer Revenue Bonds, Series 1986 (the "Series 1986 Bonds"). The County currently anticipates that the Series 1986 Bonds will be sold to FmHA pursuant to the laws of the State of Florida, Resolution No. 86-35 and the Senior Lien Bond Resolution, as amended and supplemented (collectively, the "Series 1986 Bond Resolution"), and certain Letters of Condition between FmHA and the County ("FmHA Letters of Condition"), on or prior to December 1, 1990. Pursuant to the Series 1986 Bond Resolution and the FmHA Letters of Condition the County anticipates that it will pledge to, and grant a lien on, the revenues and receipts of the System for payment of the Series 1986 Bonds when issued, with such pledge and lien being senior to the pledge of, and lien on, the Net Revenues of the System for payment of the Series 1989 Bonds. FmHA has also issued a commitment to provide a $450,000 loan to the County for the purchase and improvement of a utility system in the "Bent Pine" area of the County, subject to fulfillment by the County of certain conditions (the "Bent Pine Commitment'). Any bonds sold to FmHA issued by the County in connection with the Bent Pine Commitment would likely involve a pledge of, and grant of a lien on, the revenues and receipts of the System, which pledge and lien would also be senior to the pledge of, and lien on, the Net Revenues of the System granted to secure payment of the Series 1989 Bonds. Other than bonds sold to FmHA as described above (the "Senior Lien Bonds"), the County shall not issue any other bonds or obligations senior to or having priority to the Net Revenues of the System pledged for payment of the Series 1989 Bonds. Issuance of Additional Parity Bonds Additional Parity Bonds, payable on a parity from the Net Revenues with the Series 1989 Bonds, may be issued from time to time to finance any portion of the costs of the construction and/or acquisition of additions, extensions and improvements to the System, or of any physically separate water or sewer system declared by resolution of the Board to be part of the System, or for refunding purposes, in the manner herein_ provided. 13 Before issuing any such Additional Parity Bonds, there shall have been obtained and filed with the County a certificate of an independent firm of certified public accountants of suitable experience and responsibility: (i) stating that the books and records of the County relating to the collection and receipt of the Revenues and the Operating Expenses have been audited by them for the Fiscal Year immediately preceding the date of sale of the proposed obligations or for any twelve (12) consecutive month period out of the eighteen (18) consecutive months immediately preceding the date of sale of the proposed obligations; (ii) setting forth the Revenues, the Uniform Charges, the Operating Expenses and the Net Revenues for the audited period referred to in (i) above, with respect to which such certificate is made; and (iii) stating that: (a) during such audited period, the County was in compliance with the rate covenant previously discussed; and (b) the Net Revenues, as adjusted as hereinafter provided, were equal to at least 1.20 times the largest amount of principal and interest which will mature and become due in any Fiscal Year thereafter on all Bonds then outstanding, including the proposed Additional Parity Bonds; and when the Revenues include receipts and revenues in addition to Uniform Charges, the Uniform Charges less Operating Expenses, adjusted as hereinafter provided, were equal to at least 1.00 times the largest amount of principal and interest that will mature and become due in any Fiscal Year thereafter on all Bonds outstanding, including the proposed Additional Parity Bonds. For purposes of (iii) above: (A) Revenues, Uniform Charges and Operating Expenses may be adjusted so as to fairly represent the operation of the System, provided that the amount and a detailed reason for each such adjustment is set forth in such certificate; (B) Net Revenues may also be adjusted for (i) the pro forma effect of rates implemented prior to issuance of the Additional Parity Bonds, (ii) new customers added to the System during the test period, (iii) already existing occupied residences or operating business establishments which will be connected to the System upon completion of projects under construction or to be funded with bond proceeds, and (iv) Net Revenues attributable to customers for whom Impact Fees have been paid, and which will be connected to the System upon completion of projects under construction or to be funded with bond proceeds (provided that while the Series 1989 Bonds are outstanding and the Bond Insurance Policy is in effect, not more than 40% of the Net Revenues described in this subclause (iv) shall be used as an adjustment under this clause (B) without the consent of the Bond Insurer); and (C) any amounts owed by the County to the issuer of a Reserve Account Credit Instrument as a result of a draw thereon, as appropriate, shall be added to the principal and interest payable thereon on the Bonds to determine compliance with the foregoing test. 14 For purposes of the foregoing, Senior Lien Debt Service, Required Renewal Fund Payments and Senior Lien Bonds Reserve Account Payments shall be treated as Operating Expenses. All or any part of the certificate required under the second paragraph of this subsection may be rendered by consulting engineers, consultants or other persons with requisite knowledge and experience who are not reasonably objected to by the Bond Insurer. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Additional Parity Bonds may not be issued at any time at which the County is in default in performing any of the covenants and obligations under the Resolution, or all payments herein required to have been made into the accounts and funds, as provided under the Resolution, have not been made to the full extent required. The foregoing conditions shall not apply with respect to Additional Parity Bonds the proceeds of which will be used to complete a project a substantial portion of the cost of which has been or will be paid out of the proceeds of Bonds issued under the Resolution. The County covenants for the benefit of the Registered Owners of the Series 1989 Bonds and any other Bonds issued and outstanding under the Resolution that the County shall, at the time of issuance of any Additional Parity Bonds, make a deposit to the Reserve Account in the Sinking Fund created under the Resolution so that the Reserve Account shall have a value of cash and investments at such time equal to the maximum amount of principal and interest on all outstanding Bonds (including the Additional Parity Bonds and giving effect to the retirement of any Bonds being refunded with proceeds of the Additional Parity Bonds) becoming due in any ensuing fiscal year, unless the Bond Insurer shall agree otherwise. The County presently has outstanding an aggregate of $3,900,000, 6 7/8% Water Revenue Bonds, Series 1988, Anticipation Notes due December 1, 1991 (the "1988 Anticipation Notes"). Such Notes were issued in anticipation of the receipt by the County of the proceeds from the future sale of its Water Revenue Bonds, Series 1988 which have been authorized in an amount up to $4,000,000 (the "Series 1988 Bonds"). The County expects that the Series 1988 Bonds will be sold at public or private sale pursuant to the laws of the State of Florida and Resolution No. 88-44 duly adopted by the County on August 2, 1988, as amended and supplemented from time to time, on or prior to the maturity of the 1988 Anticipation Notes. Upon issuance, the Series 1988 Bonds will be either (i) payable on a parity from the Net Revenues with the Series 1989 Bonds or (ii) payable from and secured by a pledge of and lien upon the Surcharges from the North Beach Water System operations of the System, which Surcharges are not included in the Net Revenues pledged in the Resolution as of the date hereof. 15 MUNICIPAL BOND INSURANCE Concurrently with the issuance of the Series 1989 Bonds, Financial Guaranty Insurance Company ("Financial Guaranty") will issue its Municipal Bond New Issue Insurance Policy for the Series 1989 Bonds (the "Policy"). The Policy unconditionally guarantees the payment of that portion of the principal of and interest on the Series 1989 Bonds which has become due for payment, but shall be unpaid by reason of nonpayment by the County. Financial Guaranty will make such payments to Citibank, N.A., or its successor as its agent (the "Fiscal Agent"), on the later of the date on which such principal and interest is due or on the business day next following the day on which Financial Guaranty shall have received telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail, from an owner of Series 1989 Bonds or the Paying Agent of the nonpayment of such amount by the County. The Fiscal Agent will disburse such amount due on any Series 1989 Bond to its owner upon receipt by the Fiscal Agent of evidence satisfactory to the Fiscal Agent of the owner's right to receive payment of the principal and interest due for payment and evidence, including any appropriate instruments of assignment, that all of such owner's rights to payment of such principal and interest shall be vested in Financial Guaranty. The term "nonpayment" in respect of a Series 1989 Bond includes any payment of principal or interest made to an owner of a Series 1989 Bond which has been recovered from such owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. The Policy is non -cancellable and the premium will be fully paid at the time of delivery of the Series 1989 Bonds. The Policy covers failure to pay principal of the Series 1989 Bonds on their respective stated maturity dates, or dates on which the same shall have been duly called for mandatory sinking fund redemption, and not on any other date on which the Series 1989 Bonds may have been accelerated, and covers the failure to pay an installment of interest on the stated date for its payment. Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation (the "Corporation"), a Delaware holding company. The Corporation is a wholly-owned subsidiary of General Electric Capital Corporation ("GECC"). Neither the Corporation nor GECC is obligated to pay the debts of or the claims against Financial Guaranty. Financial Guaranty is domiciled in the State of New York and is subject to regulation by the State of New York and is subject to regulation by the State of New York Insurance Department. As of December 31, 1988, the total capital and surplus of Financial Guaranty was approximately $385,600,000. Copies of Financial Guaranty's financial statements, prepared on the basis of statutory accounting principles, and the Corporation's financial statements, prepare on the basis of generally accepted accounting principles, may be obtained by writing to Financial Guaranty at 175 Water Street, New York, New York 10038, Attention: Communications Department. Financial Guaranty's telephone number is (212)607-3000. 16 DEBT SERVICE SCHEDULE The following table presents the annual debt service requirements of the County for the Series 1989 Bonds: Year Ending September 304 Principal Interest Total 1990 $ 65,000.00 $ 499,359.33 $ 564,359.33 1991 70,000.00 473,755.00 543,755.00 1992 75,000.00 468,995.00 543,995.00 1993 80,000.00 463,820.00 543,820.00 1994 85,000.00 458,260.00 543,260.00 1995 95,000.00 452,310.00 547,310.00 1996 100,000.00 445,612.50 545,612.50 1997 105,000.00 438,512.50 543,512.50 1998 115,000.00 431,057.50 546,057.50 1999 125,000.00 422,835.00 547,835.00 2000 130,000.00 413,835.00 543,835.00 2001 140,000.00 404,410.00 544,410.00 2002 150,000.00 394,050.00 544,050.00 2003 160,000.00 382,950.00 542,950.00 2004 175,000.00 371,110.00 546,110.00 2005 185,000.00 358,160.00 543,160.00 2006 200,000.00 344,470.00 544,470.00 2007 215,000.00 329,670.00 544,670.00 2008 230,000.00 313,760.00 543,760.00 2009 250,000.00 296,740.00 546,740.00 2010 265,000.00 278,240.00 543,240.00 2011 285,000.00 258,630.00 543,630.00 2012 310,000.00 237,540.00 547,540.00 2013 330,000.00 214,600.00 544,600.00 2014 355,000.00 190,180.00 545,180.00 2015 380,000.00 163,910.00 543,910.00 2016 410,000.00 135,790.00 545,790.00 2017 440,000.00 105,450.00 545,450.00 2018 475,000.00 72,890.00 547,890.00 2019 510,000.00 37,740.00 547,740.00 Total $6,510,000.00 $9,858,641.83 $16,368,641.8a THE SYSTEM General The County owns and operates water and sewer systems (collectively, the "System"), which were established in 1978. The County provides water and sewer services to a portion of the County's population, with a majority of the other County residents being serviced by private wells and septic tanks and the City of Vero Beach, Florida, which operates its own water and sewer systems. 17 The County presently operates two water plants, the South County plant ("South County Plant") and the North Beach plant ("North Beach Plant"). The water plants have a present nominal capacity of 3 million gallons per day ("MGD"). In addition, the County purchases 750,000 gallons of water per day from the City of Vero Beach, Florida. The County is currently expanding the storage capacity of the South County Plant to 5 million gallons, which expansion is expected to be completed by the summer of 1989. Also under construction is a transmission line connecting different areas of the County's water system. On November 1, 1988, the County consummated the purchase of the business and assets of the North Beach Water Company consisting of the North Beach Plant and a distribution system in the northern portion of the County ("NBWC System"). The County's sewer system currently consists of four small wastewater plants and two regional plants. The County also has the right to have treated up to 1.39 MGD at the municipally -owned Vero Beach wastewater plant. The County is expanding each of its regional plants from a treatment capacity of 1 MGD to a capacity of 2 MGD, with completion of such expansion expected in 2 years. System Staff The System presently employs 58 persons. The System is managed by Terrance G. Pinto, Director of Utilities. It is the opinion of management that the System enjoys excellent labor relations. Water and Sewer Customers The number of County water and sewer customers, expressed as the number of equivalent residential units ("ERUs"), for the years 1984-1988 is set forth below: October 31 Water ERUs Sewer ERUs 1984 5,701 3,351 1985 6,832 3,437 1986 9,827 8,824 1987 11,193 9,339 1988 12,005 9,552 The NBWC System presently provides approximately 2,000 additional Water ERUs. Rate Structure Rates charged by the County for water service and sewer service are charged upon reservation of such service. For water service the County charges a $1.82 billing charge per connection, a $5.34 base facility charge per ERU per month and $1.99 volume charge per 1,000 gallons of water consumption. For sewer service the billing charge is $1.84 per connection, the base facility charge is $1.53 per ERU 18 per month and the volume charge is $2.86 per 1,000 gallons of water consumption. Since February 1, 1987 a 6% surcharge has been added to the current monthly charge. In addition, customers of the NBWC System are charged up to an additional $13.00 surcharge per ERU per month. Outstanding Debt As of February 28, 1989, there was an aggregate of $21,978,200 principal amount of indebtedness of the County outstanding in connection with the System, consisting of (i) $8,878,200 outstanding principal amount of the Original Bonds, (ii) $9,200,000 outstanding principal amount of the 1986 Anticipation Notes, and (iii) $3,900,000 principal amount of 1988 Anticipation Notes. Selected Financial Data The following table sets forth selected financial data for the System for the Fiscal Years ended September 30, 1984 through September 30, 1988. The data has been derived from the Water and Sewer System Fund and are summaries of (i) audited financial statements for the Fiscal Years ended September 30, 1984 and September 30, 1985 which were examined and reported on by May Zima Co., Daytona Beach, Florida, which was acquired by Arthur Young & Company in 1986, (ii) the audited financial statements for Fiscal Year ended September 30, 1986 examined by Arthur Young & Company, Daytona Beach, Florida, and (iii) the audited financial statements for Fiscal Years ended September 30, 1987 and September 30, 1988 audited by Coopers & Lybrand, Orlando, Florida. 19 Annual Debt Service (3) Original Bonds 576 414 521 546 547 Series 1989 Bonds 550" Estimated Debt Service Coverage 1.81 1.91 1.95 3.15 3.13 2.59 (1) From Indian River County, Florida, Office of Management and Budget (2) "Revenues" as used herein has the same meaning as ascribed in the Resolution. (3) Does not include interest on the 1986 Anticipation Notes or the 1988 Anticipation Notes, which interest has been capitalized. " Preliminary, Subject to Change. The County attributes the increase in revenues for the fiscal years ended September 30, 1984 through September 30, 1988 primarily to growth of the System. The County also receives Impact Fees in connection with the operation of the System. Impact Fees are not pledged as a security for the Series 1989 Bonds. While the County may pledge the Impact Fees in the future, the County presently has no intention to pledge 20 SUMMARY OF REVENUES OF THE SYSTEM Fiscal Years Ended September 30 Audited Projected (1) 1294 1985 1295: 1292 12H >2n (thousands of dollars) Revenues (2) Operating $1,847 $1,948 $2,452 $3,118 $3,531 3,750 Interest Income 302 241 __m 373 5{6 350 Total Revenues 2,149 2,189 2,807 3,491 4,067 4,100 Operating and Maintenance Expenses Personal Services 445 481 544 684 800 1,035 Materials, Supplies and Other 660 918 1.247 ;.083 1.557 1.640 Total Expenses 1,105 1,399 1,791 1,767 2,357 2,675 Net Revenues Available for Debt Service 1,044 790 1,016 1,724 1,710 1,425 Annual Debt Service (3) Original Bonds 576 414 521 546 547 Series 1989 Bonds 550" Estimated Debt Service Coverage 1.81 1.91 1.95 3.15 3.13 2.59 (1) From Indian River County, Florida, Office of Management and Budget (2) "Revenues" as used herein has the same meaning as ascribed in the Resolution. (3) Does not include interest on the 1986 Anticipation Notes or the 1988 Anticipation Notes, which interest has been capitalized. " Preliminary, Subject to Change. The County attributes the increase in revenues for the fiscal years ended September 30, 1984 through September 30, 1988 primarily to growth of the System. The County also receives Impact Fees in connection with the operation of the System. Impact Fees are not pledged as a security for the Series 1989 Bonds. While the County may pledge the Impact Fees in the future, the County presently has no intention to pledge 20 Impact Fees as security for the Series 1989 Bonds. Impact Fees for the last five fiscal years ending September 30 are as follows: Fiscal Impact Fees Year (000's) 1984 $ 178 1985 1,867 1986 1,092 1987 1,739 1988 2,852 1989 (Projected) 1,400 �* The following information has been provided by the County and is included only for the purpose of general background information. The Bonds are not general obligations of the County and are payable only from the specific sources described in this Official Statement, See "DESCRIPTION OF THE BONDS" and "SECURITY AND SOURCES OF PAYMENT". Description Indian River County (the "County") was established in 1925 by an Act of the Legislature separating it from St Lucie County. The County encompasses approximately 497 square miles and is located in the middle of Florida on the eastern coast, approximately 135 miles north of Miami, 190 miles south of Jacksonville, and 135 miles east of St, Petersburg. The County is bounded on the north by Brevard County, on the south by St, Lucie County, on the west by Osceola and Okeechobee Counties and on the east by the Atlantic Ocean. The City of Vero Beach is the seat of County government and the largest city in the County. Other incorporated cities located within the County are Fellsmere, Indian River Shores, Orchid and Sebastian. There are approximately 100 miles of waterfront land in the County, including about 23 miles of Atlantic beaches. Government Indian River County has a five -member Board of County Commissioners (the "Commission"). Each member represents one of five districts, elected at large (County -wide) for staggered terms of four years. The Chairman and Vice -Chairman are elected by the Commission. A County Administrator is appointed by the Board and is responsible for administrative and fiscal control of the resources 21 of the County. The following is a list of the Commissioners and the expiration of their respective term. Name Office Term Expires Gary C. Wheeler Chairman November, 1990 Carolyn K. Eggert Vice Chairman November, 1990 Don C. Scurlock, Jr. Member November, 1992 Richard N. Bird Member November, 1992 Margaret C. Bowman Member November, 1992 The Commission apportions and levies County taxes and controls the expenditure of all County funds, except schools which are controlled by the School Board of Indian River County. The budget year of the County runs from October 1 to the following September 30. Operating revenue is raised from ad valorem taxes, real and personal property taxes, user fees with supplements from state and federal sources. The Commission operates a County Road System and has power to establish, build, maintain, repair, protect and preserve these public facilities. Other elected officials serving County -wide are a Property Appraiser, Tax Collector, Supervisor of Elections, Sheriff and Clerk of the Circuit Court who is also Ex -Officio Clerk of the Board of County Commissioners, Population The 1980 Census population of the County was 59,896, while the estimated 1988 population was 87,313, an increase of 46%. Vero Beach, the largest city in the County, and the County Seat, had a 1980 Census population of 16,176 and an estimated 1988 population of 17,783. In 1980, Indian River County ranked twenty-eighth out of 67 counties in Florida in terms of total population, representing 0.61% of the total state population at that time. As illustrated in the following table, the population of the County has more than tripled since 1960. It is anticipated that the growth of the County will continue. 22 Year Population % Increase 1930 6,724 -- 1940 8,957 33% 1950 11,872 33 1960 25,309 113 1970 35,992 42 1980 59,896 66 1985 76,442 28 1986 80,023 5 1987 83,515 4 1988 87,313 5 Source: U.S., Census and University of Florida, Bureau of Economic and Business Research While the population of the County has been steadily increasing, so has the median age of the resident population. The number of persons age 18-44 is the largest age category. The following table illustrates the percentage of population in the various age groups for 1986. Age Group 1986 0-17 15,853 18-44 26,758 45-64 18,411 65+ 19,001 Components of Population Change 1980 Census ...................................... 1986 ............................................ TotalChange ................................. Components of Change due to Natural Increase...... Components of Change due to Net Migration ........ Percentage of Change due to Natural Increase...... Percentage of Change due to Net Migration......... % 19.8% 33.4 23.0 23.8 59,896 80,023 20,127 337 19,790 1.67% 98.33% Source: Bureau of Economic Analysis, Florida Department of Commerce. Industry The economy of the County is based upon agriculture (citrus and cattle), tourism, light manufacturing, wholesale and retail trade and commercial fishing. The Florida Crop and Livestock Reporting Service reports that in the 1987-1988 crop year Indian River County had 65,162 acres of citrus which produced 22,408,000 boxes of oranges, grapefruit and specialty fruit. The County was third among all Florida counties 23 in total citrus production, but second in grapefruit production. Part of the citrus fruit is sold to the fresh fruit market, and there are also 21 major packing houses and one citrus juice processing plant located in the County. Approximately 62,208 acres of improved pasture and rangelands are utilized for dairy farming and beef cattle production, while approximately 44,100 acres remain as forest and woodlands. The largest manufacturer in the County is the Piper Aircraft Corporation, which currently has approximately 1,450 employees involved in the manufacture and sale of light aircraft and related services. The Piper plant is located adjacent to the Vero Beach Airport. Fellsmere Joint Venture has extensive citrus and cattle interests in the County, employing approximately 600 persons at the peak of the citrus season. Their agricultural properties, including a citrus packing plant, are located west of Fellsmere in the central part of the County. - Other industries include lumber and millwork plants, cabinet and millwork plants, machine shops, welding shops, sheet metal fabricators, mattress ticking, mattress and springs, thermostats, aircraft instruments, steel and wood truss construction, architectural and ornamental iron works, stone and marble products, asphalt plant, pilot training school, welding school, television antennas, wholesale seafood, metal windows and awnings, printing, air handling systems, ready mix concrete, concrete blocks, precast concrete products, electronic components, plating and machine shop equipment, screw machine parts, aircraft parts and supplies, factory built homes, dairy products, newspaper, radio stations and temperature controls. Twelve banks, eight savings and loan associations and nineteen securities brokerage offices provide financial services within the County. The Atlantic beaches and the excellent climate in the County provide the basis for a year-round tourist industry. There are numerous hotels and motels in the County as well as retail and service establishments geared to serving the tourist trade. Forty-six miles of riverfront on the Indian River, many miles of canals and lakefront and about 23 miles of Atlantic Ocean beaches as well as two state parks, five county parks, and eight public and six private golf courses provide ample opportunity for outdoor recreation. The Los Angeles Dodgers baseball club trains at Dodgertown. The 340 -acre complex is also home to the largest and most advanced baseball school in the world. Employment Indian River County employment fluctuates seasonally with most unemployment occurring from July through October, the slower months in both the tourist and citrus picking seasons. 24 Employment by sector for the calendar year 1987 is as follows: Percent of Category Distribution Agriculture ....................... 12.1% Manufacturing ..................... 6.9 Construction ........ ... ....... 9.8 Transportation, Communications & manufacturer Utilities ....................... 2.7 Wholesale Trade ................... 1.7 Retail Trade ........ .. ....... 24.2 Finance, Insurance & Real Estate... 5.7 Services .......................... 30.2 Government........................ 6.7 10 OA Source: State of Florida, Department of Labor and Employment Security. Major employers in Indian River County and their approximate current level of employment are as follows: Establishment Product or Service Employment Piper Aircraft Corporation Light aircraft 1450 manufacturer Indian River County School system 1265 School District Indian River County County government 1090 Indian River Memorial Hospital Medical services 1081 Fellsmere Management Citrus & Cattle 600 City of Vero Beach City government 496 Humana Hospital Sebastian Acute care facility 312 Publix Corporation Retail grocery 280 Indian River Exchange Packers Citrus 276 K -Mart Corporation General merchandise 230 Source: Indian River County. 25 The following table sets forth County per capita income and compares the annual average unemployment rate in the County compared to the State of Florida and national annual averages. Rail transportation in the County is handled by Florida East Coast Railway, while numerous freight truck lines are available to serve the County. Highways providing surface travel are Interstate 95, U.S. 1 and State Road AIA for north -south travel and State Road 60 for travel to the west, while the Florida Turnpike courses south and northwest through the southwest corner of the County. The area is served by Greyhound Bus Lines for passenger and package service. Vero Beach Municipal Airport provides scheduled airline service to County citizens, while one other airport in the County serves both charter and private aircraft. Health Care The Indian River Hospital District, encompassing all but six square miles of the County, has a 347 -bed facility in Vero Beach, The Humana Hospital Sebastian, a private for profit acute care 26 Annual Annual Annual Average Average Average Unemployment Unemployment Unemployment Per Capita Rate - Rate - Rate - Fiscal Population Income County State National Year End (1) (2) (3) (3) (3) 1978 53,300 $ 8,021 8.6% 6.6% 6.1% 1979 56,800 8,864 8.5 6.0 5.8 1980 59,896 9,917 8.7 5.9 7.1 1981 63,100 11,891 8.9 6.8 7.6 1982 66,915 11,909 12.4 8.2 9.7 1983 69,414 12,285 14.0 8.6 9.5 1984 74,162 13,527 9.0 6.3 7.2 1985 76,442 15,362 9.0 6.2 7.3 1986 80,023 15,895 9.2 5.8 7.1 1987 83,515 17,033 8.7 5.4 6.4 1988 87,313 17,745 7.2 5.0 5.5 Sources: (1) U.S. Census and Bureau of Economic and Business Research, University of Florida. (2) U.S. Department of Commerce, Bureau of Economic Analysis, Unpublished Data. (3) Florida Department of Labor and Employment Security Bureau of Research and Information. N/A - Not Available. Transportation Rail transportation in the County is handled by Florida East Coast Railway, while numerous freight truck lines are available to serve the County. Highways providing surface travel are Interstate 95, U.S. 1 and State Road AIA for north -south travel and State Road 60 for travel to the west, while the Florida Turnpike courses south and northwest through the southwest corner of the County. The area is served by Greyhound Bus Lines for passenger and package service. Vero Beach Municipal Airport provides scheduled airline service to County citizens, while one other airport in the County serves both charter and private aircraft. Health Care The Indian River Hospital District, encompassing all but six square miles of the County, has a 347 -bed facility in Vero Beach, The Humana Hospital Sebastian, a private for profit acute care 26 facility, is located in the northern part of the County on U.S. 1. There are presently over 150 physicians serving the hospitals and area residents. The Sunshine Rehabilitation Center offers physical and speech therapy to handicapped children and adults. Education The education system is administered on a County -wide basis by the School Board of Indian River County. The five -member Board, elected for staggered four-year terms each, appoints a Superintendent of Schools. The County has twelve elementary schools, one middle -junior school, two middle schools, one junior high and one senior high. There is one Special Education School for all grades. Enrollment for the 1988-89 school year is 10,802 students. There are 1,265 instructional and non -instructional personnel with 732 teachers. In addition to the public school system, there are several parochial and private schools. The Indian River Community College, with its main campus located in Ft. Pierce, about 15 miles from Vero Beach, has branch campuses in Vero Beach and in Okeechobee and Martin Counties. The state -supported community college offers a general college program for the first two years and a wide variety of technical and vocational instruction. The Mueller Center in Vero Beach has a 40 -acre campus, ten classrooms and office facilities. Communications and Electric Utilities One daily newspaper is published in the County. There are five local radio stations. Telephone service is supplied by Southern Bell. Vero Beach Electric System and Florida Power & Light Company supply electricity. SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION The following constitutes a summary of certain provisions of the Resolution. This summary does not purport to be a complete description of the terms of the Resolution and accordingly, is qualified by reference thereto and subject to the full text thereof. Copies of the Resolution may be obtained from the County. The covenants of the County set forth in the Resolution are subject to any stricter covenants which may be imposed upon the County in the Senior Lien Bond Resolution, which shall be observed while any Senior Lien Bonds are outstanding. Retirement of Original Bonds. The Resolution authorizes the County to purchase and redeem the Original Bonds with proceeds of the Series 1989 Bonds pursuant to and as more fully described in the letter dated January 10, 1989, to the County from FmHA, the holder of the Original Bonds. 27 Non -Arbitrage and Tax Covenants. The County covenants in the Resolution that it will make no use of the proceeds of the Series 1989 Bonds which would cause the Series 1989 Bonds to be "arbitrage bonds" within the meaning of Section 103(b)(2) and Section 148 of the Internal Revenue Code of 1986, as amended, and it will comply with all other requirements of applicable provisions of the Internal Revenue Code of 1986, as amended. Application of the Bond Proceeds. All moneys received from the sale of the Series 1989 Bonds shall be deposited and applied by the County as follows: (1) All accrued interest on the Series 1989 Bonds shall be deposited into the Sinking Fund and applied exclusively for the payment of interest first becoming due on the Series 1989 Bonds. (2) A sum, if any, specified by subsequent resolution of the County shall be deposited into the Reserve Account in the Sinking Fund. (3) The amount necessary to purchase and redeem all of the outstanding Original Bonds shall be paid to the FWA. (4) Next, the amount necessary to pay all engineering fees, costs and expenses of financial reports, studies and projections, legal fees, fees of financial advisors, insurance premiums, costs of the issuance of the Series 1989 Bonds, and all other similar costs incurred in connection with the retirement of the original Bonds and the issuance of the Series 1989 Bonds shall be paid or provided for. If for any reason any proceeds of the Series 1989 Bonds are not necessary for or are not applied to the payment of such costs, then such moneys shall be deposited by the County into the Sinking Fund and used only to pay the principal of and interest on the Series 1989 Bonds. A Rebate Account is established wherein amounts sufficient to pay the United States of America all amounts due with respect to the Series 1989 Bonds under the provisions of Section 148(f) of the Internal Revenue Code of 1986, as amended, or under similar provisions of subsequent Federal revenue laws will be transferred from the funds and accounts created under the Resolution. Investments. All moneys in all funds and accounts created by the Resolution, including without limitation, the Revenue Fund, the Sinking Fund, the Bond Amortization Account and the Reserve Account, must be secured in the manner by which deposits of public funds are authorized to be secured by State law and may be invested only in those investments specified in Section 125.31 Florida Statutes (the Authorized Investments"). Moneys on deposit in the Revenue Fund and the Sinking Fund (except the Reserve Account therein) may be invested and reinvested only in Authorized Investments maturing not later than the date on which the proceeds thereof will be needed. 28 Moneys in the Reserve Account may be invested and reinvested in Authorized Investments maturing not later than five (5) years from the date of purchase. Except as may be provided in a resolution adopted in connection with the issuance of Additional Parity Bonds, any and all income from such investments shall be deposited into the Rebate Account to the extent required and the excess, if any, into the Revenue Account. Defeasance. If at any time the County shall have paid, or shall have made provision for the payment of, the principal, interest and premiums, if any, with respect to any of the Series 1989 Bonds, then, and in that event, the pledge of and lien on the Pledged Funds in favor of the Registered owners of such Bonds shall no longer be in effect. The Resolution provides that, for purposes of the preceding sentence, the deposit of sufficient cash and/or direct obligations of the United States or obligations the principal of and interest on which are fully guaranteed by the United States, none of which permit redemption prior to maturity at the option of the obligor ("Federal Securities"), or bank certificates of deposit fully secured as to principal and interest by Federal Securities (or deposit of any other securities or investments which may be authorized by law from time to time and sufficient under such law to effect such a defeasance) in irrevocable trust with a banking institution or trust company, for the sole benefit of the Holders, the principal of and interest on which will be sufficient to pay when due the outstanding Series 1989 Bonds, shall be considered '.provision for payment". Events of Default: Remedies. No event of default is expressly stated in the Resolution. In addition, no trustee has been appointed under the Resolution to enforce any failure by the County to pay principal of or interest on the Series 1989 Bonds, when due, or to enforce any remedies provided by the Resolution to the holders of the Series 1989 Bonds. In determining whether an event of default has occurred no effect shall be given to payments made by the Bond Insurer. No remedial action shall be taken without the consent of the Bond Insurer and the Bond Insurer acting alone, shall have the right to direct remedies upon default. Subject to the foregoing, any Holder of any Series 1989 Bond may either at law or in equity by suit, action, mandamus or other proceeding in any court of competent jurisdiction, protect or enforce any and all rights existing under Florida law or granted and contained in the Resolution, and may enforce and compel the performance of all duties required by the Resolution or by any applicable state or Federal statutes to be performed by the County or any officer thereof. Modification. No adverse material. modification or amendment of the Resolution, or of any resolution amendatory thereof or supplemental thereto, may be made without the consent in writing of the Holders of 51% or more in aggregate principal amount of the Series 1989 Bonds and any Additional Parity Bonds then outstanding affected by such adverse material modification or amendment; provided, however, that no modification or amendment shall permit a change in the maturity of any Series 1989 Bonds or any Additional 29 Parity Bonds or a reduction in the rate of interest thereon or in the amount of the principal obligation thereof, or affect the unconditional promise of the County to levy, impose and/or collect the Revenues, or to pay the principal of and interest on the Series 1989 Bonds or any Additional Parity Bonds as the same shall become due or reduce the percentage required above for an adverse material modification or amendment, without the consent of the Holders of all of the Series 1989 Bonds or any Additional Parity Bonds affected thereby. The foregoing shall not apply with respect to supplemental resolutions adopted for the sole purpose of issuing Additional Parity Bonds or junior and subordinate obligations issued in accordance with the Resolution or any resolution authorizing the issuance of Senior Lien Bonds to FmHA as contemplated by the Resolution. Operation and Maintenance. The County will maintain the System and all parts thereof in good condition and will operate the same in an efficient and economical manner making such expenditures for equipment and for renewals, repairs and replacements as may be proper for the economical operation and maintenance thereof. No Mortgage or Sale of the System. The County will not sell, mortgage, pledge or otherwise encumber the System or any part thereof, or any Revenues to be derived therefrom, except as provided in the Resolution (which contemplates, without limitation, the issuance of Senior Lien Bonds to the FmHA and the issuance of Additional Parity Bonds), and will not sell, lease or otherwise dispose of any substantial portion of the System, except as set forth below. The County may sell, lease or otherwise dispose of the property comprising a substantial portion of the System in the event that (a) such property is determined by resolution of the Board, upon the recommendation of the County Administrator and the Consulting Engineers, to be no longer necessary or useful or profitable for the System; and (b) the sale, lease or other disposition of such property is determined by resolution of the Board, upon recommendation of the County Administrator and the Consulting Engineers, not to impair the ability of the County to comply during the current or any future Fiscal Year with the rate covenant set forth above. The proceeds derived from any sale, lease or other disposition of a substantial portion of the System shall be used for the retirement of outstanding Series 1989 Bonds, subject to the prior application thereof for any then outstanding Senior Lien Bonds. Any other proceeds derived from the sale, lease or other disposition of a portion of the System shall be placed in an appropriate fund of the County relating to the renewal or replacement of the System, provided, however, all or a portion of any such proceeds may be used for the retirement of outstanding Series 1989 Bonds if authorized by resolution of the Board upon the recommendation of the County Administrator and the Consulting Engineers. 30 Insurance. For so long as any of the Series 1989 Bonds are outstanding, and to the extent practicable, the County will carry adequate fire and windstorm insurance on all buildings, structures and other appropriate properties of the System which are subject to loss through fire or windstorm, will carry adequate public liability insurance, and will otherwise carry insurance of all kinds and in the amounts normally carried in the operation of similar facilities and properties in Florida. Any such insurance shall be carried for the benefit of the Registered Owners of the Series 1989 Bonds, subject to the prior application thereof for any then outstanding Senior Lien Bonds. All moneys received from losses under any of such insurance, except public liability, are hereby pledged by the County as security for the Series 1989 Bonds, until and unless such proceeds are used to remedy the loss or damage for which such proceeds are received, in which event the repairing of the property damaged or the replacement of the property destroyed shall be commenced within a reasonable time after the receipt of such proceeds and shall proceed on a reasonable and continuous basis. No Free Service. The County will not render or cause to be rendered any free use of any nature of the System, nor will any preferential rates be established for users of the same class. Operating Budget. On or before the last day of each Fiscal Year, the County shall adopt an annual budget for the System for the ensuing Fiscal Year, which shall include a budget for Operating Expenses, The Operating Expenses incurred in any Fiscal Year will not exceed the reasonable and necessary amounts required therefor and the County will not expend any amount or incur any obligation for the operation, maintenance and repair of the System in excess of the amount provided for the purpose in the annual budget for the then current Fiscal Year except upon resolution of the Board declaring that such expenses are necessary for the operation and maintenance of the System. If the budget discloses that the estimated Revenues and other revenues, funds and receipts pledged hereunder, if any, will be insufficient during such Fiscal Year, after payment of the Operating Expenses, to meet the rate covenant set forth herein, the County shall forthwith revise the rates, fees and charges imposed with respect to the System in order to cure such estimated deficiency and to comply with the rate covenant. There shall be included in the budget amounts necessary to provide for the orderly replacement of the depreciable capital assets of the System. Consulting Engineers. The County will annually retain the Consulting Engineers for the purpose of providing the County with competent engineering counsel with respect to the economical and efficient operation of the entire water and sewer system of the County and in connection with the making of capital improvements thereto and renewals and replacements thereof. The County may, however, employ additional engineers at any time with relation to specific engineering and operation problems arising in connection therewith. 31 No Competing Systems. To the full extent permitted by law, the County will not grant, renew, extend or allow to expand any franchise or permit for any system similar to the System within the service area of the System. TAX EXEMPTION In the opinion of Rhoads & Sinon, Boca Raton, Florida, Bond Counsel, assuming continuing compliance by the County with certain covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the "Code"), in order to preserve the federal income tax exemption of the interest on the Series 1989 Bonds, interest on the Series 1989 Bonds is exempt from present federal income taxes under existing statutes, regulations and decisions; provided, however, that such exemption does not extend to corporations to the extent that they are required to include such interest in the calculation and payment of alternative minimum taxes imposed under the Code, or the "Environmental Tax" under Section 59A of the Code, or to certain foreign corporations doing business in the United States of America to the extent that they are subject to the branch profits tax imposed under Section 884 of the Code. Further, interest on the Series 1989 Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum taxes imposed on individuals and corporations. Interest on the Series 1989 Bonds is exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, banks, and savings associations. The County will issue its certificate to the effect that on the basis of the facts, estimates and circumstances in existence on the date of delivery of the Series 1989 Bonds, it is not expected that proceeds of the Series 1989 Bonds will be used in a manner that would cause the Series 1989 Bonds to be "arbitrage bonds" under Section 103(b)(2) of the Code, as contemplated by the United States Treasury regulations relating to "arbitrage bonds". Such certificate will be accompanied by an opinion of Bond Counsel, based upon the facts, estimates and circumstances set forth in said certificate, that the Series 1989 Bonds are not currently "arbitrage bonds," under existing statutes, regulations and decisions. Corporate Alternative Minimum Taxes; Environmental Tax; Branch Profits Tax Interest on the Series 1989 Bonds may be includible in a corporation's "adjusted net book income" or "adjusted current earnings" upon which alternative minimum taxable income is calculated for tax years beginning in 1987 and thereafter, and such interest may also be included in corporate alternative minimum taxable income that is subject to the environmental tax imposed under Section 59A of the Internal Revenue Code of 1986, as amended 32 (the "Code"). In addition, such interest may be includible in the amount upon which certain foreign corporations are required to pay the branch profits tax imposed under Section 884 of the Code. Prospective corporate purchasers of the Series 1989 Bonds should consult their professional tax advisors concerning the potential impact of receipt of interest income on such Bonds upon their Federal tax liability. Financial Institutions' Costs of Carrying Tax -Exempt Bonds Under the Code, financial institutions are denied 100 percent of the interest expense deduction that is allocable, by formula, to the carrying of tax-exempt obligations acquired after August 7, 1986; the former provision of the Internal Revenue Code of 1954, which provided for a 20 percent disallowance of the interest expense deduction, continues to apply with respect to tax-exempt obligations acquired on or before August 7, 1986, as well as to new issues specifically designated as "qualified tax-exempt obligations" under Section 265 of the Code, as discussed below. A general exception to the 100 percent disallowance rule of Section 265 of the Code is provided for certain tax-exempt obligations that are not "private activity bonds" as defined in the Code (other than "qualified 501(c)(3) bonds") and that are issued by a governmental issuer that reasonably expects to issue (together with any of its subordinate entities and authorities) not more than $10,000,000 in principal amount of tax-exempt obligations in the same calendar year. The exception applies only if the issuer specifically designates the issue as "qualified tax-exempt obligations" under Section 265 of the Code. Financial institutions considering the purchase of the Series 1989 Bonds should consult with their professional tax advisors to determine the effect of the interest expense disallowance related to tax-exempt bonds upon their Federal income tax liability. The Series 1989 Bonds have not been designated by the issuer as "qualified tax-exempt obligations" for purposes of Section 265 of the Code. Other Federal Income Tax Consequences Ownership of the Series 1989 Bonds may also result in other Federal income tax consequences to certain taxpayers, including, but not limited to, financial institutions, property and casualty insurance companies, certain subchapter S corporations with substantial passive income and subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the bonds. No opinion or representation concerning these matters is being given or made by the issuer of the Series 1989 Bonds, Bond Counsel or any other party associated with issuance, offering or sale of the Series 1989 33 Bonds. Prospective purchasers of the Series 1989 Bonds should consult their own tax advisors concerning these matters. NON -ARBITRAGE BONDS The County has covenanted in the Resolution with the purchasers of the Series 1989 Bonds that it will make no use of the proceeds of the Series 1989 Bonds which will cause the Series 1989 Bonds to be or become "arbitrage bonds," and has further covenanted in the Resolution to comply with the requirements of Section 103 and 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder from time to time, during the term of the Series 1989 Bonds, if and to the extent applicable to maintain continuously the Federal income tax exemption of interest on the Series 1989 Bonds. Officials of the County have executed a certificate concerning the use of the proceeds of the Series 1989 Bonds in conformity with regulations issued under Sections 103 and 148 of the Code. LITIGATION In the opinion of the County Attorney, no legal proceedings are pending or threatened that materially affect the County's ability to perform its obligations to the holders of the Series 1989 Bonds or that materially affect the financial condition of the System. In the opinion of the County Attorney, there is no litigation or controversy of any nature now pending or, to the County's knowledge, threatened to restrain or enjoin the issuance, sale, execution or delivery of the Series 1989 Bonds or in any way contesting the validity of the Series 1989 Bonds or any proceedings of the County taken with respect to the authorization, sale or issuance of the Series 1989 Bonds or the pledge or application of any moneys provided for the payment of the Series 1989 Bonds. RATINGS It is expected that Moody's Investors Service and Standard & Poor's Corporation will assign a rating of "Aaa" and "AAA," respectively, to the Series 1989 Bonds on the understanding that the standard insurance policy, insuring the timely payment of the principal of and interest on the Series 1989 Bonds, will be issued by Financial Guaranty upon delivery of the Series 1989 Bonds. No application has been made to any other agency for a rating on the Series 1989 Bonds. A rating reflects only the views of the rating agency at the time such rating is given, and neither the.County nor the Underwriter make any representation as to the appropriateness of any rating. An explanation of the significance of the rating may be obtained from the rating agency providing such rating. There is no assurance that the ratings on the Series 1989 Bonds will continue 34 for any given period of time or that the ratings will not be suspended, lowered or withdrawn entirely if, in the judgment of the respective rating agency, circumstances so warrant. Any suspension, downward revision or withdrawal of either such rating may have an adverse effect on the market price of the Series 1989 Bonds. The County and the Underwriter have undertaken no responsibility either to bring to the attention of the Registered Owners of the Series 1989 Bonds any proposed suspension, change in or withdrawal of either such rating or to oppose any such suspension, revision or withdrawal. UNDERWRITING The Series 1989 Bonds are being purchased by Gulfstream Financial Associates, Inc. (the "Underwriter"), subject to certain terms and conditions set forth in a bond purchase agreement between the County and the Underwriter, including the approval of certain legal matters by Bond Counsel and the existence of no material change in the affairs of the County from that set forth in this Official Statement. The aggregate purchase price payable by the Underwriter is $6,367,357.50 plus accrued interest on the Series 1989 Bonds from April 15, 1989 to the date of delivery of the Series 1989 Bonds. The Series 1989 Bonds are offered for sale to the public at the price set forth on the cover page of this Official Statement. The Series 1989 Bonds may be offered and sold to certain dealers at prices lower than such offering prices, and such public offering prices may be changed, from time to time, by the Underwriter. LEGALITY The issuance of the Series 1989 Bonds is subject to the approval of Rhoads & Sinon, Boca Raton, Florida, Bond Counsel to the County, whose unqualified approving opinion, in substantially the form attached hereto as Appendix B will be available at the time of delivery of the Series 1989 Bonds. Certain legal matters will be passed upon for the County by Charles P. Vitunac, Esq., County Attorney, and for the Underwriter by Gunster, Yoakley, Criser & Stewart, P.A., West Palm Beach, Florida. MISCELLANEOUS The references to, and excerpts of, all documents referred to herein do not purport to be complete statements of the provisions of such documents and reference is directed to all such documents for full and complete statements of all matters of fact relating to the Series 1989 Bonds, the security for the payment of the Series 1989 Bonds, and the rights and obligations of Registered Owners thereof. 35 The information contained in this Official Statement has been compiled from official and other sources deemed to be reliable and, while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representation of fact, and no representation is made that any such estimates will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holders of the Series 1989 Bonds. ADDITIONAL INFORMATION The brief descriptions of the Resolution, the Series 1989 Bonds, the Senior Lien Bond Resolution and other documents pertaining to the Series 1989 Bonds contained in this Official Statement are qualified in their entirety by reference to the originals of such documents, copies of which are available from Indian River County, Florida, 1840 25th Street, Vero Beach, Florida 32960, Attention: Joseph A. Baird, during the period of the initial offering of the Series 1989 Bonds, AUTHORIZATION OF OFFICIAL STATEMENT The delivery of this Official Statement has been duly auchorized by the Board of County Cotwrtissioners of the County. At the time of delivery of the Series 1989 Bonds, the Chairman of the Board of County Commissioners and the County Administrator, acting on behalf of the County, will furnish a certificate to the effect that nothing has come to their attention which would lead them to believe that the Official Statement, as of its date and as of the delivery of the Series 1989 Bonds, contains an untrue statement of a material fact or omits to state a material fact which should be included therein for the purposes for which the Official Statement is intended to be used, or which is necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. INDIAN RIVER COUNTY, FLORIDA /s/ Gary C. Wheeler Gary C. Wheeler, Chairman, Board of County Commissioners /s/ James E. Chandler James E. Chandler, County Administrator 36 INDIAN RIVER COUNTY, FLORIDA FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 1988 TABLE OF CONTENTS REPORTOF INDEPENDENT ACCOUNTANTS.....................................................A-1 GENERAL PURPOSE FINANCIAL STATEMENTS (COMBINED STATEMENTS - OVERVIEW) Combined Balance Sheet - All Fund Types and Account Groups....................................................................A-3 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Fund...................................................A-5 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - AllGovernmental Fund Types.......................................................A-7 Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types................................A-11 Combined Statement of Changes in Financial Position - A1lProprietary Fund Types.......................................................A-13 Notes to Financial Statements......................................................A-14 COMBINING FINANCIAL STATEMENTS Enterprise Funds: Combining Balance Sheet..........................................................A-53 Combining Statement of Revenues, Expenses and Changes in Retained Earnings...................................................A-57 Combining Statement of Changes in Financial Position.............................A-59 EXHIBIT A Coopers. certified Public accountants &Lybrand Report of Independent Accountants The Honorable County Commissioners and Constitutional Officers Indian River County, Florida We have audited the general purpose financial statements of Indian River County, Florida and the combining financial statements - enterprise funds of the County as of and for the year ended September 30, 1988, as listed in the Table of Contents. These financial statements are the responsibility of the County's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presenta- tion. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of Indian River County, Florida, at September 30, 1988, and the results of its operations and the changes in financial position of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. Also, in our opinion, the combining financial statements - enterprise funds referred to above present fairly, in all material respects, the financial position of each of- the individual funds at September 30, 1988, and the results of operations of such funds and the changes in financial position of such funds for the year then ended, in conformity with generally accepted accounting principles. Orlando, Florida December 16, 1988 1. GENERAL PORPOSS FINANCIAL STATS® S (CONSINRD STATBI WS - OVMVIW) These basic financial statements provide a summary overview of the financial position of all funds and account groups as well as the operating results of all funds. They also serve as an introduction to the more detailed statements and schedules that follow in the next subsection. 2. INDIAN RIVER COUNTY, FLORIDA COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS September 30, 1988 ASSETS Equity in pooled cash and investments Accounts receivable - net Special asseesmen:s receivable - deferred Due from other funds Due from other governments Interest receivable Inventories Deposits Restricted assets: Cash and investsents: Sinking Funds Renewal and replacement and Capital projects Customer deposits Capital construction Due from other funds Property, plant and equipment Accumulated depreciation Unamettired bond costs Intangible assets Amount available in debt service funds Amount to be provided for, retirement of general long -tots debt Total Assets LIABILITIES AND FUND EQUITY Liabilities: Deficit in pooled cash and investments Accounts payable Retainage payable Notes payable - current portion Due to other funds Due to other governments Deterred compensation Other deposits held In escrow Deterred revenues Payable from restricted auets: Accounts payable Retainage payable Accrued interest payable Bonds payable - current portion Customer deposits Closure costs payable Accrued compensated absences Capital leases Notes payable Bond anticipation notes Bonds payable - net of discounts Total liabilities Commitments and Contingencies Fund Equity: Investment In general fixed assets Contributions Retained earningu Reserved Unreserved - (deficit) Fund balances: Reserved Unreserved - (deficit) Total fund equity Total Liabilities and Fund Equity ] GOVERMMINT— FUND TYPES SPECIAL or" CAPITAL GENERAL REVENUE SERVICE PROJECTS $12,259,882 $12,560,554 51,842,056 S2,373 319 20,968 22,531 - 2],73 - 100,990 3,471,649 - 169,696 739,859 23,0:9 - 288,347 317,164 - L0319S0 58,822 36,554 - 45,978 - - _ - 70,000 S - $ - S 23,089 698,249 430,511 - - 28,700 - 142,970 7,405 - 179,003 36,601 - 59,445 - - 12,667 100,990 3,471,649 604,207 3,494,730 1,093,139 S 49,332 103,489 28,790 1,800,000 40,000 - 1,879,410 984,531 11,755.682 12,661,713 15691091) 11,795.682 12.661.713 1.879.410 415,442 512.888,821 51].265.920 SS,]74.1�8 52.397.053 FIDUCIARY PROPRIETARY FUND TYPES FUND TYPES ACCOUNT GROUPS INTERNAL SERVICE GENERAL TOTALS (FLEET TRUST AND GENERAL LONG-TERM (MEMORANDUM ENTERPRISE MANAGEMENT) AGENCY FIXED ASSETS GEST ONLY) S 1,261,955 S 42,098 $ 4,511,170 S - $ - S 34,871,834 833,032 8,252 957 - - 909,474 - - - - - 3,572,639 - - - - - 332,644 6,286 - - - - 607,795 246,487 - 12,271 - - 458,084 213,306 219,773 L1,108 - - 490,165 70,000 3,712,064 - - - - 3,712,064 5,266,734 - - - - 5.266,734 430,560 - - - - 430,560 9,619,367 - - - - 9,619,367 11600,000 - - - - 1,800,000 47,030,254 229,632 - 43,923,344 - 91,183,230 (4,986,282) (131,737) - - - (5,1L8,019) 349,725 - - - - 349,725 271,894 271,894 - - - - 1,879,410 1,879,410 t 16,033,167 ls,o n,ls7 i 566.075.]80 S ]68.018 S 4.535.506 44].92].744 516.912.567 5165.740.757 $ 32,216 S - i - S - S 5 104,637 799,559 36,475 88,373 - - 2,156,656 _ - - - - 57,490 700,000 - - - 700,000 - - 182,269 - - 2,132,644 17,369 - 739,494 - - 973,272 - - 196,094 - - 196,094 5,700 - 3.313,730 - - 3,378,875 1.027 - - - - 3,586.333 1,466.705 - - - - 1,466,705 506.557 - - - - 506,557 435,212 - - - - 435,212 546.000 - - - - 546.000 458.781 - - - - 468,781 11519,850 - - - - 1,519.850 79.055 13,165 - - 684,619 776,839 124.975 - - - 325,273 450,248 395.655 - - - 395.655 91200.000 - - - - 9,200,000 21.133.827 - 15,902.675 37,036,502 37.422.488 49,640 4,519,960 16.912.567 66.078.]50 - - - 43.923.344 - 43.923,344 22,842,532 612,620 - - - 23.455,152 2,137,771 - - - - 2.137,771 3,672,589 (294.242) - - - 3,375,347 - _ - - 2,903,943 15,546 23,863,850 28652,892 118.378 __. 15.546 43,923,344 99,662,407 Q S 368.018 S 4.535.506 543.927.344 916,912.567 S16S.740.757 The accompanying nota. ata an intagtaL pact of the financial atataaanta. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND Year Ended September 30, 1988 Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Total revenues Expenditures: Current: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture/Recreation Debt Service: Principal Interest Capital Projects Total expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Proceeds from bond refinancing Payment to former bond holder Lease -purchase proceeds Total other financing sources (uses) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances at Beginning of Year Residual Fund Equity Transfers Fund Balances at End of Year GOVERNMENTAL 8,357,330 SPECIAL GENERAL REVENUE S 23,703,906 S 6,826,616 234,219 9,756 4,079,118 2,155,926 2,035,151 1,443,450 353,825 155,257 2,420,511 1,475,707 32,826,730 12,066,712 8,357,330 235,578 10,897,826 4,194,399 727,949 - 6,201,994 81,902 3,132,612 1,242,481 893,315 1,717,763 147,076 161,649 15,835 27,281 7,783 23,214,18111,596,080 9,612,549 370,632 4,586,539 4,633,027 (8,783,807) (1,871,047) ___ 71,010 (4,126,258) 2,761,980 5,486,291 3,132,612 6,195,318 9,529,101 114,073 S 11,692 S 12,661,713 FUND TYPES - FIDUCIARY FUND TYPE 15,152,695 - - EXPENDABLE 727,949 - - TRUST TOTALS DEBT CAPITAL (INMATE (MEMORANDUM SERVICE PROJECTS WELFARE) ONLY) S 1,260,544 S 278,046 S - S 32,069,112 - - - 243,975 1,391,226 286,000 - 7,912,270 - - - 3,478,601 - - - 509,082 1,394,652 114,633 69,217 5,474,720 4,046,422 678,679 69,217 49,687,760 8,592,908 ' - 60,470 15,152,695 - - - 727,949 - - - 6,201,994 - - - 81,902 - - - 2,135,896 - - - 1,864,839 2,452,900 - - 2,630,384 1,798,000 - - 1,833,064 - 3,384,496 - 3,384,496 4,250,900 3,384,496 60,470 42,606,127 (204,478) (2,705,817) 8,747 7,081,633 - 1,925,099 - 11,144,665 (34,742) (520,008) - (11,209,604) 3,227,675 - - 3,227,675 (3,227,675) - - (3,227,675) ' 71,010 (34,742) 1,405,091 - 6,071 (239,220) (11300,726) 8,747 7,087,704 2,232,703 1,716,168 6,799 19,680,089 (114,073) SS 1,879,410 S 415.442 S 15.546 S 26, 767,793 The accompanying notes are an integral part of the financial statements. 6. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL ALL GOVERNMENTAL FUND TYPES Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Total revenues Expenditures: Current: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture/Recreation Debt Service: Principal Interest Capital Projects Total expenditures Year Ended September 30, 1988 Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): 9,248,104 GENERAL 890,774 11,442,178 10,897,826 VARIANCE 775,912 727,949 FAVORABLE BUDGET ACTUAL (UNFAVORABLE) S 23,557,183 S 23,703,906 S 146,723 187,500 234,219 46,719 3,904,949 4,079,118 174,169 2,462,560 2,035,151 (427,409) 382,000 353,825 (28,175) 1,494,095 2,420,511 926,416 31,988,287 32,826,730 838,443 Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): 9,248,104 8,357,330 890,774 11,442,178 10,897,826 544,352 775,912 727,949 47,963 84,982 81,902 3,080 1,283,429 1,242,481 40,948 1,925,491 1,717,763 207,728 157,620 161,649 (4,029) 28,857 27,281 1,576 24,946,573 23,214,181 1,732,392 7,041,714 9,612,549 2,570,835 Operating transfers in 4,664,465 4,586,539 (77,926) Operating transfers out (8,832,441) (81783,807) 48,634 Proceeds from bond refinancing Payment to former bond holder _ Lease -purchase proceeds 71,010 71,010 Total other financial sources (uses) (4,096,966) (4,126,258) (29,292) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances at Beginning of Year Residual Fund Equity Transfers Fund Balances at End of Year 7. S 2,944,748 5,486,291 S 2,543 6,195,318 114,073 S 11 7995,682 381,715 SPECIAL REVENUE 146,137 4,618,957 4,194,399 VARIANCE 9,198,225 6,201,994 FAVORABLE BUDGET ACTUAL (UNFAVORABLE) $ 6,476,694 $ 6,826,616 S 349,922 10000 9,756 8,756 2,225,232 2,155,926 (69,306) 1,221,295 1,443,450 222,155 143,400 155,257 11,857 901,667 1,475,707 574,040 10,969,288 12,066,712 1,097,424 381,715 235,578 146,137 4,618,957 4,194,399 424,558 9,198,225 6,201,994 2,996,231 898,888 893,415 5,473 265,000 147,076 117,924 15,836 15,835 1 7,784 7,783 1 15,386,405 11,696,080 3,690,325 (4,417,117) 370,632 4,787,749 5,891,848 4,633,027 (1,258,821) (5,646,863) (1,871,047) 3,775,816 244,985 2,761,980 2,516,995 S (4.172.132) 3,132,612 S 7.304.744 9,529,101 DEBT SERVICE VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) 5 1,247,335 $ 1,260,544 S 13,209 1,429,357 1,391,226 (38,131) 1,317,000 1,394,652 77,652 3,993,692 4,046,422 52,730 2,590,000 2,452,900 137,100 2,072,982 1,798,000 274,982 4,662,982 4,250,900 412,082 (669,290) (204,478) 464,812 (54,122) (34,742) 19,380 3,227,675 3,227,675 - (3,227,675) (3,227,675) - (54,122) (34,742) 19,380 S (723,412) (239,220) S 484,192 2,232,703 (114,073) S 1.879.410 Continued The accompanying notes are an integral part of the Financial statements. 8. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED ALL GOVERNMENTAL FUND TYPES Year Ended September 30, 1988 CAPITAL PROJECTS VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) Revenues: Taxes S 21,000 $ 278,046 S 257,046 Licenses and permits - - - Intergovernmental 150,000 286,000 136,000 Charges for services - - - Pines and forfeitures - - - Miscellaneous 5,200 114,633 109,433 Total revenues 176,200 678,679 502,479 Expenditures: Current: General Government - - - Public Safety - - - Physical Environment - - - Transportation - _ _ Economic Environment - - - Human Services - - _ Culture/Recreation - - - Debt Service: Principal - - - Interest - - _ Capital Projects 6,883,181 3,384,496 3,498,685 Total expenditures 6,883,181 3,384,496 3,498,685 Excess of Revenues Over (Under) Expenditures (6,706,981) (21705,817) 4,001,164 Other Financing Sources (Uses): Operating transfers in 4,508,865 1,925,099 (2,583,766) Operating transfers out (522,000) (520,008) 1,992 Proceeds from bond refinancing - - _ Payment to former bond holder Lease -purchase proceeds _ Total other financial sources (uses) 3,986,865 1,405,091 (2,581,774) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses S(2,720,116) (1,300,726) S 1.19,390 Fund Balances at Beginning of Year 1,716,168 Residual Fund Equity Transfers Fund Balances at End of Year S 415,442 9. 9,629,819 TOTALS (MEMORANDUM ONLY) 1,036,911 16,061,135 15,092,225 VARIANCE 775,912 727,949 FAVORABLE BUDGET ACTUAL (UNFAVORABLE) $ 31,302,212 S 32,069,112 S 766,900 188,500 243,975 55,475 7,709,538 7,912,270 202,732 3,683,855 3,478,601 (205,254) 525,400 509,082 (16,318) 3,717,962 5,405,503 1,687,541 47,127,467 49,618,543 2,491,076 9,629,819 8,592,908 1,036,911 16,061,135 15,092,225 968,910 775,912 727,949 47,963 9,198,225 6,201,994 2,996,231 84,982 81,902 3,080 2,182,317 2,135,896 46,421 2,190,491 1,864,839 325,652 2,763,456 2,630,384 133,072 2,109,623 1,833,064 276,559 6,883,181 3,384,496 3,498,685 51,879,141 42,545,657 9,333,484 (4,751,674) 7,072,886 11,824,560 15,065,178 11,144,665 (3,920,513) (15,055,426) (11,209,604) 3,845,822 3,227,675 3,227,675 - (3,227,675) (3,227,675) - 71,010 71,010 80,762 6,071 (74,691) S (4,670.912) 7,078,957 S 11,749,869 19,673,290 S 26,752,247 The accompanying notes are an integral part of the financial statements. L0. INDIAN RIVER COUNTY, FLORIDA COMBINED STATENENT OF REVENUES EXPENSES AND CHANGES IN RETAINED EARNINGS ALL PROPRIETARY FUND TYPES Year Ended September 30, 1988 INTERNAL SERVICE TOTALS (FLEET (MEMORANDUM Operating Revenues: ENTERPRISE MANAGEMENT) _ONLY) Charges for services: Landfill Golf $1,957,590 $ - $1,957,590 course County building 1,106,587 - 11106,587 Water and sewer 747,119 3,530,826 - 747,119 Housing Authority 204,550 - - 3,530,826 Vehicle maintenance 204,550 Total operating revenues - 7,546,672 974,796 974,796 974,796 8,521,468 Operating Expenses: Personal services 2,354,047 335,419 2,689,466 Materials, supplies, services and other operating 4,092,784 639,430 4,732,214 Depreciation and amortization 1,430,158 24,401 1,454,559 Total operating expenses 7476,989 999,250 8,876,239 Operating Income (Loss) (330,317) (24,454) (354,771) Nonoperating Revenues (Expenses): Interest income 758,197 - 758,197 Operating grants 61,741 61,741 Gain on disposal of equipment 7,794 1,002 8,796 Interest expense Amortization (722,216) - (722,216) expense Loss on disposal of equipment (4,921) (29,451) - -(29,451) (4,921) Total nonoperating revenues (expenses) 71,144 1,002 72,146 Operating Transfers: Operating transfers in 64,939 - 64,939 Income (Loss) Before Extraordinary Gain (194,234) (23,452) (217,686) Extraordinary Gain on Defeasance of Debt 77,069 - 77,069 Net Income (Loss) Add: Depreciation on Fixed Assets Acquired (117,165) (23,452) (140,617) with Contributed Capital 540,967 - 540,967 Increase (Decrease) in Retained Earnings 423,802 (23,452) 400,350 Retained Earnings (Deficit) at Beginning of Year 5,386,558 (270,790) 5,115,768 Retained Earnings (Deficit) at End of Year $5,810,]60 SS 1294,242) g5.5�118 The accompanying notes are an integral part of the financial - statements. 11. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION ALL PROPRIETARY FUND TYPES Year Ended September 30, 1988 Applications of Working Capital: Increase in restricted assets 13,424,914 INTERNAL 13,424,914 Acquisition of fixed assets 13,683,963 SERVICE TOTALS increase in other assets 324,595 (FLEET (MEMORANDUM Decrease in capital leases ENTERPRISE MANAGEMENT) ONLY) Sources of Working Capital: 700,000 - 700,000 From operations: 1,463,028 - 1,463,028 Net income (loss) before extraordinary item $ (194,234) S (23,452) S (217,686) Add expenses not creating current S(1.151,813) S (16.599) S(1.168.412) liabilities or using current assets - depreciation and amortization 1,435,079 24,401 1,459,480 Working capital provided from S (509,619) $ (17,903) S (527,522) operations exclusive of extra- 182,797 4,274 187,071 ordinary item 1,240,845 949 1,241,794 Extraordinary item 77,069 - 77,069 Disposal of fixed assets net of accumulated depreciation 5,273 - 5,273 Increase in current liabilities payable (354,660) 2,937 (351,723) from restricted assets 4,259,489 - 4,259,489 Increase in other liabilities 108,610 294 108,904 Increase in capital leases 36,750 - 36,750 Increase in notes payable 1,006,554 - 1,006,554 Increase in bond anticipation notes payable 9,200,000 - 9,200,000 Increase in revenue bonds payable 8,240,000 - 8,240,000 Increase in contributions 4,312,571 500 4,313,071 Total sources of working capital 28,487,161 1,743 28,488,904 Applications of Working Capital: Increase in restricted assets 13,424,914 - 13,424,914 Acquisition of fixed assets 13,683,963 18,342 13,702,305 increase in other assets 324,595 - 324,595 Decrease in capital leases 42,474 - 42,474 Decrease in notes payable 700,000 - 700,000 Decrease in revenue bonds payable 1,463,028 - 1,463,028 Total applications of working capital 29,638,974 18,342 29,657,316 Net Decrease in Working Capital S(1.151,813) S (16.599) S(1.168.412) Component Elements of Net Increase (Decrease) in Working Capital: Equity in pooled cash and investments S (509,619) $ (17,903) S (527,522) Accounts receivable - net 182,797 4,274 187,071 Other receivables (31,890) - (31,890) Inventories 28,189 (5,907) 22,282 Deficit in equity in pooled cash and investments (32,216) - (32,216) Accounts payable (354,660) 2,937 (351,723) Other liabilities (434,414) - (434,414) Net Decrease in Working Capital S(1.151,813) S (16.599) S(1.168.412) The accompanying notes are an integral part of the financial statements. 12. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS Year Ended September 30, 1988 I. Su=ary of Significant Accounting Policies: Indian River County, Florida (the "County") is a political subdivision of the State of Florida. It is governed by an elected Board of County Commissioners (the "Board") which is governed by state statutes and regulations. In addition to the members of the Board, there are five elected Constitutional Officers: Clerk of the Circuit Court, Sheriff, Tax Collector, Property Appraiser, and Supervisor of Elections. The Constitutional Officers, except the Supervisor of Elections, main- tain separate accounting records and budgets. The accompanying financial statements present the combined financial position and combined results of operations of the various fund types and account groups and the changes in financial position of the proprietary fund types for the funds controlled by the Board and its Constitutional Officers. The Board funds a portion or, in certain instances, all of the operating budgets of the County's Constitutional Officers. The payments by the Board to fund the opera- tions of the Constitutional Officers are recorded as operating transfers out on the financial statements of the Board and as operating transfers in or charges for services on the financial statements of the Constitutional Officers. Accordingly, such amounts and the budget relating to those amounts have been eliminated in the accompanying combined financial statements. The accounting policies of the County conform to generally accepted accounting principles, as applicable to governments. The following is a summary of the more significant policies. A. Reporting Entity - Generally accepted accounting principles require that finan- cial operations of governmental departments, agencies, commissions or authori- ties over which the governmental unit's elected officials have oversight respon- sibility be included in the reporting entity's financial statements. Criteria used to determine if an agency should be included in the County's report were the oversight responsibility and the scope of public service. Oversight responsibility implies that an agency is dependent on another. The manifestations of oversight responsibility are financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters. The manifestations of scope of public service are whether the activity is for the benefit of the reporting entity and/or its residents and whether the activity is conducted within the geographic boundaries of the reporting entity and is generally available to the citizens of that entity. 13 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: A. Reporting Entity - Continued - Applying the criteria above has caused the inclusion of the following entities: Indian River County Housing Authority (IRCHA) - The IRCHA was included in the report because the Board provides the primary funding for the operations of the IRCHA. The Board maintains budgetary control over the operating costs of the IRCHA. In addition, they provide use of certain furniture and equipment to the IRCHA at no charge. Due to the proprietary nature of the IRCHA's operations, the IRCHA is reported as an enterprise fund. For budgetary control, the Board maintains a Special Revenue Fund to account for the operating costs of the IRCHA. Funding is provided from operating transfers from the Board's General Fund and operating grants received from the State of Florida. Since the oper- ating costs of IRCHA have been properly reported in the enterprise fund, the Special Revenue Fund has been eliminated for the purposes of this report. Appropriations from the Board totaled $71,977 and the related actual operating costs totaled $71,296 for the fiscal year. The IRCHA cannot overspend appropri- ations in total. Indian River County Law Library (IRCLL) - The IRCLL was included in the report because a member of the Board serves on the IRCLL Board, the facilities for the IRCLL are provided by the Board, and funds are provided to the IRCLL under a special act passed by the Florida State Legislature at the request of the Board. The IRCLL is reported as a special revenue fund. North Indian River County Fire District, West Indian River County Fire District and South Indian River County Fire District - The fire districts were included in the report because the Board sits as the Board for each fire district, approves the budget and sets the millage rate for each fire district, and desig- nates the management of each fire district. The fire districts are reported as special revenue funds. The following entities, which meet the scope of public service criteria, have been excluded from this report: Indian River County School Board District (IRCSBD) - The IRCSBD has a separately elected board, maintains its own financial records and reports to the Florida Department of Education. Indian River County Hospital (IRCH) - The IRCH has a separately elected board, maintains its own financial records, can issue debt with the approval of its board or the voters, and issues its own report. Indian River County Mosquito Control District (IRCMCD) - The IRCMCD has a sepa- rately elected board, maintains its own financial records, and issues its own report. 14. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: Indian River County Health Department (IRCHD) - The Board does provide some funds for the operations of the IRCHD, sets part of the fee schedule, and must provide the facilities for the IRCHD. However, the Florida Department of Health and Rehabilitation appoints the management of the IRCHD, maintains the financial records, and includes the IRCHD in its own report. The funds and facilities provided by the Board are mandated by the Florida State Statutes. B. Fund Accounting - The accounts of the County are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Government resources are allo- cated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are con- trolled. The purpose of the County's various funds and account groups is as follows: Governmental Funds General Fund - The General Fund is the general operating fund of the County. It is used to account for all financial resources, except those required to be accounted for in another fund. Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Funds - Debt Service Funds are used to account for the accu- mulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by the proprietary funds). Proprietary Funds Enterprise Funds - Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. 15 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: Proprietary Funds - Continued Internal Service Fund - The Fleet Management Internal Service Fund is used to account for the financing of goods and services provided by the Fleet Management Department to other departments or agencies of the County, on a cost -reimbursement basis. Fiduciary Funds Trust and Agency Funds - Trust and Agency Funds are used to account for assets held by the County in a trustee capacity or as an agent for indi- viduals, private organizations, other governments, and/or other funds. These include Agency Funds and an Expendable Trust Fund. Account Groups General Fixed Assets - To account for all fixed assets of the County, except fixed assets of proprietary funds. General Lona -Term Debt - To account for all the outstanding principal balances of general and special obligation bonds, notes, capital leases and compensated absences of the County, except long-term obligations of proprietary funds. C. Measurement Focus Governmental Fund Types - General, Special Revenue, Debt Service and Capital Projects Funds are accounted for on a "spending" or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on the balance sheets. Accordingly, the reported unreserved fund balance (net current assets) is considered a measure of available, spend- able or appropriable resources. Governmental Fund Type operating statements present increases (revenues and other financing sources) and decreases (expendi- tures and other financing uses) in net current assets. Proprietary Fund Types - The Enterprise and Internal Service Funds are accounted for on an "income determination" measurement focus. Accordingly, all assets and liabilities are included on the balance sheet, and the reported fund equity (total reported assets less total reported liabilities) provides an indication of the economic net worth of the fund. Operating statements for the Proprietary Fund Types report increases (revenues) and decreases (expenses) in total eco- nomic net worth. Fiduciary Fund Types - The Expendable Trust Fund is accounted for in the same manner as Governmental Funds. The Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. 16. INDIAN RIVER COUNTy, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies Continued: C. Measurement Focus -.,Continued Account Groups - The General Fixed Assets Account Group and the General Long - Term Debt Account Group are concerned only with the measurement of financial position. They are not involved with the measurement of results of opera- tions. Fixed assets, which are not used in Proprietary Fund operations, are accounted for in the General Fixed Assets Account Group. Depreciation is not charged on the general fixed assets. Long-term debts, which are not intended to be financed through the Proprietary Funds, are accounted for in the General Long -Term Debt Account Group. D. Basis of Accounting - Basis of accounting refers to when revenues and expendi- tures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All Governmental Funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets. Primary revenues, including taxes, intergovernmental revenues, charges for services, rents and interest are treated as susceptible to accrual under the modified accrual basis. Other revenue sources are not considered measurable and available, and are not treated as susceptible to accrual. Expenditures are generally recog- nized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt, which is recognized when due and prepaid insurance and similar items which are recorded as expenditures when purchased. Proprietary Funds - The Enterprise and the Internal Service Funds are accounted for using the accrual basis of accounting. Under this method, revenues are recognized when they are earned and expenses are recognized when they are incurred. Unbilled utility receivables are recorded at year end. Fiduciary Funds - The Expendable Trust Funds and the Agency Funds are accounted for on the modified accrual basis. E. Equity in Pooled Cash and Investments - The County, for accounting and invest- ment purposes, maintains a pooled cash and investment account for all Board funds. This gives the County the ability to invest large amounts of idle cash for short periods of time and to maximize earning potential. The "equity in pooled cash and investments" represents the amount owned by each fund of the Board. Cash and investments of Constitutional Officers are generally maintained in separate accounts, but have been combined with the Board's equity in pooled cash and investments for financial statement purposes. 17 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATENENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: F. Investments - Investments consist of repurchase agreements, U.S. Treasury Securities, U.S. Government Agency Securities, Certificates of Deposit and savings accounts that are recorded at cost, which approximates market value. G. Allowance for Doubtful Accounts - The County provides an allowance for water and sewer accounts receivable that may become uncollectible. At September 30, 1988, this allowance was $4,000. The Housing Authority provides an allowance for rents receivable which may become uncollectible which amounted to $1,757 at September 30, 1988. No other allowances for uncollectible accounts are main- tained since other fund accounts receivable are considered collectible as reported at September 30, 1988. H. Inventories - All inventories are stated at the lower of cost or market on the basis of the "first -in, first out" method of accounting. The effect of this method is to assign a balance sheet cost which reflects current replacement values. Supply inventories in the General Fund are accounted for using the consumption method. This method requires that items be charged to inventory as purchased and to expenditures when consumed. Land inventory in the Housing Authority Enterprise Fund consists of developed land held for resale to low income citizens. All costs incurred to develop land are included in inventory and are removed from inventory when the land is sold based on the relative value of the lots within inventory. Inventories in other proprietary funds consist of materials and supplies held for consumption. Inventory of the Clerk of the Circuit Court, included in the combined Agency Funds, represents documentary stamps on consignment from the State of Florida. Stamps are carried at cost, which is their face value. Inventory in the Expendable Trust Fund (Inmate Welfare Trust) consists of supplies held for resale to inmates accounted for on the consumption method. This method requires that items be charged to inventory as purchased and to expenditures when consumed (sold). I. Property, Plant and Equipment (1) Property, plant and equipment purchased in the Governmental Fund Types are recorded as capital outlay expenditures at the time of purchase. Such assets are capitalized at cost in the General Fixed Assets Account Group, except for certain improvements other than buildings ("infrastructure") such as roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems. Donated and confiscated assets are recorded in the general fixed assets at their fair market value at the time received. No depreciation has been provided on general fixed assets. 18. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 I. Summary of Significant Accounting Policies - Continued: I. Property, Plant and Eguipment - Continued The Board holds legal title for the general fixed assets used in the operations of the Board, Property Appraiser, Tax Collector, Supervisor of Elections, and Clerk of the Circuit Court and is accountable for them under Florida law. The Sheriff is accountable for and thus maintains general fixed asset records pertaining only to equipment used in his operations. These assets have been combined with the Board's general fixed assets in the General Fixed Assets Account Group. (2) Property, plant and equipment of the Proprietary Fund types are recorded at cost. Donated property, plant and equipment are capitalized at their fair market value at the time received. Depreciation is provided using the straight-line method over the estimated useful lives of the various classes of depreciable assets. The estimated useful lives of the various classes of depreciable assets are as follows: Assets Years Building and improvements 25 - 40 Machinery and equipment 3 - 10 Utility distribution systems 25 - 50 J. Capitalization of Interest - Interest costs related to bond issues are capital- ized during the construction period. These costs are netted against applicable interest earnings on construction fund investments. During the current period, the Solid Waste Disposal District and Water and Sewer System Enterprise Funds incurred interest expense during the construction period totaling $645,493 Related interest earnings on construction fund investments totaled $459,962 for net capitalized interest of $185,531. K. Unamortized Bond Costs - Bond issue costs and legal fees associated with the issuance of revenue bonds are amortized over the life of the bonds using the straight-line method of accounting. L. Unamortized Bond Discount - Bond discount associated with the issuance of Proprietary Fund revenue bonds are amortized according to the interest method, which results in a constant rate of interest being applied to the amount out- standing at any given time. For financial reporting, unamortized bond discount is netted against applicable long-term debt. M. Intangible Assets - Land use rights purchased by the Water and Sewer System Fund from the Golf Course Fund for irrigating the golf course with treated effluent are being amortized using the straight-line method over the estimated useful life of 20 years. 19. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEN ENT S - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: N. Deferred Revenues - Deferred revenues reported in applicable Governmental Fund Types represent unearned revenues or revenues which are measurable but not available and, in accordance with the modified accrual basis of accounting, are reported as deferred revenue. The deferred revenue will be recognized as revenue in the fiscal year they are earned or bacon* available. 0. Accrued Compensated Absences - The County records compensated absences in the Governmental Fund Types as an expenditure for the amount accrued during the year that would normally be liquidated with expendable available financial resources. The remainder of the liability is reported in the General Long -Term Debt Account Group. Proprietary Fund Types accrue compensated absences in the period they are earned. P. Contributions - The contributions accounted for in the Proprietary Fund Types represent contributions from other funds, State and Federal Aid programs, and impact fees charged to new customers for their anticipated burden on the existing system. Depreciation expense on contributed fixed assets is reflected in the statement of revenues, expenses and changes in retained earnings. Depreciation on contributed fixed assets is transferrred to the related contribution accounts (reducing contributions) instead of retained earnings. Q. Budgets and Budgetary Accounting - The County uses the following procedures in establishing the budgetary data reflected in the financial statements: (1) The Constitutional Officers submit, at various times, to the Board and to certain divisions within the Department of Revenue, State of Florida, a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. (2) The Department of Revenue, State of Florida, has the final authority on the operating budgets for the Tax Collector and Property Appraiser included in the General Fund. (3) On or before July 15 of each year, the Director of the Office of Management and Budget, as the Board's designated budget officer, submits to the Board a tentative budget for the ensuing fiscal year. The tenta- tive budget includes proposed expenditures and the means of financing them. 20. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies Continued: 0. Budgets and Budgetary Accounting - Continued (4) During September, public hearings are held pursuant to Section 200.065 of the Florida Statutes in order for the Board to receive public input on the tentative and final budget. Based on the public input received, the Board shall require such changes to be made as it shall deem necessary, provided the budget remains in balance and subject to the budget preparation and adoption procedures as defined in Section 129.03 of the Florida Statutes. (5) Prior to October 1, the budget is legally enacted through passage of an ordinance setting forth total revenues and total expenditures by fund. (6) It is unlawful to expend in any fiscal year more than the total amount budgeted in each fund's budget pursuant to Section 129.07 of the Florida Statutes. (7) Budgeted amounts as shown in the financial statements are as originally adopted, with the exception of the General Fund, which was increased $538,455 by resolutions adopted by the Board. (8) Formal budgetary integration is used as a measurement control device for all governmental funds of the County. The level on which expenditures may not legally exceed appropriations is the fund level. (9) Budgets for the governmental fund types are adopted on a basis consistent with generally accepted accounting principles. (10) Appropriations for the County lapse at the close of the fiscal year. R. Total Columns on Combined Statements - Overview - Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable in a consolidation. Interfund eliminations have not been made in the aggregation of these data. 2. Cash and Investments: The County maintains a cash and investment pool that is available for use by all funds except those whose cash and investments must be segregated due to bond cove- nants or other legal restrictions. Deoosits - At September 30, 1988, the carrying amount of the County's deposits was $5,778,518 and the bank balance was $4,115,923. These deposits were 100% collater- alized by federal depository insurance or by collateral pursuant to the Public Depository Security Act of the State of Florida. Various deposits were earning interest from 4.75-7.91. 21. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL -STATEMENTS - CONTINUED Year Ended September 30, 1988 2. Cash and Investments - Continued: Investments - Florida Statutes, the Board of County Commissioners' Investment Policy, and various bond covenants authorize investments in certificates of deposit, savings accounts, repurchase agreements, the Local Government Surplus Funds Trust Fund administered by the Florida State Board of Administration, obligations of the U.S. Government, and government agencies unconditionally guaranteed by the U.S. Government. Certificates of deposit, savings accounts and bank balances, which are reported as deposits above, whose value exceeds the amount of federal depository insurance are 1001 collateralized pursuant to the Public Depository Security Act of the State of Florida. The County invested in only these types of instruments during the fiscal year. The County's investments are categorized below to give an indication of the level of risk assumed at year end. Category 1, defined as insured or collateralized with securities held by the County or by its agent in the County's name, includes invest- ments that are insured or registered or for which the securities are held by the County or its agent in the County's name. Category 2, defined as collateralized with securities held by the pledging financial institution's trust department or agent in the County's name, includes uninsured and unregistered investments for which the securities are held by the broker's or dealer's trust department or agent in the County's name. Schedule of Investments at September 30, 1988 Category Carrying Market 1 2 Amount Value Repurchase agreements $ - $ 461,970 $ 461,970 S 461,970 U.S. Government securities 5,284,553 - 5,284,553 5,216,969 U.S. Government agency securities 27,291,631 - 27,291,631 26,885,403 S32,576,184 S 461.970 33,038,154 32,564,342 Local Government Surplus Funds Trust Fund 14,783,156 14,783,156 Total Investments 547,821,310 $47,37,498 In addition to the cash and temporary cash investments listed Above, employee deferred compensation plan (see Note 8) cash and temporary cash investments were $196,094, which -are carried at market value. These investments are held separately from those of other County funds. As prescribed by the plan documents, the investment portfolios include investment obligations of the U.S. Government, mutual funds and money market accounts, and are held by the plan administrators but not in the County's name. 22. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 3. Property Tax Revenuess Property tax revenues recognized for the 1987-88 fiscal year were levied in October, 1987. Virtually all unpaid taxes are collected via the sale of tax certificates prior to fiscal year and, therefore, there were no material taxes receivable at fiscal year and. Key dates in the property tax cycle (latest date where appropriate) are as follows: Revenues for Fiscal Year Ending September 30, 1988 Assessment roll certified June 26, 1987 Property taxes levied October 12, 1987 Data of lien October 12, 1987 Beginning of fiscal year for which taxes have been levied October 1, 1987 Tax bills rendered November 1, 1987 Property taxes payable: Maximum discount November 30, 1987 Delinquent April 1, 1988 Tax certificates sold on unpaid property taxes June 1, 1988 4. Property, Plant and Equipment: A. General Fixed Assets - A summary of changes in the General Fixed Assets Account Group follows: Total Buildings Property, and Construction Plant and Land Improvements Equipment In Progress Equipment Balance at October 1, 1987 $12,512,128 $12,536,079 $11,077,629 $ 5,225,713 $41,351,549 Additions 473,282 4,854,322 2,769,982 1,180,491 9,278,077 Deletions 347,750 - 920,394 5,438,138 6,706,282 Balance at Septem- ber 30, 1988 S12.6� 631,660 $17,390,401 512.927 7 S 968,066 $43.923,344 23. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 4. Property, Plant and Equipment - Continued: B. Proprietary Fund Type Fixed Assets - A summary of proprietary fund type property, plant and equipment follows: Internal Enterprise Service Land $ 1,893,209 5 - Buildings, distribution systems and improvements 29,779,905 78,193 Equipment 3,312,472 151,439 Construction in progress 12,044,668 - Total Property, Plant and Equipment 47,030,254 229,632 Less: Accumulated depreciation 4,986,282 131,737 Total S 42,043,972 S 97,895 S. Interfund Accounts: Fund Receievable Payable General Fund S 169,696 $ 142,970 Special Revenue Funds: Policy Academy 6,280 - Court Facilities 4,515 - South Co. Fire District 111,527 - North Co. Fire District 12,408 - West Co. Fire District 1,750 - Vero Lakes Estates 1,689 - Street Lighting Districts 1,634 - Law Enforcement Forfeiture Proceeds 56 7,405 Debt Service Funds: Beach Bonds 23,089 - Capital Projects Funds: Library Construction - 1,500,000 Jail - Phase III - 300,000 Enterprise Funds: Water and Sewer System 11800,000 - Agency Funds: Clerk - 57,345 Sheriff - 5,725 Tax Collector 119,199 Totals S 2,132,644 S 2,132,644 24. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt: A. Enterprise Fund Revenue Bonds - The County has adopted resolutions for bonds payable that provide for various covenants. These covenants are listed below for each bond payable. Solid Waste Disposal System Revenue Bonds, Series 1988 (1) Pledge of Revenue - The Series 1988 bonds are payable from and secured by a lien on net revenues of the system, including the proceeds derived from the collection of disposal charges which are annual assessment charges against assessable property for the disposal of solid waste. (2) Establishment of Various Accounts a. Operating account to pay all operating and maintenance costs of the system. b. Sinking Fund account to pay principal and interest payments coming due during the current fiscal year. C. Reserve account to accumulate an amount equal to the maximum amount of principal and interest coming due in any ensuing fiscal year. $824,000 was deposited into this account from bond proceeds which is less than the maximum annual principal and interest requirement. The County intends to fund the remaining amount required over a five-year period. d. Renewal and Replacement Fund and capital projects account to pay for the costs of enlargements, replacements or emergency repairs to the system. The amounts to be maintained in these accounts are determined by consulting engineers. The amounts in these accounts are restricted by the bond resolution. No deposits were required to be made into this account during the current fiscal year. (3) Other Covenants - The resolution provides for several additional covenants such as required revenue rates, minimum insurance levels, adoption of annual budget, certain required engineering reports. 25. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: (4) Bonds Issued - At September 30, 1988, these revenue bonds consisted of the following: Outstanding at Rates and Original September 30, Description Date Maturity Issue 1988 1988 Solid Waste Disposal System 5.251-7.41 Revenue Bonds 6/1 and 12/1 6/1/02 $8,240,000 $ 8,240,000 Less: Current portion 390,000 Long -Term Portion 5 7,850,0000 Recreational (Golf Course) Revenue Bonds (1) Pledge of Revenue - The revenue bonds are secured by a lien on the net revenues derived from the operations of the project and racetrack and jai alai fronton funds accruing annually td the County. (2) Establishment of Various Accounts a. Operating accounts to reflect all transactions which relate to the project. b. Sinking Fund account to pay principal and interest coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution. c. Reserve Fund account to accumulate an amount equal to the maximum amount of principal and interest coming due in any ensuing fiscal year. This account may be established at the option of the Board of County Commissioners. The amounts in this account are restricted by the bond resolution. d. Renewal and Replacement Fund account to pay for the costs of exten- sions, enlargements, additions, replacements or emergency repairs to the system. The amounts deposited into this account are determined by the County Administrator. The amounts in this account will be restricted by the bond resolution. 26. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: Recreational (Golf Course) Revenue Bonds - Continued (3) Other Covenants a. The proceeds of this bond issue are to finance the construction of a public golf course and related clubhouse facility, and interest on the bonds for the first three years. b. The bond resolution provides for additional covenants such as annual audit requirement and minimum insurance levels. (4) At September 30, 1988, these revenue bonds consisted of the following: Outstanding at Rates and Original September 30, Dates Maturity Issue 1988 1985 Recreational 6.40%-7.501 Revenue Bonds 9/1 9/1/15 $2,720,000 S 2,720,000 Less: Current portion - Unamortized discount 66,373 Long -Term Portion 5 2.653.627 Water and Sewer Revenue Bonds On September 8, 1983, the County, with the approval of existing bondholders, revised certain covenants and terms. Covenants and terms associated with previous resolutions were dissolved. The following is a summary of the current covenants: (1) Pledge of Revenues - The revenue bonds are secured by a pledge of all gross revenues of the system and impact fees. (2) Establishment of Various Accounts a. Revenue Fund account to pay all operating and maintenance costs of the system. b. Sinking Fund account to pay principal and interest coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been estab- lished in the retained earnings. 27. L.' INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: (2) Establishment of Various Accounts - Continued c. Reserve Fund account to accumulate an amount equal to the maximum amount of principal and interest coming due in any ensuing fiscal year. When the maximum amount is obtained, no further deposits are necessary. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been established in the retained earnings. d. Renewal and Replacement Fund account to pay for the costs of exten- sions, enlargements, additions, replacements or emergency repairs to the system. The amounts deposited into this account are determined by a percentage of revenues. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been estab- lished in the retained earnings. (3) Investment Restrictions - The resolution provides that all monies in the above funds and accounts may only be invested in direct obligations of the U.S. Government, or in obligations unconditionally guaranteed by the U.S. Government. (4) Other Covenants - The resolution provides for several additional cove- nants, such as required revenue rates, annual audit, minimum insurance levels and capital project reserve amounts determined by the County's consulting engineers. (5) Bonds Issued - At September 30, 1988, revenue bonds consisted of the following: Description 1979 Water and Sewer Revenue Bonds 1979 Water and Sewer Revenue Bonds - Series II 1980 Water and Sewer Revenue Bonds 1985 Water and Sewer Revenue Bonds Total Less: Current portion Long -Term Portion Outstanding at Rates and Original September 30, Dates Maturity Issue 1988 8,878,200 103,000 S8,775,200 28. 51 9/1 and 3/1 9/1/2018 $ 402,500 $ 366,500 5i 9/1 and 3/1 9/1/2020 $ 236,000 221,000 51 10/1 and 4/1 9/1/2022 $5,825,900 5,592,000 51 9/1 and 3/1 9/1/2024 $2,750,700 2,698,700 8,878,200 103,000 S8,775,200 28. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: Housing Authority Revenue Bonds On March a, 1986, the Housing Authority adopted a resolution authorizing the issuance of a revenue bond payable to the U.S. Department of Agriculture, Farmers Home Administration, for the purpose of financing a part of the cost of acquiring, erecting and constructing low -rent, multi -family housing facilities (the Project), including the repayment of certain notes payable to the State of Florida for the acquisition of land. The bond and interest thereon are payable solely from and secured by a prior lien upon and a pledge of the gross revenues to be derived from the project. The Project was completed and a Certificate of Occupancy was issued on -September 17, 1987. The revenue bond resolution provides for the following: (1) The revenue bond obligation consists of: (2) Early Redemption - The revenue bond is redeemable at the option of the Housing Authority on September 1, 1997, and thereafter at par plus accrued interest and plus a premium ranging between 0% and 51, depending on the year of redemption and the holder of the bond at the time of redemption. The Housing Authority may redeem, in whole or in part, at any time, the principal portion of the revenue bond on any interest payment date, at the price of par plus accrued interest, without premium if the bond is held by the U.S. Department of Agriculture, Farmers Home Administration. (3) The revenue bond resolution provides for the following: The revenue bond does not constitute a lien upon the project of any part thereof or upon any other property of the Housing Authority or a pledge of the full faith and credit of the Housing Authority. 29. Original Balance Interest Revenue Outstanding Rate Bond September 30, Description and Dates Commitment 1988 Indian River It per annum on County Housing the unpaid Authority balance, payable Revenue Bonds September 1 each year $1,908,000 S1.908.000 (2) Early Redemption - The revenue bond is redeemable at the option of the Housing Authority on September 1, 1997, and thereafter at par plus accrued interest and plus a premium ranging between 0% and 51, depending on the year of redemption and the holder of the bond at the time of redemption. The Housing Authority may redeem, in whole or in part, at any time, the principal portion of the revenue bond on any interest payment date, at the price of par plus accrued interest, without premium if the bond is held by the U.S. Department of Agriculture, Farmers Home Administration. (3) The revenue bond resolution provides for the following: The revenue bond does not constitute a lien upon the project of any part thereof or upon any other property of the Housing Authority or a pledge of the full faith and credit of the Housing Authority. 29. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: Housing Authority Revenue Bonds - Continued The Housing Authority collects fees, rentals and other charges for the use of the facilities of the project, and out of such funds pays the principal of and interest on the land, the necessary expenses of operating and maintenance and all reserve and sinking fund require- ments. Fees, rentals and other charges will not be reduced so as to be insufficient to provide funds for such purposes. • Establishment of Various Accounts - The Loan and Grant Resolution provides for the creation and establishment of the following accounts, which are to be deposited with a depository in the State of Florida, which is a member of the Federal Deposit Insurance Corporation and which is eligible under the laws of the State of Florida to receive public funds: a. Revenue Account to deposit all gross revenues and provide for payment of costs of operation and maintenance of the project. b. Bond Service Accounts: Interest Account to deposit monthly from Revenue Account 1/12 of all interest coming due on the next interest payment date. Principal Account to deposit monthly from Revenue Account 1/12 of the principal amount which will become due on such annual maturity date. Renewal, Replacement and Improvement Account to deposit from the Revenue Account $1,584 per month. In addition, at the end of each fiscal year, all excess funds remaining in the Revenue Account are deposited in the Renewal Replacement and Improvement Account until the amount on deposit equals $190,000. c. Investment Restrictions - Monies in any account created in the resolution may be invested in authorized investments which mature not later than 15 days prior to the dates on which the monies will be needed for the purpose of such fund. Authorized investments as specified by the resolution are as follows: Direct obligations of the U.S. Government Bonds, debentures or notes backed by the full faith and credit of the U.S. Government 30. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Tars Debt - Continued: Annual Debt Service Payments - Enterprise Fund Bonds Payable - The annual debt service payments to amortize the bonds payable outstanding at September 30, 1988 are as follows: Water and Golf Course Fiscal Year Sewer Landfill Recreational Ending Revenue Revenue Revenue Housing September 30, Bonds Bonds Bonds Authority Total 1989 $ 546,910 $ 938,430 $ 201,360 1990 546,760 937,955 201,360 1991 545,360 935,405 241,360 1992 545,260 935,895 243,800 1993 547,885 934,050 245,830 1994-1998 2,731,375 4,683,555 1,213,960 1999-2003 2,729,875 3,757,335 1,217,415 2004-2008 2,731,475 - 1,216,375 2009-2013 2,730,775 - 1,213,375 2014-2018 2,731,275 - 484,500 2019-2023 2,224,825 - - 2024-2025 163,485 Totals 18,775,260 13,122525 6,479,335 Less: Amounts representing interest 9,897,060 Total Bonds Payable 8,878,200 Less: Current portion 103,000 Unamor- tized bond discount S 72,080 $ 1,758,780 71,550 1,757,625 72,020 1,794,145 71,480 1,796,435 71,940 1,799,705 360,320 8,989,210 359,860 8,064,485 359,660 4,307,510 358,710 4,302,860 358,960 3,574,735 71,710 2,296,535 - 163,485 2,228,290 40,605,510 4,892,625 3,759,335 320,290 18,859,310 8,240,000 2,720,000 11908,000 21,746,200 390,000 - 53,000 546,000 66,373 - 66,373 S 8.77S.200 S 7,800 S2,653,627 $1,855,000 S21,1133,8277 Advance Refunding of Enterprise Fund Debt - In June, 1988, the County defeased $1,050,000 Solid Waste Disposal System Revenue Bonds, Series 1977 by depositing $971,991 from excess funds of the Solid WAste Disposal System with an escrowed trustee. This was the result of restructuring the Solid Waste Disposal System into the Solid Waste Disposal District. The defeasance resulted in the recog- nition of an accounting gain of $77,069. However, the aggregate debt service payments for the next 6 years increased by $17,885 which resulted in an economic loss (difference between the present values of the debt service payments on the old and new debt) of $13,130. 31. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: B. Enterprise Fund Bond Anticipation Notes - In December, 1987, the County issued 6 3/8% Water and Sewer Revenue Bond, Series 1986, Anticipation Notes in the principal amount of $9,200,000. These notes were issued in anticipation of their receipt by the County of the proceeds from the sale of its $9,200,000 Water and Sewer Revenue Bonds, Series 1986. The County currently expects the Series 1986 Bonds will be sold to the United States Department of Agriculture, Farmers Home Administration pursuant to the laws of the State of Florida and the Resolution No. 86-35 duly adopted by the County on June 18, 1986, as amended and supplemented, on or prior to December 1, 1990. From the proceeds of the Bond Anticipation Notes, the County deposited $1,759,500 into the Notes Payment Account within the sinking fund for interest payments to be made to maturity. At September 30, 1988, revenue bond anticipation notes consisted of the following: Rates Outstanding at and Original September 30, Dates Maturity Issue 1988 Water and Sewer Revenue Bonds, Series 1986 Anticipation Notes 6.375% 12/1/90 $9,200,000 $9,200,000 C. Changes in General Long -Term Debt - A summary of changes in general long-term debt follows: Accrued Compensated Absences: Board Clerk of Court Sheriff Tax Collector Property Appraiser Capital Leases: Board Clerk of Court Sheriff Tax Collector Balance Balance October 1, September 30, 1987 Additions Deletions 1988 S 420,475 $ 84,489 S - $ 504,964 31,165 7,214 6,615 31,764 97,188 41,206 37,387 101,007 23,429 2,944 - 26,373 - 20,511 - 20,511 572,257 156,364 44,002 684,619 135,591 - 32,352 103,239 228,282 - 81,675 146,607 11,317 - 61900 4,417 56,557 71,010 56,557 71,010 431,747 71,010 177,484 325,273 32. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: Bonds Payable: Refunding and Improvement Revenue Bonds - 1985 Series 9,385,000 - 250,000 91135,000 Capital Improvement Revenue Bonds - 1987 Series 3,655,000 - 115,000 3,540,000 General Obligation Bonds - 1983 Beach Acquisition 1,125,000 - 1,125,000 - Special Assessment Bonds - 101 4,190,575 - 4,190,575 - Special Assessment Bonds - 8.471 - 3,227,675 - 3,227,675 18,355,575 3,227,675 5,680,575 15,902,675 Totals 519.3 59,579 53,455,049 55,902,061 516.912,567 D. General Long -Term Debt (1) Revenue Bonds - On July 10, 1985, the Board adopted a resolution autho- rizing the issuance of $25,000,000 of Refunding and Capital Improvement Revenue Bonds. On November 1, 1985, the Board issued $9,855,000 of Refunding and Improvement Bonds, 1985 Series. The proceeds of this issue legally defeased the County's Capital Improvement Revenue Bonds, Series 1980 and 1981, and provided funds to finance the cost of construction and to reimburse the County for certain capital projects. On July 1, 1987, the Board issued $3,655,000 of Capital Improvement Revenue Bonds, 1987 Series. The proceeds of this issue provide funds for construction of certain capital projects. The bonds and interest thereon, from both these issues, are payable solely from and secured by a first lien upon and pledge of the County's half -cent sales tax and related investment income. 33. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: The revenue bond resolution, as dated July 10, 1985, and as amended and supplemented, provides for the following: a. The Revenue Bonds consist of: Serial Bonds 9/1 i 3/1 2000 2,165,000 2,050,000 Term Bond 7.75% 2005 1,490,000 1,490,000 3,655,000 3,540,000 S13,510,000 $12,675,000 b. Disbursements or expenditures of bond proceeds which have been desig- nated as construction funds shall be made only after written approval of the County Administrator or his designee. c. Establishment and maintenance of various funds - Revenue Fund to record County sales tax monies received by the County from the State. Sinking Fund to pay principal and interest payments coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution and thus, a reserve of fund balance has been established for them. d. Other covenants - The resolution provides for several additional covenants such as required books and records and annual audit. 34. Balance Interest Outstanding Rates and Original September 30, Dates Maturity Issue 1988 Refunding and Improve- ment Revenue Bonds, 1985 Series - 5.5%-8.75% Serial Bonds 9/1 i 3/1 1997 S 4,000,000 S 3,280,000 Term Bond 9% 2000 1,735,000 1,735,000 Term Bond 9.125% 2002 1,440,000 1,440,000 Term Bond 9.125% 2005 2,680,000 2,680,000 9,855,000 9,135,000 Capital Improvement Revenue Bonds, 1987 Series - 4.751-7.30% Serial Bonds 9/1 i 3/1 2000 2,165,000 2,050,000 Term Bond 7.75% 2005 1,490,000 1,490,000 3,655,000 3,540,000 S13,510,000 $12,675,000 b. Disbursements or expenditures of bond proceeds which have been desig- nated as construction funds shall be made only after written approval of the County Administrator or his designee. c. Establishment and maintenance of various funds - Revenue Fund to record County sales tax monies received by the County from the State. Sinking Fund to pay principal and interest payments coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution and thus, a reserve of fund balance has been established for them. d. Other covenants - The resolution provides for several additional covenants such as required books and records and annual audit. 34. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: (2) Special Assessment Bonds - The proceeds of the initial special assessment bonds were used to extend the water and sewer distribution systems along Florida State Road 60. During the current fiscal year, the County refinanced the outstanding bonds in order to obtain a lower interest rate. The refinancing resulted in economic gains of $24,615 and $316,638 for the Route 60 Waterline bonds and Route 60 Sewerline bonds, respec- tively. The payments of principal and interest on special assessment bonds and all other required payments are being paid solely from the proceeds of the assessments levied against benefiting property owners. There is no secon- dary lien on the assets or the revenues of the County's Water and Sewer System, however, if through foreclosure proceedings the property cannot be sold at auction, then the County must acquire it for its market value. At September 30, 1988, special assessment bonds consisted of the following: Rates and Description Dates Route 60 Waterline 8.47% construction 5/1 Route 60 Sewerline 8.47% construction 1/1 35. Outstanding at Original September 30, Maturity Issue 1988 1997 $ 430,000 5 430,000 1996 2,797,675 21797,675 $3,227,675 $3,227,675 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEN - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: (3) The annual debt service requirements to amortize all revenue bonds and general obligation bonds and special assessment bonds outstanding at September 30, 1988 are as follows: 36. Revenue Bonds Refunding Fiscal and Capital Year Improvement Improvement Ending 1985 Series 1987 Series 1989 $ 1,064,159 $ 371,598 1990 1,060,596 370,347 1991 1,060,076 368,523 1992 1,062,506 371,097 1993 1,062,344 367,760 1994-1998 5,312,481 1,844,460 1999-2003 5,310,538 1,846,688 2004-2007 2,124,150 743,275 Totals 18,056,850 6,283,748 Less: Amount representing interest 8,921,850 2,743,748 Total S 9.135.000 53,5iL Special Assessment Bonds Fiscal Route Route Year 60 60 Ending Waterline Sewerline _ Total _ 1989 $ 84,199 S 586,672 $ 2,106,628 1990 80,152 557,052 2,068,147 1991 76,105 527,432 2,032,136 1992 72,058 497,811 2,003,472 1993 68,012 468,192 1,966,308 1994-1998 231,579 1,226,850 8,615,370 1999-2003 - - 7,157,226 2004-2007 - 2,867,425 Totals 612,105 3,864,009 28,816,712 Less: Amount representing interest 182,105 1,066,334 12,914,037 Total S 430.000 S 2,797,675 515.902,675 36. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: (5) The revenue, general obligation, and special assessment bonds are reported in the General Long -Term Debt Account Group since they do not represent obligations of any governmental or proprietary fund types. E. Summary of Defeased Debt Outstanding The following outstanding revenue bonds are legally defeased. Since governmental obligations are held in escrow for the payment of principal and interest, the bonds are not liabilities of the County. Retired Outstanding During at Fiscal Year September 30, Capital Improvement Revenue Bonds: 1988 1988 Series 1980 SS ss.nn0 S 4,025,000 Series 1981 S000 S 670,000 Solid Waste Disposal System Revenue Bonds, Series 1977 S1_ 25,000 S 9255,0000 F. Capital Leases and Notes Payable (1) General Lona -Term Debt Capital Leases - The County has entered into several lease -purchase agreements to purchase various types of equipment with lease terms varying from 24 to 60 months. The following is a schedule of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments, As of September 30, 1988: Present Value Of Net Minimum Lease Payments $103,239 $146,607 5 4,417 1 010 $325,273 I 37. l Board of Clerk of Year Ending County The Circuit Tax liatiattLJ_OL Commissioners Court Sheriff Collector Total 1989 1990 $ 43,999 $ 57,447 S 4,767 $40,777 $146,990 1991 32,948 56,369 - 40,072 129,389 1992 23,051 41,796 - 64,847 Total Minimum 21,830 13,785 - - 35,615 Lease Payments 121,828 169,397 4,767 80,849 376,841 Less: Amount 'representing interest 18,589 22,790 350 9,839 51,568 Present Value Of Net Minimum Lease Payments $103,239 $146,607 5 4,417 1 010 $325,273 I 37. l INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: F. Capital Leases and Note Payable - Continued The following is an analysis of the leased property under capital leases: Capitalized Cost Board of Clerk of Type of County the Circuit Tax Property Commissioners Court Sheriff Collector Total Computer equip- ment S - $225,695 $ - $ 71,010 $296,705 Copier equip- ment - 2,745 12,143 - 14,888 Automotive equipment 107,790 - - - 107,790 Communication equipment 84,837 - - 84,837 S19�627 S228,440 $12,143 5 71,010 $504,220 The equipment listed above is recorded in the General Fixed Assets Account Group. (2) Enterprise Funds Capital Leases - The County has entered into two lease - purchase agreements to purchase golf course equipment with a lease term of 48 months. This equipment is recorded in the County's Golf Course Enterprise Fund as depreciable assets. The following is a schedule of future minimum lease payments under these capital leases, together with the present value of the net minimum lease payments, as of September 30, 1988: Year Ending September 30, 1989 S 52,645 1990 52,645 1991 31,637 Total Minimum Lease Payments 136,927 Less: Amount representing interest 11,952 Present Value of Net Minimum Lease Payments S124,975 38. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: F. Capital Leases and Notes Payable - Continued (3) Enterprise Funds Note Payable - The County issued a note in the amount of $1,006,554 at 9.25% for the purchase of a sod farm for the Water and Sewer System. The sod farm has been recorded as land in the Water and Sewer Enterprise Fund. The balance at September 30, 1988 is $1,006,554. The note payable will mature as follows: 1989 $ 793,106 1990 334,910 Total payments 1,128,016 Less: Amount representing interest 121,462 Total $1,006,554 (4) Housing Authority Note Payable - At September 30, 1988, the Housing Authority had a note payable of $89,101 to a bank with interest at prime, due November 7, 1988. This note was repaid with a portion of the proceeds from the revenue bond described in Note 15. 7. Retirement: A. Florida Retirement System The County's employees, except certain firemen, participate in the Florida Retirement System (FRS), a multiple employer cost sharing defined benefit retirement system, administered by the Florida Department of Administration. The FRS has five classes of membership with descriptions and contribution rates in effect during the period ended September 30, 1988 as follows (contribution rates are in agreement with the actuarially determined rates): Regular Class - Members not qualifying for other classes (13.14% rate). Senior Management Service Class - Members of senior management who do not elect the optional annuity retirement program (13.88% rate). Special Risk Class - Members employed as law enforcement officers, firefighters, or correctional officers and meet the criteria set to qualify for this class (15.11% rate). 39. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 7. Retirement - Continued: A. Florida Retirement System - Continued Special Risk Administrative Support Class - Special risk members who are transferred or reassigned to non -special risk and meet the criteria (15.441 rate). Elected State Officer's Class - Certain elected State and County officials (varies from 11.501 to 20.941 rates). The FRS provides vesting after ten years of creditable service. Members are eligible for normal retirement after vesting (10 years or more creditable service for regular members). Early retirement may be taken anytime; but there is a five percent benefit reduction for each year prior to normal retirement age (less than 30 years service or 62 years of age for regular members). Members are also eligible for in -Line -of -duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. The County's contributions to the FRS, which are based on Section 121, Florida Statutes, through September 30, 1988 were $2,279,360 on covered payroll of $16,508,439, for a 13.811 contribution rate. Total payroll for the County was $16,913,425. The most recent actuarial report was prepared as of July 1, 1987 which recom- mends an increase in contribution rates over the next five years in order to meet normal cost and fund the unfunded actuarial accrued liability. The report indicated two major changes in procedures and assumptions. The investment return was changed to 81 from 91 and the asset valuation method was changed. Section 121.031(3) of the Florida Statutes requires that an actuarial review of the FRS be performed biannually. The conclusions of the review are included in the annual report of the FRS. 40. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 7. Retirement --Continued: A. Florida Retirement System - Continued As of June 30, 1987, the FAS had 83,403 retirees and beneficiaries, 10,584 vested but terminated potential annuitants and 453,939 active members. Of the active members, 172,514 are vested. The total annual payroll of the vested members was $9,353,674,000. Total June 30, 1987 (in millions) Pension benefit obligation: Active member contributions $ 512 Employer -financed vested benefits 11,799 Employer -financed non -vested benefits 2,142 Total 14,453 Annuitants and other 6,104 Other inactive members 262 Total pension benefit obligation 20,819 Net assets available for benefits 13,977 Unfunded pension benefit obligations 5 6,842 The amount of the total pension benefit obligation is based on a standardized measurement established by the GASB Statement No. 5. The standardized measure- ment is the actuarial present value of credited projected benefits. This pension valuation method reflects present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date and is adjusted for the effects of projected salary increases and any changes in benefits. Because the standardized measure is used only for disclosure purposes only, the measurement is independent of the actuarial computation made to determine contributions to the pension plan which is the entry age actuarial cost method. For further information, including 10 -year historical trend information, refer to the State of Florida's Comprehensive Annual Financial Report or the various publications available from the Florida Department of Administration. 41. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 a. Firefighters Pension Plan In October, 1981, the South Indian River County Fire District took over opera- tions of the City of Vero Beach's Fire Department. Full-time firemen were given the option of joining the Florida Retirement System or remaining in the City's plan. Twenty full-time firemen and all of the volunteers elected to remain in the City's plan. Those who joined the Florida Retirement System received refunds of their contributions from the City's plan. The City has by Statute retained fiduciary responsibility for this PERS. Employer contributions to the PEAS are made by the County. Benefits vest after 10 years of service. Firefighters who retire at the earlier of age fifty-five and ten years of contributing service or age Eifty-two and twenty-five years of contributing service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 2.50 percent of their base compensation over the highest five years of employment, multipled by credited service. The PERS also provides death and disability benefits. These benefits and other requirements are established by State Statute and City of Vero Beach ordinance. The firefighters are required to contribute 7 percent of their compensation. The PERS also receives contributions from the State for insurance premium refunds. The County is required to contribute the remaining amount necessary to pay the annual normal cost plus an amount sufficient to fund any unfunded accrued liability over 40 years. Funding Status and Progress - The amount shown as the "pension benefit obliga- tion" is a standardized disclosure measure of the present value of pension bene- fits, adjusted for the effects of projected salary increases and step -rate bene- fits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the PEAS on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine contributions to the PERS. The pension benefit obligations were computed as a part of actuarial valuations performed as of January 1, 1988. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets compounded annually of 6 1/2Y, and (b) projected salary increases of 79 a year compounded annually attributable to inflation. 42. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 7. Retirement - Continued: B. Firefighters Pension.Plan - Continued Total unfunded pension benefit obligations are as follows: There were no current year changes in actuarial assumptions or benefit pro- visions that would affect the pension benefit obligation. Actuarially Determined Contribution Requirements and Contributions Made - The County -s funding policy provides for actuarially determined periodic contribu- tions to the plans. The required contributions are actuarially determined and include normal costs (after deducting expected employee contributions) and the amount of the additional unfunded obligations created due to increases in plan benefits over a period of 40 years. Employer contribution rates are determined using the frozen entry age actuarial funding method. The Firemen's PERS uses the aggregate actuarial cost method which does not produce a past service liability that is amortized over a fixed number of years. Instead, the value of all projected benefit in excess of current asset is paid off over the future working years of the covered employee. Therefore, this method automatically funds the remaining value of benefits while there are still active members. The significant actuarial assumptions used to determine the actuarially deter- mined employer contribution requirement are the same as those used to compute the actuarial present value of credited projected benefits. There were no changes in the current year in actuarial assumptions, actuarial funding method, or benefit provisions. 43. January 1, 1988 Pension Benefit Obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits $ 942,997 Current employees - Accumulated employee contributions including allocated investment earnings 237,339 Employer -financed vested 1,293,598 Employer -financed nonvested 73,744 Total Pension Benefit Obligation 2,547,678 Net Assets Available for Benefits, at cost 2,470,577 Net Assets Over (Under) Pension Benefit Obligation S (77.10U) Net Assets Available for Benefits at Market Value $2,495,126 There were no current year changes in actuarial assumptions or benefit pro- visions that would affect the pension benefit obligation. Actuarially Determined Contribution Requirements and Contributions Made - The County -s funding policy provides for actuarially determined periodic contribu- tions to the plans. The required contributions are actuarially determined and include normal costs (after deducting expected employee contributions) and the amount of the additional unfunded obligations created due to increases in plan benefits over a period of 40 years. Employer contribution rates are determined using the frozen entry age actuarial funding method. The Firemen's PERS uses the aggregate actuarial cost method which does not produce a past service liability that is amortized over a fixed number of years. Instead, the value of all projected benefit in excess of current asset is paid off over the future working years of the covered employee. Therefore, this method automatically funds the remaining value of benefits while there are still active members. The significant actuarial assumptions used to determine the actuarially deter- mined employer contribution requirement are the same as those used to compute the actuarial present value of credited projected benefits. There were no changes in the current year in actuarial assumptions, actuarial funding method, or benefit provisions. 43. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 7. Retirement - Continued: B. Firefi liters Pension Plan.- o lan• Continued The contributions made to the plan during the fiscal year ended September 30, 1988 were based on the actuarial reports dated January 1, 1987 and January 1, 1988. An analysis of contributions made during the current fiscal year is as follows: Contributions made: ,( Employee - fJ 7% of compensation $ 28,349 5 state - ''� Premium Tax Refunds 78,527 Employer - Additional amount necessary to pay the ') annual normal cost and amortize any unfunded actuarial accrued liability 21,157 Total Contributions 1285033 Current Year Covered Payroll $404,986 Contributions as a Percentage of Current Year Covered Payroll: Employee 7.0% State 19.4% Employer 5.2% Trend Information - The required three-year and ten-year historical trend infor- mation is unavailable at this time. 8. Deferred Compensation Plan: The County offers its employees deferred compensation plans created in accordance with the Internal Revenue Code, Section 457. The plan permits them to defer a portion of their compensation until future years. The monies placed in the deferred compensation plan are not available to employees until termination, retirement, death, or an unforseeable emergency. All amounts of compensation deferred under the plan, all property and rights pur- chased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or beneficiary) solely the property and rights of the County, subject only to the claims of the County's general creditors. Participants' rights under the plan are equal to those of general creditors in an amount equal to the fair market value of the deferred account for each participant. The County has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The County believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. 44. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 9. Segment Information: The County maintains Enterprise Funds for its Water and Sewer System, Solid Waste System, County Building, and Golf Course and Housing Authority Funds. Segment information for the year ended September 30, 1988 follows: Solid Water Housing Waste Golf County and Sewer Author - System Course Building System ity Total Operating Revenues $1,957,590 $1,106,587 5 747,119 S 3,530,626 $ 204,550 S 7,546,672 Depreciation and Amortisation Expense 241,040 147,562 operating Income (Lose) (731,531) 117,110 Operating Transfers. In (Out) - - Het Income (Lou) (571,157) (76,0761 fixed Aueta-t Additions 1,506,760 120,147 Deletions - net of accumulated depreciation 205 3,959 Net Working Capital 577,859 (16,920( Total Assets 12,320,063 2,846,493 Bonds and Other Long - Term Liabilities (nst): Payable from operating revenues 7,873,669 2,785,561 Total Equity (Deficit) 1,756,241 (16,055) Current Year Increase in Contributions 112,901 - 45. ■ 29,200 935,202 90,270 236,923 149,596 326,583 23,258 12,031,702 1,109 - 942,915 (555,402) 1,022,500 47,260,302 17,629 18,312,352 966,563 25,308.173 - 4,199,670 76,346 11430,158 (45,089) (330,317) 64,939 64,939 $5,869 (117,165) 2,096 13,683,963 - 5,273 48,431 996,883 2,626,022 66,075,380 1,944,101 30,933,5:2 617,970 28,652,$92 - 4,312,571 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 10. Operatinq Leases: The County has entered into operating leases, both as lessor and lessee. Lease terms vary from 5 to 30 years. Lease revenues totaled $45,000 and lease expendi- tures totaled $41,428 for the year ended September 30, 1988. Future Minimum Lease Receipts The following is a schedule by years of minimum future rentals to be received Ecom the School Board on noncancellable operating leases for office space as of September 30: Year Ending September 30, 1989 S 45,000 1990 45,000 1991 45,000 1992 45,000 1993 45,000 Remaining 753,750 Total future minimum lease receipts9S 78.750 The property being leased to the School Board is included in the County's General Fixed Asset Account Group and has a carrying value, which approximates cost, of $734,000. Future Minimum Lease Payments The following is a schedule by years of minimum future rentals to be paid by the County (Tax Collector) for noncancellable operating leases for office space as of September 30: Year Ending September 30 1989 S 59,816 1990 59,816 1991 59,816 1992 33,000 Total future minimum lease payments S212,448 46. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 11. Fund Equity: A. The County has established certain. reserves for restricted assets of the Enterprise Funds. These assets are restricted by various covenants within the revenue bond issues, as described in Note 6. Reserved retained earnings at September 30, 1988 consist of the following: Water and Golf Sewer Housing Course System Authority Total Reserved for debt service $184,580 S 372,768 S 4,417 S 561,765 Reserved for renewal and replacement - 440,839 119,566 560,105 Reserved for capital projects - 1,015,601 1,015,601 Total S184,580 $1,829,208 S 123.983 S2,137,7711 B. The following is a summary of changes in Proprietary Fund contributions by Fund: Contributions at October 1, 1987 Increase in contributions Depreciation on contributed assets Contributions at September 30, 1988 47. Interna: Enterprise funds Se•,., 3oT+d Hater Haste Golf County and Sewer Housing Systs Course Building System Authority Me $10,000 9422,013 $ 12,181 $18,088,513 $538,221 $6. 112,901 - - 4,199,670 - 4,363 - 520,616 15,988 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 11. Fund Equity - Continued: C. The County has established certain reserves within the fund equity section of the governmental funds. Reserved fund balances at September 30, 1988 consist of the following: 48. Amount Board of County Commissioners: General Fund: Reserved for emergency management S 40,000 These funds are segregated in compliance with an agreement between the County and a mobile home park to be used solely for emergency management purposes, a general fund type expenditure. Debt Service Funds: Reserved for debt service - Refunding and Improvement Bonds $1,637,571 Route 60 Sewer Assessment Bonds 189,960 Route 60 Water Assessment Bonds 51,879 51,879,410 These reserves represent fund balances restricted to debt service requirements of the revenue and general obligation bonds. Capital Projects Funds: Reserved for capital projects - Sheriff's Office and Communication Center $ 358,322 County Jail 18 Community Health Building 75,759 Minimum Security Facility 550,434 $ 984,533 These reserves are the fund balances that are restricted to specified capital projects. 48. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 12. Fund Equity Deficit: The following funds had deficits in fund balance or retained earnings at September 30, 1988: Fund Deficit Capital Projects Funds: Golden Sands Park $101,836 Library Construction 239,276 Jail - Phase III 227,976 Enterprise Funds: Golf Course 438,068 1 carnal Service Fund: Fleet Management 294,242 The deficit fund balances in the Capital Project Funds will be eliminated by inter - fund transfers and the issuance of debt in future periods. The retained earnings deficit in the Fleet Management Internal Service Fund will oe eliminated by anticipated operating income in future periods. The Golf Course began operations during the fiscal year ended September 30, 1987. The retained earnings deficit in the Golf Course Enterprise Fund will be eliminated by anticipated operating income in future periods. 13. Commitments and Contingencies: A. Litigation - The County is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management, based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial Position of the County. 49. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 13. Commitments and Contingencies - Continued: B. Construction Commitments - The County has various construction contracts out- standing at September 30, 1988. In the Capital Projects Funds projects are for Golden Sands Park and various road projects. In the Enterprise Funds, the landfill expansion and various water and sewer projects are under construc- tion. A summary of these projects at September 30, 1988 is as follows: Capital C. Grants - Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures are disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the County. In the opinion of management, any Such adjustments would not be significant. 14. Change in Accounting Estimate: During the current fiscal year, the County issued the Solid Waste Disposal System Revenue Bonds, which are in part to fund the costs of closure of Segment I of the Solid Waste Disposal District Landfill. The additional funding is necessary due to certain recent regulatory requirements which have escalated the costs of closure. Based on an engineering report made available in the current year, the County estimates the total costs of closure to be $1,658,000 of which $1,519,850 has been considered current and has been accrued in the current year in the Solid Waste Disposal District Enterprise Fund. 15. Subsequent Events: Water and Sewer System - On December 1, 1988, the County issued $3,900,000 in 6 7,88 Water Revenue Bond, Series 1988, Anticipation Notes. The notes were issued in anticipation of the receipt by the County of the proceeds from the future sale of its $4,000,000 Water Revenue Bonds, Series 1988. The County currently expects that the Series 1988 Bonds will be sold at public or private sale pursuant to the laws of the State of Florida and Resolution No. 88-44 duly adopted by the County ;,n August 2, 1988. 50. Projects Enterprise Total Total contract price S 447,057 $9,336,560 S 9,783,617 Total paid as of September 30, 1988 28,760 51576,600 51605,360 Remaining commitment at September 30, 1988 S 418.297 53,759,960 S 4,178,257 C. Grants - Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures are disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the County. In the opinion of management, any Such adjustments would not be significant. 14. Change in Accounting Estimate: During the current fiscal year, the County issued the Solid Waste Disposal System Revenue Bonds, which are in part to fund the costs of closure of Segment I of the Solid Waste Disposal District Landfill. The additional funding is necessary due to certain recent regulatory requirements which have escalated the costs of closure. Based on an engineering report made available in the current year, the County estimates the total costs of closure to be $1,658,000 of which $1,519,850 has been considered current and has been accrued in the current year in the Solid Waste Disposal District Enterprise Fund. 15. Subsequent Events: Water and Sewer System - On December 1, 1988, the County issued $3,900,000 in 6 7,88 Water Revenue Bond, Series 1988, Anticipation Notes. The notes were issued in anticipation of the receipt by the County of the proceeds from the future sale of its $4,000,000 Water Revenue Bonds, Series 1988. The County currently expects that the Series 1988 Bonds will be sold at public or private sale pursuant to the laws of the State of Florida and Resolution No. 88-44 duly adopted by the County ;,n August 2, 1988. 50. INDIAN RIVER COUNTY, FLORIDA I,; NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 15. Subsequent Events - Continued: Housing Authorit A. On August 23, 1988, the Housing Authority adopted a resolution authorizing the issuance of a revenue bond payable to the U.S. Department of Agriculture, Farmers Home Administration, for the purpose of financing a part of the cost of acquiring, erecting and constructing low -rent, multi -family housing facilities (the Project). The bond and interest thereon are payable solely from and secured by a prior lien upon and a pledge of the gross revenues to be derived from the Project. On November 4, 1988, the Housing Authority issued the bonds in the amount of $1,908,000. On October 4, 1988, a contract for $1,937,600 was entered into by the Housing Authority with a building contractor for construc- tion of the Project. During the fiscal year ended September 30, 1988, the U.S. Department of Agriculture, Farmers Home Administration, committed to grant $600,000 to partially finance the acquisition and construction of the above low -rent, multi- family housing facility. As of September 30, 1988, no grant proceeds were received or earned. B. During the fiscal year ended September 30, 1988, the Housing Authority signed a purchase option for acquisition of land in connection with construction of another low -rent, multi -family housing facility. On November 30, 1988, the Housing Authority Assistance Council in Washington, D.C. committed to loan $238,819 to the Authority to acquire the land needed for the new project. 51: ENTERPRISE FUNDS Solid Waste Disposal District - To account for the revenues, expenses, assets and liabilities associated with the County landfill. County Golf Course Fund - To account for the revenues, expenses, assets and liabilities associated with the County Golf Course. County Building Fund - To account for the revenues, expenses, assets and liabilities associated with the building permit and inspection program. Water and Sewer System Fund - To account for the revenues, expenses, assets and liabilities associated with the County water and sewer system. Housing Authority Fund - To account for the revenues, expenses, assets and liabilities associated with providing low income housing within Indian River County. Financing is provided by loans from the State of Florida, U.S. Department of Agriculture, and transfers from the County's General Fund. 52. INDIAN RIVER COUNTY, FLORIDA COMBINING BALANCE SHEET ALL ENTERPRISE FUNDS September 30, 1988 ASSETS Current Assets: Equity in pooled cash and investments Accounts receivable - net Due from other governments Interest receivable Inventories Total current assets Restricted Assets: Cash and investments: Sinking Fund Renewal and replacement and capital projects Customer deposits Capital construction Due from other funds Total restricted assets Property, Plant and Equipment: Land Buildings, distribution systems and improvements Equipment Construction in progress Less accumulated depreciation Total property, plant and equipment Other Assets: Unamortized bond costs Intangible assets Total other assets Total Assets 53. SOLID WASTE DISPOSAL GOLF DISTRICT COURSE 5 230,437 $ 1,200 237,570 713 138,785 - - 41,374 606,792 43,287 1,372,430 201,360 23,150 - 7,378,323 - 8,773,903 201,360 553,988 108,134 605,364 2,247,419 2,108,581 453,213 634,174 3,902,107 2,808,766 (1,217,910) (206,920) 2,684,197 2,601,846 255,171 - 255,171 512.320,063 $2,846,493 The accompanying notes are an integral part of the financial statements. 54. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS S 961,156 S 29,336 S 31,516 S 1,253,645 67 585,570 9,112 833,032 - 448 5,836 6,284 - 107,702 - 246,487 - 165,532 6,400 213,306 961,223 888,588 52,864 2,552,754 - 2,132,267 6,007 3,712,064 - 5,147,168 119,566 5,266,734 - 430,703 5,017 458,870 - 2,241,044 - 9,619,367 - 1,800,000 - 1,800,000 - 11,751,182 130,590 20,857,035 - 1,084,661 146,426 1,893,209 - 24,604,459 2,322,663 29,779,905 142,101 562,742 45,835 3,312,472 - 11,408,398 2,096 12,044,668 142,101 37,660,260 2,517,020 47,030,253 (80,824) (3,404,282) (76,346) (4,986,282) 61,277 34,255,978 2,440,674 42,043,972 - 94,554 - 349,725 - 270,000 1,894 271,894 - 364,554 1,894 621,619 51,022,500 547,260,302 $2,626,022 $66,075.380 The accompanying notes are an integral part of the financial statements. 54. INDIAN RIVER COUNTY, FLORIDA COMBINING BALANCE SHEET - CONTINUED ALL ENTERPRISE FUNDS September 30, 1988 LIABILITIES AND FUND EOUITY Current Liabilities (Payable from Current Assets): Deficit in equity in pooled cash and investments Accounts payable Notes payable Due to other governments Other deposits held in escrow Deferred revenues Total current liabilities (payable from current assets) Current Liabilities (Payable from Restricted Assets): Accounts payable Retainage payable Accrued interest payable Bonds payable - current portion Customer deposits Closure costs payable Total current liabilities (payable from restricted assets) Other Liabilities: Accrued compensated absences Capital leases Notes payable Bond anticipation notes Bonds payable - net of unamortized discount Total other liabilities Total liabilities Fund Equity: Contributions Retained earnings: Reserved for debt service Reserved for renewal and replacement Reserved for capital projects Unreserved (deficit) Total retained earnings (deficit) Total fund equity (deficit) Total Liabilities and Fund Equity 55. SOLID WASTE DISPOSAL GOLF DISTRICT COURSE S - S 30,641 28,933 28,339 200 _ 1,027 28,933 60,207 487,735 - 55,952 - 184,333 16,780 390,000 - 23,150 - 1,519,850 2,661,020 16,780 23,869 6,959 - 124,975 7,850,000 2,653,627 7,873,869 2,785,561 10,563,822 2,862,548 118,538 422,013 - 184,580 1,637,703 (622,648) 1,637,703 (438,068) 1,756,241 (16,055) $12,3. 20,063 52,893 The accompanying notes are an integral part of the financial statements. 56. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS S - S - S 1,575 5 32,216 51605 733,824 2,858 799,559 - 700,000 - 700,000 7,203 10,166 - 17,369 50500 - - 5,700 ' - - 1,027 18,308 1,443,990 4,433 1,555,871 - 978,970 - 1,466,705 - 450,605 - 506,557 - 232,509 11590 435,212 - 103,000 53,000 546,000 - 430,703 4,928 458,781 ' - - 11519,850 - 2,195,787 59,518 4,933,105 17,629 30,598 - 79,055 - - - 124,975 - 306,554 89,101 395,655 - 9,200,000 - 9,200,000 - 8,775,200 11855,000 21,133,827 17,629 18,312,352 1,944,101 30,933,512 35,937 21,952,129 2,008,052 37,422,488 12,181 21,767,567 522,233 22,842,532 - 372,768 4,417 561,765 - 440,839 119,566 560,405 - 1,015,601 - 1,015,601 974,382 1,711,398 (28,246) 3,672,589 974,382 3,540,606 95,737 5,810,360 986,563 25,308,173 617,970 28,652,892 51.022.5000 547.260.302 $2,626,022 $66,075,380 The accompanying notes are an integral part of the financial statements. 56. INDIAN RIVER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES# EXPENSES AND CHANGES IN RETAINED EARNINGS ALL ENTERPRISE FUNDS Year Ended September 30, 1988 57. SOLID WASTE DISPOSAL GOLF DISTRICT COURSE Operating Revenues: Charges for services $1,957,590 $1,106,587 Total operating revenues 1,957,590 1,106,587 Operating Expenses: Personal services 528,573 451,276 Materials, supplies, services and other operating 1,918,700 390,639 Depreciation and amortization 241,848 147,562 Total operating expenses 2,689,121 989,477 Operating Income (Loss) (731,531) 117,110 Nonoperating Revenues (Expenses): Interest income Operating grants 141,184 18,802 Gain on disposal of equipment 6,662 5,452 _ Interest expense Amortization (38,990) (211,530) expense Loss on disposal of equipment (11861) (2,458) Total nonoperating revenues (expenses) (29,142) 83,305 (195,186) Operating Transfers: Operating transfers in Income (Loss) Before Extraordinary Gain (648,226) (78,076) Extraordinary Gain on Defeasance of Debt 77,069 Net Income (Loss) (571,157) (78,076) Add: Depreciation on Fixed Assets Acquired by Contributed Capital 4,363 Increase (Decrease) in Retained Earnings (566,794) (78,076) Retained Earnings (Deficit), at Beginning of Year 2,204,497 (359,992) Retained Earnings (Deficit), at End of Year S1,63�7.77033 S (438=) 57. The accompanying notes are an integral part of the financial statements. 58. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS S 747,119 $3,530,826 5 104,550 S 7,546,672 747,119 3,530,826 204,550 7,546,672 492,178 799,830 82,190 2,354,047 135,471 1,556,871 91,103 4092,784 29,200 935,202 76,346 1,430,158 656,849 3,291,903 249,639 7,876,989 90,270 238,923 (45,089) (330,317) 57,530 536,443 4,238 758,197 - - 55,079 61,741 2,105 237 - 7,794 - (448,418) (23,278) (722,216) - (602) - (4,921) (309) - - (29,451) 59,326 87,660 36,039 71,144 - - 64,939 64,939 149,596 326,583 55,889 (194,234) - - - 77,069 149,596 326,583 55,889 (117,165) -520,616 15,988 540,967 149,596 847,199 71,877 423,802 824,786 2,693,407 23,860 5,386,558 S 974.382 S3,540,606 S 95,737 S 5.810.360 The accompanying notes are an integral part of the financial statements. 58. INDIAN RIVER COUNTY, FLORIDA COMBINING STATEMENT OF CHANGES IN FINANCIAL POSITION ALL ENTERPRISE FUNDS Year Ended September 30, 1988 Applications of Working Capital: Increase in restricted assets SOLID WASTE - Acquisition of fixed assets DISPOSAL GOLF Increase in other assets DISTRICT COURSE Sources of Working Capital: - 42,374 From operations: - - Net income (loss) before extraordinary item $ (648,226) $ (78,076) Add expenses not creating current liabilities 10,724,633 _ 162,621 or using current assets: S (193,332)S (� 4.1288) Depreciation and amortization _ 243,709 150,020 Working capital provided from (used in) operations exclusive of extraordinary item (404,517) 71,943 Extraordinary item 77,069 - Disposal of fixed assets net of accumulated depreciation 205 3,959 Increase in current liabilities payable from 91,943 - restricted assets 2,501,357 - Increase in other liabilities 4,286 11840 Increase in capital leases - 36,750 Increase in notes payable - - Increase in bond anticipation notes payable - - Increase in revenue bonds payable 8,240,000 - Increase in contributions 112,901 - Total sources of working capital 10,531,301 114,393 Applications of Working Capital: Increase in restricted assets 7,664,044 - Acquisition of fixed assets 1,506,760 120,137 Increase in other assets 246,801 - Decrease in capital leases - 42,374 Decrease in notes payable - - Decrease in revenue bonds payable 1,307,028 Total applications of working capital 10,724,633 _ 162,621 Net Increase (Decrease) in Working Capital S (193,332)S (� 4.1288) Component Elements of Net Increase (Decrease) in Working Capital: Equity in pooled cash and investments $ (538,221) S (103,383) Accounts receivable - net 104,144 713 Due from other governments - _ Interest receivable 91,943 - Inventories - 21,137 Deficit in equity in pooled cash and investments - (30,641) Accounts payable 135,870 52,356 Other liabilities 12,932 11,780 Net Increase (Decrease) in Working Capital S ll_ 93.332) S (i8.11e) 59. The accompanying notes are an integral part of the financial statements. 60. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS S 149,596 $ 326,583 S 55,889 $ (194,234) 29,200 935,804 76,346 1,435,079 178,796 1,262,387 132,235 1,240,845 11109 - - 77,069 - 5,273 - 1,701,356 56,776 4,259,489 3,444 9,939 89,101 108,610 ' 36,750 - 1,006,554 - 1,006,554 - 9,200,000 - 9,200,000 8,240,000 _ - =1199L670 4,312,571 183,349 17,379,906 278,112 _ 28,487,161 - 5,633,070 127,800 13,424,914 23,258 12,031,702 2,096 13,683,963 - 75,900 1,894 324,595 ' 42,474 - 700,000 - 700,000 _ - 103,000 53,000 1,463,028 23,258 18,543,672 _ 184 L90 _ 29,638,974 SS 160091 S(1.1163,766) SS 93,322 V1,151,813) S 177,259 $ (51,843) S 6,669 S (509,619) (5,412) 106,475 (23,123) 182,797 ' (1,690) 270 (122,413) - (122,413) 90,523 - 26,241 (19,199) 28,189 ' 2,637 - (564,567) (1,575) 19,044 (32,216) (354,660) (12,703) (680,342) 233,919 (434,414) S 160,091 � S(1,163,766) �. $ 93.322 S(1,151,813) The accompanying notes are an integral part of the financial statements. 60. FORM OF OPINION OF BOND COUNSEL RHOADS & 81NON ATTORNEYS AT LAW SUITE 301 299 WEST CAMINO GARDENS BOULEVARD BOCA RATON, FLORIDA 33432 Re: Indian River County, Florida $6,510,000 Aggregate Principal Amount of Water and Sewer Revenue Refunding Bonds, Series 1989 May 4, 1989 Dated as of April 15, 1989 OPINION We have acted as Bond Counsel In connection with the authorization, Issuance and sale of the Water and Sewer Revenue Refunding Bonds, Series 1989, dated as of April 15, 1989, In the aggregate princippal amount of $6,510,000 (the 'Bonds'), of Indian River Countyy Florida (the 'County'). The Bonds are Issued pursuant to the Constllutlon and laws of the State of Florida, particularly Chapters 126 and 159, Florida Statutes (1988), and Resolution No. 89-19, duly adopted by the Board of County Commissioners of the County (the 'Board') on February 14, 1989, as amended and supplemented (the 'Resolution'), and other applicable provisions or law. Under the Resolution, Florida National Be* St. Petersburg, Florida (the 'Paying Agent% has been appointed as paying agent and registrar for the Bonds. The Resolution contains covenants of the County to comply with provisions of the Internal Revenue Code or 1986, as amended (the 'Code'), and applicable regulations promulgated thereunder, Inter alto, to preserve the Federal Income tax exemption of the Interest on the Bonds. The County, pursuant to power and authority vested in It by law, has heretofore acquired and/or constructed water and sewer systems located In the Countyy which, together with any and all Improvements, extensions and additions thereto hereafter constructed or acquired and any phyalcally Independent water or sewer system hereafter made a part of the System by resolution of the Board, together with any art all Improvements, extensions and additions thereto thereafter constructed or acquired, are herein referred to as the 'System'. The Resolution provides, Inter ally that the proceeds of the Bonds together with other available funds of the County, are to be used for the purpose o! providing funds for and toward: (1) retirement or the Original Bonds, as that phrase is defined In the Resolution, heretofore Issued by the County to finance a portion of the costs of acquisition and/or construction of the System, (18 establishment of a debt service reserve account !or the Bonds, and (118 payment of a0 costs and expenses of Issuance or the Bonds and retirement of such Original Bonds, all as more fully provided In the Resolution. The principal of and Interest on the Bonds are payable solely from and secured by a lien on and pledge of the Pledged Funds, as defined In the Resolution, which Include the Net Revenues, as that phrase Is defined In the Resolution, of the System. Reference is made to the Resolution for the definition of the term 'Revenues', for terms and conditions upon which certain receipts and revenues pledged under the Resolution may be released from such pledge, and for terms and conditions upon which additional bonds having a senior or parity lien upon and right to payment from such Pledged Funds may be Issued from time to time. The Bonds shall not constitute a general obligation or Indebtedness of the County, and the holders thereof shall never have the right to require or compel the exercise of the power of the County to levy ad valorem taxes for the payment of the principal of and Interest on the Bonds. As Bond Counsel, we have examined, among other things: certined copies of certain proceedings of the Board with respect to the Bonds and other proofs submitted to us which ere relevant to the Issuance and s9le of the Bonds; a certlned copy of the Resolution: certain documents required by the Resolution to be furnished as conclItIons precedent to Issuance and delivery of the Bonds: an affidavit of no Iltigatlon; anon -arbitrage certificate of the County: an Investment certificate of the County; and usual and required closing affidavits, certlAcetes end documents. We also have examined a specimen of the Bonds executed In the manner required by the Resolution, and assume that, es required by the Resolution, all of the Bonds have been slmllariy executed, will be Issued In registered form and will be euthenlieated by the Paying Agent, acting as bond registrar. As to questions o! fact material to our opinion, we have relied upon the certined proceedings and other certifications of public officials furnished to us without undertaking to verify such facts by Independent Investigation. Based on our examinatlon and assuming investment and sppllcatlon of the proceeds of the Bonds as set forth In the aforementioned non -arbitrage certificate and Investment certldcate, assuming that the Bonds will remain In registered form as required by the Resolution, and assuming continuing cc pile by the County with the aforementioned covenants pertaining to the Code, we are of the opinion that: I. The County Is a political subdivision of the State of Florida and has the power to issue the Bonds and to awn, operate and maintain the System. 2. The Resolution has been duly adopted by the County and Is a valid and enforceable Instrument. 3. The Bonds are valid and legally binding special obligations of the County and arc payable from and secured by a lien upon and pledge of the Pledged Funds, as that term is donned In the Resolution. 4. Interest on the Bonds Is exempt hum taxation under the laws of the Stale of Florida, except estate taxes and taxes Imposed by Chapter 220, Florida Statutes, on Interest, Income or profits on debt obligations owned by corporations, banks and savings associations. 5. The Bonds are not presently 'arbitrage bonds' as described In Section 103(b)(2) and Section 148 of the Code and applicable regulations promulgated thereunder. 6. Interest on the Bonds Is exempt, under present statutes, regulations and decisions, from present Federal Income taxes: provided, however, that such exemption does not extend to corporations to the extant he they are required to Include such Interest in the calculation and payment of alternative minimum vexes Imposed under the Code or the 'Environmental Tex' under Section 59A of the Code, or lu certeI foreign corporations doing business In the United States of America to the extent that they are subject to a branch profits tax Imposed under Seetlon 684 of the Code. Further, Intens: on the Bonds Is not an Item of tax preference for purposes of calculating Federal alternative minimum taxes Imposed on Individual. and corporatlons. It is to IX underalaod that the rights critic holders of the Bonds and the enroreeabllity of the Bonds and of the Resolution may be sub)ect to banki'll y, Insolvency, reorganization, moratoduin and other similar laws a8ecting creditors' rights generally heretofore or hereafter enacted and that lhelr enforcement may be subject to :he exercise of ludlcl.l discretion In accordance with general principles of equity. Very truly yo �+ RHOADS firs N v Ghurics L. 5; APPENDIX C I SPECIMEN MUNICIPAL BOND INSURANCE POLICY Financial Guaranty Insurance Company FGICs 175 Water Strict New York, New York 100:38 (212) 607-3000 Municipal Bond New Issue Insurance Policy Financial Guaranty Iasis nee Company insurance company. in consideration o A terms of this Policy. hereby unco ' uo fll, N.A., or its succes�for l the portion of file prin-res oil tl ' Which shall becon fit,r„•r 1111r f of Folders, that u ns (the :.Bonds") of Nonpayment by the Issuer, lana tri ly n maize such ma neat. fo VOKH"r•al Agent on the date such principal ori ores be res Du for Payntem )r\!j fl isiness Day next following the day on whic Fir acial 'moral v shall ha , r ed Notice of Nonpaymem, whichever is later. he ' ' yen ' I dis se to c Bondholder the face anumnt of principal and interest ich i. Chet hl . o to is unpaid by reason of Nonpayment by the Issuer bat int apo reccip I ' the Fiscal Agent io form reasonably satisfactory to it, of (i) evidence of f , Bot ho S right to receive payment of the principal or interest Due for Pavnm•nt and ') once, including arty appropriate instruments of assignment, that all of the Bo o der:s rights to paq'nu•nt of such principal or interest Due for Payment shall thereupon vest in Financial Cuaramy. Upon such disbursement, Financial Guaranty shall become tit(- owner of the Boad, appurtenant coupon or right to payment of principal or interest on such Bond and shall be fully subrogated to all of the Bondholder's rights thereunder, including the Bondholder's right to payment thereof. ]'his Policy is non-cmrcellable forany reason. The premium on this Policy is not refundable for any reason, including the payment of file Bonds prior to their maturity. This Policy docs not insure against loss of any prepayment premium which stay at any fine• be payable with respect to any Bond. As used herein, the term "Bondholder" means, as to n particular Bond, the person other than the Issuer who, at the time of Nonpayrnont, is entitled ander the terms of such Bond to payment thereof. "Due for Payment" means, when referring to the principal of it l3ond, tile, stated maturity date thereof orthe dice on which the same shall have been duly called for mandatory sinking fund redemption and docs not refer to aufy earlier date oil which payment is (life by reason of call for redemption (other than by Imatlllatory sinking fulfil redemption), acceleration or other advancement of maturity and neons, when referring to Page 1 of 2 Form 9000 SM: Service nark used 6y Finanriol f;uanatt' Insurance Compnn�. under license from its parent Company, I GIC Corporation Financial Guaranty Insurance +'s Company FGIC 175 Water Street v New York, New York 100313 (212) 607-3000 Municipal Bond New Issue Insurance Policy interest on a Bond, the stated date for payment of interest. "Nonpayment" in respect of a Road means the failure of the Issuer to have provided sufficient funds to the paying agent for payment in full of all principal and interest Due for Payment on such Bond. "Notic •" means telephonic or telegraphic notice, subsequently confirmed in writing, or wr' to notice by registered or certified mail, from a Bondholder or a paying agent a on Financial Guaranty. "Business Day" means any day other than a Sat Sona r a day on which the Fiscal Agent is authorized by law to remain cis c . In Witness Whereof, Financial Guaranty has caused thiskollicy1f be of ed w t t t corporate seal and to be signed by its duly au t d offi sin csimil o be me effective and binding upon Financial Gyp by vt ue to ro ntcrsig lure fits authorized representative. �� 1,0 Vice President Authorized Representative has agreed to perform the duties of Fiscal Agent Authorized ((ricer SM: Service mark used by Finunciul Nage 2 of 2 Fonn 9000 Guaranty Insurance Cmnpany under license from its parent congn"m FGIC Coruoratiou Financial Guaranty Insurance Company ] GIC. 175 Water Street 1 �J lA New York, New York 10038 APPENDIX C (212) 607-3000 Endorsement To Financial Guaranty Insurance Company Insurance Policy Policy Number: Control Number: It is further understood that the term "Nonpayment" in respect of u payment of principal or interest made to a Bondholder by or on bel Bond which has been recovered from such Bondholder purse Bankruptcy Code by a trustee in bankruptcy in accordance ith a order of a court having competent jurisdiction. In Witness Whereof, Financial Cuarant s eau this d s m corporate seal and to be signed b c my uthori1 office . t t c effective and binding upon Fin+ al uara y by t of th of authorized rettresentmiv f POO Executive Vice President the t wer f sh the 'ted a - mal, it Lapp a eat o be a ' ed Sino . to be • e He r I g of its duly Authorized ILepresentative as of the Effective Date written above: Authorized Officer Citibank, N.A., as Fiscal Agent SM: Service murk used by Financial Page 1 of 1 Font F.-0002 Guaranty tnsurume Company under license from its purest annpany, FDIC Cogwration APPENDIX D DEFINITIONS 1. "Act" shall mean Chapters 125 and 159, Florida Statutes (1987), as amended, and other applicable provisions of law. 2. "Additional Parity Bonds" shall mean additional bonds issued in compliance with the terms, conditions and limitations contained in the Resolution which have an equal lien on the Pledged Funds, as herein defined, and rank equally in all respects with all other Bonds issued under the Resolution as to lien and security for payment. 3. "Authorized Investments" shall mean any of the following investments, provided that such investments are at the time lawful investments under Section 125.31, Florida Statutes (1987), as amended: a. direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America ("Direct Obligations"); b. direct obligations and fully guaranteed certificates of beneficial interest of. the Export -Import Bank of the United States; senior debt obligations of the Federal Home Loan Banks; debentures of the Federal Housing Administration; guaranteed mortgage-backed bonds and guaranteed pass-through obligations of the Government National Mortgage Corporations; guaranteed Title XI financing of the U.S. Maritime Administration; mortgage-backed securities and senior debt obligations of the Federal National Mortgage Association; and participation certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation (collectively, "Agency Obligations"); C. direct obligations of any state of the United States of America or any subdivision or agency thereof whose unsecured general obligation debt is rated "A3" or better by Moody's Investors Service and "A-" or better by Standard & Poor's Corporation, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is rated "A3" or better by Moody's Investors Service and "A-" or better by Standard & Poor's Corporation; d. commercial paper rated "Prime -1" by Moody's Investors Service and "A-1" or better by Standard & Poor's Corporation; e. obligations rated "A3" or better by Moody's Investors Service and "A-" or better by Standard & Poor's Corporation; f. deposits, Federal funds or bankers acceptances of any domestic bank, including a branch office of a foreign bank which branch office is located in the United States, provided legal opinions are received to the effect that full and timely payment of such deposit or similar obligation is enforceable against the principal office or any branch of such bank, which: (1) has an unsecured, uninsured and unguaranteed obligation rated "Prime -1" or "A3" or better by Moody's Investors Service and "A-1" or "A-" or better by Standard & Poor's Corporation, or (2) is the lead bank of a parent bank holding company with an uninsured, unsecured and unguaranteed obligation meeting the rating requirements in (1) above; g. deposits of any bank or savings and loan association which has combined capital, surplus and undivided profits of not less than $3 million, provided such deposits are fully insured by the Federal Deposit Insurance Corporation or Federal Savings and Loan Insurance Corporation; h. investments in a money-market fund rated "Am" or "Am -G" or better by Standard & Poor's Corporation; i. repurchase agreements with a term of one year or less with any institution with debt rated "AA" or commercial paper rated "A-1" (in each case by Standard & Poor's Corporation); repurchase agreements collateralized by Direct Obligations or Agency Obligations with any registered broker/dealer subject to the Securities Investors' Protection Corporation jurisdiction or any commercial bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated "Prime -1" or "A3" or better by Moody's Investors Service, and "A-1" or "A-" or better by Standard & Poor's Corporation, provided: (1) a master repurchase agreement or specific written, repurchase agreement governs the transaction; and (2) the securities are held free and clear of any lien by the Trustee or an independent third party acting solely as agent for the Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank which is a member of the Federal Deposit Insurance Corporation and which has combined capital, surplus and undivided profits of not less than $25 million, or (c) a bank approved in writing for such purpose by Financial Guaranty Insurance Company, and the Trustee shall have received written confirmation from such third party that it holds such securities, free and clear of any lien, as agent for the Trustee; and (3) a perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created for the benefit of the Trustee; and (4) the repurchase agreement has a term of thirty days or less, or the Trustee will value the collateral securities no less frequently than monthly and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two business days or such valuation; and (5) the repurchase agreement matures at least ten days (or other appropriate liquidation period) prior to a debt service payment date, and (6) the fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 100%; and k. investment agreements with a bank or insurance company which has an unsecured, uninsured and unguaranteed obligation (or claims -paying ability) rated "A3" or better by Moody's Investors Service and "A-" or better by Standard & Poor's Corporation, or is the lead bank of a parent bank holding company with an uninsured, unsecured and unguaranteed obligation meeting such rating requirements, provided: (1) interest is paid at least semi-annually at a fixed rate during the entire term of the agreement, consistent with bond payment dates, and (2) moneys invested thereunder may be withdrawn without any penalty, premium, or charge upon not more than one day's notice (provided such notice may be amended or cancelled at any time prior to the withdrawal date), and (3) the agreement is not subordinated to any other obligations of such insurance company or bank, and (4) the same guaranteed interest rate will be paid on any future deposits made to restore the reserve to its required amount, and (5) the Trustee receives an opinion of counsel that such agreement is an enforceable obligation of such insurance company or bank. 4. "Board" shall mean the Board of County Commissioners of Indian River County, Florida. 5. "Bond Amortization Account" shall mean the account created pursuant to the Resolution into which funds shall be deposited for purposes of the mandatory redemption of Term Bonds. 6. "Bond Registrar" shall mean Florida National Bank, St. Petersburg, Florida. 7. "Bonds" shall mean the Series 1989 Bonds together with any Additional Parity Bonds hereafter issued under the Resolution. 8. "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by the Bond Insurer guaranteeing the payment of principal of and interest on the Series 1989 Bonds. 9. "Bond Insurer" shall mean Financial Guaranty Insurance Company, a New York stock insurance company, or any successor thereto. 10. "Consulting Engineers" shall mean such qualified and recognized consulting engineers, having a nationwide and favorable reputation for skill and experience in the construction and operation of systems such as the System at the time retained by the County to perform the acts and carry out the duties as provided in the Resolution for the Consulting Engineers. 11. "Costs" shall mean all expenses necessary, appurtenant or incidental to the acquisition or construction of any property, real, personal or mixed, deemed necessary or desirable for carrying out the purposes of the System, including, without intending to limit the generality of the foregoing, the cost of any land or interest therein or of any fixtures, equipment or personal property necessary or convenient therefor; costs of acquiring any water or sewer system or other property in place, or any undivided interest therein, which can be operated as part of the System or which may be declared by resolution of the Board to be part of the System; engineering, legal and financing expenses; expenses for estimates of costs and of revenues; expenses for surveys; the fees of fiscal agents, financial advisors and consultants; administrative expenses relating solely to such acquisition or construction; the capitalization of interest for a reasonable period after the issuance of Bonds to finance any portion of the Costs of such acquisition or construction; the creation and establishment of reasonable reserves for debt service and operation and maintenance; the discount on the sale of Bonds to finance any portion of the Costs of such acquisition or construction; and such other costs and expenses as may be necessary or incidental to such acquisition or construction. 12. "County" shall mean Indian River County, Florida. 13. "Federal Securities" shall mean direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, which are not redeemable prior to maturity at the option of the obligor. 14. "Fees in lieu of Franchise Fees" shall mean the fees paid by the Utility Services Department of the County to the County in consideration for the use of public streets and rights-of-way in the County and to defray costs incident to the regulation by the County of the services and facilities of the Utility Services Department of the County. 15. "Fiscal Year" shall mean the period beginning with and including October 1st of each year and ending with and including the next September 30th. 16. "FmHA" shall mean the Farmers Home Administration, United States Department of Agriculture. 17. "Franchise Fees" shall mean the fees paid by water and/or sewer utilities, other than the Utility Services Department of the County, to the County in consideration for the use of public streets and rights-of-way in the County and to defray costs incident to the regulation by the County of the services and facilities of such utilities. 18. "Impact Fees" shall mean the fees or charges imposed upon new customers of the System to provide funds for the payment of all or a portion of the costs and expenses of additions, extensions and improvements to the System made necessary by the inclusion of such new customers. 19. "Net Revenues" shall mean the Revenues less Operating Expenses. 20. "Operating Expenses" shall mean the current expenses paid or accrued for the operation, maintenance and repair of all facilities constituting a part of the System, as determined in accordance with generally accepted accounting methods, and shall include, without limiting the generality of the foregoing, insurance premiums, administrative expenses of the County related solely to the System, costs of labor, materials and supplies used for such operation and charges for the accumulation of appropriate reserves for current expenses not annually recurrent but which are such as may reasonably be expected to be incurred in accordance with such accepted accounting methods, but shall exclude payments into the Sinking Fund or the Reserve Account therein and any allowances for depreciation or for renewals or replacements of capital assets of the System. 21. "Operation and Maintenance Fund" shall mean the account created pursuant to the Resolution for the purposes of receiving and maintaining funds transferred from the Revenue Fund for the payment of Operating Expenses. 22. "Original Bonds" shall mean the bonds of the County known as the Water and Sewer Revenue Bonds, Series 1979, dated August 30, 1979, the Water and Sewer Revenue Bonds, Second Series 1979, dated May 21, 1981, the Water Revenue Bonds, Series 1980 (South County Water System), dated September 30, 1982, and the Water and Sewer Revenue Bonds, Series 1982, dated April 30, 1985. 23. "Paying Agent" shall mean Florida National Bank, St. Petersburg, Florida. 24. "Pledged Funds" shall mean the Net Revenues, together with any other receipts, revenues and funds pledged in connection with the Bonds. 25. "Record Date" shall mean the 15th day of the month immediately preceding an interest or other applicable payment date for the Bonds. 26. "Registered Owner", "Bondholder" or any similar term shall mean any person who shall be the owner of any outstanding Bond or Bonds as shown on the books of the County maintained by the Bond Registrar. 27. "Renewal and Replacement Fund" shall mean the account created pursuant to the Resolution into which funds shall be deposited for the purpose of providing funds for payment of the costs and expenses of renewals and replacements to the System. 28. "Required Renewal Fund Payments" shall mean the amounts required to be deposited in each month to the credit of the renewal and replacement fund under Section 3.04(E) of the Senior Lien Bond Resolution so long as the Senior Lien Bonds are outstanding. 29. "Reserve Account" shall mean the account in the Sinking Fund created pursuant to the Resolution whereby a sum at least equal to and sufficient to pay the maximum amount of principal and interest on all outstanding Bonds becoming due in any ensuing Fiscal Year, subject to certain conditions, shall be held. 30. "Resolution" shall mean Resolution No. 89-19 relating to the Bonds, adopted by the County on February 14, 1989, as the same may be amended and supplemented. 31. "Revenue Fund" shall mean the account created pursuant to the Resolution into which all Revenues of the System shall be deposited by the County. 32. "Revenues" shall mean (1) the Uniform Charges; (2) with the consent of the Bond Insurer so long as any Series 1989 Bonds are outstanding, such Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees as the Board, by resolution, may pledge specifically in connection with the Bonds; and (3) with the consent of the Bond Insurer so long as any Series 1989 Bonds are outstanding, such other receipts and revenues of the County as the Board, by resolution, may pledge specifically in connection with the Bonds. "Revenues" shall not include, however, such receipts and revenues as, from time to time, may be released from the pledge in accordance with the terms of the Resolution. 33. "Senior Lien Bond Resolution" shall mean Resolution No. 82-61 of the County, together with all amendments and supplements thereto, providing for the issuance and security of the Senior Lien Bonds. 34. "Senior Lien Bonds" shall mean sewer and water revenue bonds that may be issued to FmHA as permitted by the Resolution. 35. "Senior Lien Bonds Debt Service" shall mean the principal and interest payable on bonds issued to FmHA and having a right to payment from and a lien on the Pledged Funds senior to the lien granted for the benefit of the holders of Bonds issued under this Resolution, as permitted by the Resolution. 36. "Senior Lien Bonds Reserve Account Payments" shall mean the amounts required to be deposited in each month to the credit of the reserve account in the sinking fund for the Senior Lien Bonds under Section 3.04(C)(4) of the Senior Lien Bond Resolution so long as any Senior Lien Bonds are outstanding. 37. "Series 1989 Bonds" shall mean the Water and Sewer Revenue Refunding Bonds, Series 1989, authorized and issued pursuant to the Resolution. 38. "Sinking Fund" shall mean the account created pursuant to the Resolution for the purpose of providing funds for payment of interest on the Bonds. 39. "Special Assessments" shall mean the fees, charges and costs lawfully assessed by the County against properties benefitted by construction or reconstruction of sewer or water facilities and representing an apportionment of the costs of such improvements to such properties. 40. "Surcharges" shall mean special rates, fees and charges for water or sewer service imposed for a limited time and purpose by ordinance adopted by the Board and in addition to the usual uniform water and sewer service rates, fees and charges of the County. 41. "System" shall mean the water and sewer systems now owned and operated by the County, wherever located in the County, together with any and all improvements, extensions and additions thereto hereafter constructed or acquired, and any physically independent water or sewer system hereafter made a part of the System by resolution of the Board together with any and all improvements, extensions and additions thereto thereafter constructed or acquired. Without intending to limit the generality of the foregoing sentence, "System" shall include all property, real, personal and mixed, rights, powers, licenses, easements, rights of way privileges, franchises and all other property or interests in property of whatsoever nature, including but not limited to vehicles, rolling stock, buildings, pipes, pumps, machinery, tanks, mains, conduits, meters and other equipment, used or useful in connection with ownership, operation and maintenance of such water or sewer systems by the County. 42. "Term Bonds" shall mean the Bonds of a series all of which are stated to mature on one date but which shall be subject to earlier retirement by operation of the Bond Amortization Account. 43. "Uniform Charges" shall mean all receipts and revenues of the County derived from the imposition, collection and enforcement of uniform water and sewer service rates, fees and charges for the use of and the services furnished or to be furnished by the facilities constituting the system, including the earnings and interest income derived from the investment of moneys on deposit in various funds and accounts established in connection with the System, but excluding Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees. 256/440 E E o � c r L i In the opinion of Bond Counsel, assuming continuing compliance by the County with certain covenants to comply with provisions of the Internal Revenue Code of 1986, as amended, interest on the Series 1989 Bonds is exempt from present federal income tares under existing statutes, regulations and decisions, except as set forth tinder "TAX EXEMPTION" in this Official Statement; and interest on the Series 1989 Bonds is exempt from taxation tinder the laws of the State of Florida, except as to estate tares and tares imposed by Chapter 220, Florida Statutes, on interest, income, or profits on debt obligations owned by corporations, banks and savings associa- tions (see "TAX EXEMPTION" herein for fitrtlier information). NEW ISSUE X00 RATINGS: Moody's: Aoc. 6, r _(11 Standard & Poor's: AAN ( [=6TH- Insured) sw,iik fNk INDIAN RIVER COUNTY, FLORIDA Water and Sewer Revenue Refunding Bonds, Series 1989 Dated: April W, 1989 Due: May I as shown below d The Water and Sewer Revenue Refunding Bonds, Series 1989 (the "Series 1989 Bonds") are being issued by Indian River County, Florida (the "County") in fully registered form in denominations of $5,000 and any integral multiple thereof. Interest on the Series 1989 Bonds -is payable semiannually on May I and November I, commencing November I, 1989, by check or draft of Florida National Bank, St. Petersburg, Florida, as Paying Agent, made out and mailed to the Registered Owner, as shown on the registration books of the County maintained by Florida National Bank, St. Petersburg, Florida, as Bond Registrar, on the fifteenth day next preceding the applicable inter- est payment dates and as otherwise described herein. The principal of the Series 1989 Bonds, when due, will be payable upon presen- tation and surrender thereof at the principal corporate trust office of the Paying Agent. `d The Series 1989 Bonds are subject to redemption, at the option of the County, prior to maturity as set forth herein. The Series 1989 Bonds due May 1,20-69an+May 1,1ouq,,re subject to mandatory redemption prior to maturity as described herein. The Series 1989 Bond a being issued pursuant to a slut o y of the Constitution and laws of the State of Florida, including '9 Chapters 125 and 159, Florida Statutes, and other applicable provisions of law (the "Act") and Resolution No. 89-19, adopted by the County on February 14, 1989, as the same may be amended and supplemented (collectively, the "Resolution"). The proceeds of the Series 1989 Bonds together with certain other available funds of the County will be used to (i) retire certain bonds of the County held by Farmers Home Administration, United States Department of Agriculture ("FmHA") pursuant to loan agree- ments with the County, (ii) fund the Reserve Account established for the Series 1989 Bonds, and (iii) pay certain costs incurred in con- nection with issuance of the Series 1989 Bonds, all as more particularly described herein. The payment of the�rincipal of, and interest on the Series 1989 Bonds, when due, will be insured by a municipal bond insurance a policy to be issued by (,pti. simultaneously with the delivery of the Series 1989 Bonds. THE SERIES 1989 BONDS ARE LIMITED OBLIGATIONS OF INDIAN RIVER COUNTY, FLORIDA. THE SERIES 1989 BONDS ARE PAYABLE BY THE COUNTY FROM AND SECURED BY A LIEN UPON AND PLEDGE OF THE NET REV. a ENUES OF THE SYSTEM INCLUDING AMOUNTS ON DEPOSIT IN THE SINKING FUND, THE BOND AMORTIZATION `o ACCOUNT AND THE RESERVE ACCOUNT ESTABLISHED UNDER THE RESOLUTION, ALL AS DESCRIBED HEREIN. IT IS ANTICIPATED THAT SUCH LIEN AND PLEDGE OF THE NET REVENUES OF THE SYSTEM WILL IN THE FUTURE BE SUBORDINATE TO A LIEN TO BE GRANTED FOR CERTAIN BONDS TO BE ISSUED TO FmHA PURSUANT TO RESOLUTION 82-61 OF THE COUNTY AS FURTHER DESCRIBED HEREIN. ' NEITHER THE COUNTY, THE STATE OF FLORIDA NOR ANY POLITICAL SUBDIVISION THEREOF HAS PLEDGED ITS FAITH OR CREDIT OR TAXING POWER TO TILE PAYMENT OF THE SERIES 1989 BONDS. NO HOLDER OF THE SERIES 1989 BONDS SHALL EVER HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY AD VALOREM TAXING POWER OF THE COUNTY OR TAXATION IN ANY FORM OF ANY REAL PROPERTY THEREIN TO PAY THE SERIES 1989 BONDS OR THE INTEREST DUE THEREON NOR BE ENTITLED TO PAYMENT OF THE SERIES 1989 BONDS FROM ANY FUNDS OF THE COUNTY EXCEPT AS DESCRIBED HEREIN. MATURITIES, AMOUNTS, RATES AND YIELDS $}t6y5'000Serial Bonds e Principal Interest Yield or Principal Interest Yield or Due Amount Rate Price Due Amount Rate Price 1990 $Gs;000 6, toY ,00Y. 1996 $ 1o6,000 7•tc. Iob 1991 $ 1,),000 (,,$o too 1997 $ ,05, _1 10 Ills to. 0 1992 $ Iraq,% L.4o too 1998 $ ttS,Js% i, t5"y8 too 9 1993 $ Q,oat. (,,9S' too 1999 $ i1Sb00 1.toy► too 1994 $ OKV,65 7.ou ; 2000 $ ,10x000 7 t of 1995 $ 5{600 71.0E $ 4iS;ow 7.11o% Term bonds due May I,laOy —Price loo % $ t 0 000 'too % erm bonds due May I,xooy—Pricegq }'Lolo 'r4-76000. 1.407- (4rtA BeAJ- dva M �� ccruell interest to be added) ff ,ien, -is i, if y 11 I legality > s The Series 1989 Bonds vire offered when, as a ui i MgMand and received b the Underwriter, subject !o the approval o le alit ' b 3 Rhoads & Sinon, Boca Raton, Florida, Bond Counsel to the County. Certain legal matters will be passed upon for the County by Charles P. Vitunac, Esquire, County Attorney, and for the Underwriter by Gunter, Yoakley, Criser & Stewart, P.A., West Palm Beach, Florida. /t is expected that the Series 1989 Bonds will be available for delivery in New York, New York, in definitive form on or about May L 1989. d GULFSTREAM FINANCIAL ASSOCIATES, INC. A Kemper Financial Company Apnl1-1, 1989 � t 1' INDIAN RIVER COUNTY, FLORIDA Board of County Commissioners Gary C. Wheeler, Chairman Carolyn K. Eggert, Vice -Chairman Don C. Scurlock, Jr. Richard N. Bird Margaret C. Bowman Clerk of Court & Clerk of the Board of County Commissioners Jeffrey K. Barton County Administrator James E. Chandler County Attorney Charles P. Vitunac Director of Utilities Terrance G. Pinto Director of Management and Budget Joseph A. Baird Bond Counsel Rhoads & Sinon Boca Raton, Florida Financial Advisor Fishkind & Associates, Inc. Winter Park, Florida Certified Public Accountant Coopers & Lybrand Orlando, Florida i No dealer, sales representative or any other person has been authorized by the County or the Underwriter to give any information or to make any representation, other than those contained in this Official Statement -and, if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy and there shall be no sale of the Series 1989 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the County and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the Underwriter•or, as to information from other sources, the County. The information and the expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County since the date hereof or the earliest date as of which such information is given. THE UNDERWRITER HAS ADVISED THE COUNTY THAT IN CONNECTION WITH THE OFFERING OF THE SERIES 1989 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 1989 BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ii TABLE OF CONTENTS Page INTRODUCTION............................................ 1 PURPOSE... .. ... ...................... 2 .. .......... .. .. .. ESTIMATED SOURCES AND USES OF FUNDS ..................... 2 DESCRIPTION OF THE BONDS................................ 3 Terms .................................................. 3 REDEMPTION PROVISIONS................................... 3 Mandatory Redemption................................... 3 Optional Redemption.................................... 4 Notice of Redemption................................. 4 SECURITY AND SOURCES OF PAYMENT 5 Pledgeof Net Revenues................................. 5 Insurance.............................................. 7 RateCovenant .. .. ........................ 7 Flow of Funds for Series 1989 Bonds .................... 8 Flow of Funds Under Senior Lien Bond Resolution ........ 10 FUTURE FINANCING PLANS .................................. 12 Prior Pledge to and Lien for Series 1986 Bonds ......... 12 Issuance of Additional Parity Bonds .................... 12 MUNICIPAL BOND INSURANCE................................ 14 DEBT SERVICE SCHEDULE................................... 15 THESYSTEM .............................................. 15 General................................................ 15 SystemStaff .. ...................................... 16 Water and Sewer Customers .............................. 16 RateStructure......................................... 16 OutstandingDebt.................................... 17 Selected Financial Data ................................ 17 THE COUNTY.............................................. 19 Description............................................ 19 Government ........................................ 19 Population............................................. 20 Industry............................................... 21 Employment........................................... 22 Transportation......................................... 24 HealthCare....................................... 24 Education..... .. .................... 25 Communications and Electric Utilities .................. 25 SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION.......,,. 25 TAX EXEMPTION .... ... 30 Corporate Alternative Minimum Taxes; Environmental Tax; Branch Profits Tax................. 30 Financial Institutions' Cost of Carrying Tax-Exempt Bonds...................................... 31 Other Federal Income Tax Consequences................... 31 NON-ARBITRAGE BONDS...................................... 32 LITIGATION............................................ 32 RATINGS................................................. 32 iii UNDERWRITING ............................................. 33 LEGALITY.. ........................................... 33 MISCELLANEOUS.. .................................. 33 ADDITIONAL INFORMATION.. 34 AUTHORIZATION OF OFFICIAL STATEMENT ...................... 34 APPENDIX A - FINANCIAL STATEMENTS OF THE COUNTY.......... A-1 APPENDIX B - FORM OF OPINION OF BOND COUNSEL ............. B-1 APPENDIX C - SPECIMEN MUNICIPAL BOND INSURANCE POLICY ... C-1 APPENDIX D - CERTAIN DEFINED TERMS USED HEREIN .......... D-1 iv OFFICIAL STATEMENT 6lyto,000 INDIAN RIVER COUNTY, FLORIDA Water and Sewer Revenue Refunding Bonds, Series 1989 The purpose of this Official Statement, which includes the cover page and the appendices hereto, is to furnish information in connection with the sale by Indian River County, Florida (the "County") of ${-,4aggregate principal amount of its Water and Sewer Revenue Refundi Series 1989 (the "Series 1989 Bonds"). G s to 000 The Series 1989 Bonds are being issued pursuant to the authority of the Constitution and laws of the State of Florida, including Chapters 125 and 159, Florida Statutes, and other applicable provisions of law (the "Act") and Resolution No. 89-19, adopted by the County on February 14, 1989, as the same may be amended and supplemented (collectively, the "Resolution"). The Series 1989 Bonds were validated and confirmed by judgment of the 19th Judicial Circuit in and for Indian River County, Florida on March 27, 1989. The appeal period for validation of the Series 1989 Bonds expires on April 26, 1989. The Series 1989 Bonds and any additional obligations of the County issued on a parity with the Series 1989 Bonds pursuant to the Resolution are herein referred to as the "Bonds." The Series 1989 Bonds are limited obligations of Indian River County, Florida, payable by the,County from and secured by a lien upon and pledge of the Net Revenues of the System, including amounts on deposit in the Sinking Fund, the Bond Amortization Account and the Reserve Account established under the Resolution, all as described herein. It is anticipated that such lien and pledge of the Net Revenues of the System will in the future be subordinate to a lien on the revenues and receipts of the System to be granted to secure payment of certain bonds to be sold to FmHA pursuant to Resolution 82-61.of the County (the "Senior Lien Bond Resolution") and certain loan commitments between FmHA and the County. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986. Bonds." Neither the County,°the State of Florida nor any political subdivision thereof•.,has;pledged its faith or credit or taxing power to the payment 4f the Series 1989 Bonds. No holder of the Series 1989 Bonds shall.ever have the right to compel the exercise of any ad valorem taxing power of the County or taxation in any form of any real property.;t4erein to pay the Series 1989 Bonds or the interest due thereon nor be entitled to payment of the Series 1989 Bonds from any funds of the -County except as described herein. Terms not specifically defined herein shall have the meanings ascribed to such terms in.Appendix D attached hereto. PURPOSE The proceeds of Series 1989 Bonds together with certain other available funds of the County will be used to (i) retire the County's Water and Sewer Revenue Bonds, Series 1979, dated August 30, 1979, the Water and Sewer Revenue Bonds, Second Series 1979, dated May 21, 1981, the Water Revenue Bonds, Series 1980 (South County Water System), dated September 30, 1982, and the Water and Sewer Revenue Bonds, Series 1982, dated April 30, 1985 (collectively, the "Original Bonds") which are held in their entirety by Farmers Home Administration, United States Department of Agriculture ("FmHA") pursuant to loan agreements with the County, (ii) fund the Reserve Account established for the Series 1989 Bonds, and (iii) pay certain costs incurred in connection with issuance of the Series 1989 Bonds, all as more particularly described herein. The County has previously issued the Original Bonds to FmHA pursuant to (i) loan agreements to finance the costs of acquisition and/or construction of the System and, (ii) Resolution 82-61, as amended. As of April 1, 1989, the aggregate outstanding principal balance of the Original Bonds was $8,878,200. By letter dated January 10, 1989, FmHA has offered the County the opportunity to participate in FmHA's Discount Purchase Program for 1989. Under the Program, the County may purchase the outstanding Original Bonds at a discount from the remaining outstanding principal amount thereof, subject to certain conditions and restrictions. $ s'k31 418 y1 tie -'-�meuzr`c-raised-hereb will be used to retire the Original Bonds, ESTIMATED SOURCES AND USES OF FUNDS Sources: Principal Amount of Series 1989 Bonds $ G Y(b) 000,00 Accrued Interest ZSZ,33. 58 Other Available Funds tqi 019'.40 Total Sources t t� Uses Retire Original Bonds Deposit to Reserve Account Underwriters' Discount Issuance Expenses Municipal Bond Insurance Premium $ x,$54,268,543 xs-, z 3 3.St 33' U00-614 5�431,4,3%.4-1 5-(.4, 3 S4, 13 l 0q1 0 y2. SO lctJOTA1. R4 Ott, 306.16 Total Uses ( g1^f,268.58 DESCRIPTION OF THE BONDS The Series 1989 Bonds will bear interest at the rates, and shall mature in the years and amounts, set forth on the cover page hereto. The Series 1989,Bonds will be issued in fully registered. form in -denominations of $5,000 or integral multiples thereof. ' Interd`s`on the Series 1989 Bonds is payable semiannually on May 1 and November 1, commencing November 1, 1989, to the Registered Owner thereof from the interest payment date next preceding the date of registration and authentication thereof, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from such interest payment date; or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date first preceding November•1,-1989, in which -event such Bond shall bear interest from April IS , 1989; or (d) as shown by the records of the Paying Agent, interest on such Bond is in default, in which event such Bond shall bear interest from the date on which interest was last paid on such Bond, until the principal amount thereof is paid. The interest on the Series 1989 Bonds will be payable by check drawn on the Paying Agent and will be mailed to each Registered Owner thereof. Payment of the interest on the Series 1989 Bonds shall be made to the Registered Owners thereof whose names and addresses appear, at the close of business on the fifteenth (15th) day next preceding each interest payment date (the "Record Date") on the registration books maintained by the Paying Agent, unless the County is in default in the payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the persons in whose names the Series 1989 Bonds: are -.registered at the.close o.f.business on.a special record date-tfor. the payment of Such defaulted. ir%terest.established by notice mailed by the Paying Agent to the Registered Owners of the Series 1989 Bonds not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the persons in whose names the Series 1989 Bonds are registered at the close of business on the fifth (5th) day preceding the date of mailing. The principal of the Series 1989 Bonds will be payable upon surrender of the Series 1989 Bonds at the principal corporate trust office of the Paying Agent or any successor to the Paying Agent as paying agent under the Resolution. REDEMPTION PROVISIONS Mandatory Redemption The Series 1989 Bonds due May 1, 2oo4_ are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price equal to 100% of principal amount. Accrued interest is also payable on the redemption date. Mandatory Redemption Requirements Principal Principal Year Amount Year Amount -,00% -P IHo,000 -10o3 414401's L-6 2oou ►Sb,ode Zoog ►-►o The Series 1989 Bonds due May 1, 3.0oi are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price equal to 100% of principal amount. Accrued interest is also payable on the redemption date. Year goof 2.006 Mandatory Redemption Requirements Principal Amnunt 4 Z00-1 Optional Redemption 16S ow 200,000 2 lr, o 0% Principal Year Amount zoag 4.230,66 b 2405 Sa,000 The Series 1989 Bonds maturing on or after May 1, WAI , are subject to redemption at the option of the County in whole or, from time to time, in part, on May 1,1553, or on any date thereafter at the respective redemption prices expressed as percentages of the principal amount of the Series 1989 Bonds set forth below, plus accrued interest to the date of redemption. Redemption Redemption Period Price cc 4-, Willa i+tiry,il� NCA 30, 014 lvNa,I 1,, wti1 itivtu�� AP^� 3O1�o0 too J/'( Nt 4-, 'Loop aJA jt^e�ea r loo`► If fewer than all of the Series 1989 Bonds are to be so redeemed, the County may select the maturity or maturities to be redeemed. If fewer than all of the Series 1989 Bonds of any maturity are to be redeemed, the Bond Registrar will select by lot the particular Series 1989 Bonds or portions of Series 1989 Bonds (in fully registered form) of such maturity to be redeemed. The portion of any fully registered Series 1989 Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple of that sum. Notice of Redemption Notice of the intention to redeem the Bonds in whole or in part will be mailed by the Paying -Agent, by first class mail, to the Registered Owners of the Bonds to be redeemed in whole or in part not more than 45 days and not less than 30 days prior to the date fixed for redemption, at their respective addresses as shown on the registration books, in accordance with the terms of the Resolution. Such notice is to specify the series, maturities and numbers of Bonds to be redeemed (including the CUSIP number); the date fixed for redemption; the redemption price or prices applicable to the Bonds to be redeemed; and that on the date fixed for redemption such Bonds will be payable at the principal corporate trust office of the Paying Agent and that after such date interest shall cease to accrue on such Bonds. If holders or Registered Owners of all such Bonds to be redeemed file written waivers of notice with the Paying Agent, such Bonds may be redeemed on the redemption date without necessity of notice by mailing. Failure to mail any notice of redemption or any defect therein or in the mailing thereof will not affect the validity of any proceeding for redemption of other Bonds so called for redemption. SECURITY AND SOURCES OF PAYMENT Pledge of Net Revenues The Series 1989 Bonds are limited obligations of the County. The Series 1989 Bonds will be payable solely by the County from and secured by a lien upon and pledge of the "Net Revenues" of the System, together with such other revenues and funds which the County may choose to pledge by subsequent resolution as described below. Subject to the release of security as discussed below, "Net Revenues" for purposes of the Series 1989 Bonds means Revenues less Operating Expenses. "Revenues" as used herein means: (i) all receipts and revenues of the County derived from the imposition, collection and enforcement of uniform water and sewer service rates, fees and charges for the use of and the services furnished or to be furnished by the facilities constituting the System, including the earnings and interest income derived from the investment of moneys on deposit in various funds and accounts established in connection with the System, but excluding Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees (the "Uniform Charges"); (ii) such Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees as the County, by resolution, may pledge specifically in connection with the Series 1989 Bonds; and (iii) such other revenues of the County as the County, by resolution, may pledge specifically in connection with the Series 1989 Bonds. THE REVENUES PLEDGED IN CONNECTION WITH THE SERIES 1989 BONDS INCLUDE ONLY THE UNIFORM CHARGES OF THE SYSTEM AND DO NOT INCLUDE ANY SURCHARGES, IMPACT FEES, SPECIAL ASSESSMENTS, FRANCHISE FEES, FEES IN LIEU OF FRANCHISE FEES OR OTHER REVENUES OF THE SYSTEM. The County may, by resolution of the Board filed with the Clerk of the Board of County Commissioners, except and release from the foregoing pledge and lien, and the phrase "Revenues" as used in connection with the Series 1989 Bonds shall no longer include, the receipts and revenues of the County derived from the Uniform Charges for the use of and services furnished or to be furnished by any water and/or sewer facilities constituting a physically independent system of the County, or any Impact Fees, Special Assessments, Surcharges, Franchise Fees, Fees in Lieu of Franchise Fees or other receipts and revenues (other than Uniform Charges) theretofore pledged in connection with the Series 1989 Bonds, if there shall be filed with the Clerk of the Board of County Commissioners the following: (1) A certificate of an independent firm of certified public accountants of suitable experience and responsibility: (i) stating that the books and records of the County relating to the collection and receipt of the Revenues and the Operating Expenses have been audited by them for the Fiscal Year immediately preceding the date of the proposed release of such receipts and revenues from the pledge hereunder or for any twelve (12) consecutive month period out of the eighteen (18) consecutive months immediately preceding such date; (ii) setting forth the Revenues, the Uniform Charges, the Operating Expenses and the Net Revenues for the audited period referred to in (i) above, with respect to which such certificate is made; and (iii) stating that either: (a) the Uniform Charges less the Operating Expenses, adjusted to give effect to the proposed release of such receipts and revenues as if the same had occurred at the beginning of such audited period, were equal to at least times the largest amount of principal and interest which will mature and become due in any Fiscal Year thereafter on all Bonds then outstanding or (b) when Revenues include receipts and revenues in addition to the Uniform Charges, the Net Revenues, adjusted to give effect to the proposed release of such receipts and revenues as if the same had occurred at the beginning of such audited period, were equal to at least times the largest amount of principal and interest which will mature and become due in any Fiscal Year thereafter on all Bonds then outstanding. For purposes of (iii) above Revenues, Uniform Charges and Operating Expenses may be further adjusted so as to fairly represent the operation of the System, provided that the amount and a detailed reason for such adjustment is set forth in such certificate; and (2) A certificate of the Consulting Engineers stating that either: (i) the Uniform Charges less Operating Expenses, as each are estimated by the Consulting Engineers, for the first twelve (12) months following release of such receipt and revenues shall equal at least times the largest amount of principal and interest which will become due in any succeeding Fiscal Year on the Bonds or (ii) when Revenues include receipts and revenues in addition to the Uniform Charges, the Net Revenues, as estimated by the Consulting Engineers, for the first twelve (12) months following release of such receipt and revenues shall equal at least times the largest amount of principal and interest which will become due in any succeeding Fiscal Year on the Bonds; and (3) A certificate of the chief financial officer of the County stating that the County has established and will maintain a separate accounting of all revenues and expenses in connection with any such independent system or with respect to such Impact Fees, Surcharges, Special Assessments, Franchise Fees, Fees in Lieu of Franchise Fees or other receipts and revenues to be released, apart from the Pledged Funds. For purposes of the foregoing, payments during the Fiscal Year for: (i) principal and interest on senior lien bonds (the "Senior Lien Bonds") to be issued in the future to FmHA pursuant to the Senior Lien Bond Resolution ("Senior Lien Bonds Debt Service"), (ii) any renewal and replacement fund created in connection with the Senior Lien Bonds Resolution (the "Required Renewal Fund Payments") and (iii) any Reserve Account created in connection with the Senior Lien Bonds (the "Senior Lien Reserve Account Payments"), shall be treated as Operating Expenses. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Neither the County, the State of Florida nor any political subdivision thereof has pledged its faith or credit or taxing power to the payment of the Series 1989 Bonds. No holder of the Series 1989 Bonds shall ever have the right to compel the exercise of any ad valorem taxing power of the County or taxation in any form of any real property therein to pay the Series 1989 Bonds or the interest due thereon nor be entitled to payment of the Series 1989 Bonds from any funds of the County except as described herein. Insurance The scheduled payment of principal and interest on the Series 1989 Bonds will be insured by F G's.c The County has made no investigation and makes no representation with respect to and the policy, and reference should be made to the information under the caption "MUNICIPAL BOND INSURANCE" herein and Appendix C attached hereto for a description of and its specimen insurance policy. The material under said caption and in Appendix C has been furnished by F G T: c., Rate Covenant The County covenants in the Resolution to establish and maintain such Uniform Charges and, as applicable, such Surcharges, Impact Fees, Special Assessments, Franchise Fees, Fees in lieu of Franchise Fees and such other receipts and revenues in connection with the System, so as to always provide either of the following: (1) Uniform Charges less Operating Expenses sufficient to pay (a) one hundred percent (100%) of all required deposits into the Reserve Account, and (b) one hundred percent (100%) of the amount of principal and interest becoming due in such Fiscal Year on the Bonds outstanding, or (2) When the Revenues include receipts and revenues in addition to Uniform Charges, Net Revenues in each Fiscal Year sufficient to pay (a) one hundred percent (100%) of all required deposits into the Reserve Account, and (b) one hundred twenty percent (120%) of the amount of principal and interest becoming due in such Fiscal Year on the Bonds outstanding. For purposes of the foregoing rate covenant, Senior Lien Bonds Debt Service, Required Renewal Fund Payments and Senior Lien Bonds Reserve Account Payments shall be treated as Operating Expenses. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Flow of Funds for Series 1989 Bonds Under the Resolution, the County has covenanted that all Revenues shall upon receipt thereof be deposited in the "Water and Sewer Revenue Fund" (the "Revenue Fund"). The Revenues are subject to the prior pledge and lien granted with respect to the Senior Lien Bonds, when issued, under the Senior Lien Bond Resolution. Subject to the prior pledge and lien granted with respect to the Senior Lien Bonds and the flow of funds with respect thereto (See "SECURITY AND SOURCES OF PAYMENT - Flow of Funds under Senior Lien Bond Resolution"), all Revenues on deposit in the Revenue Fund for the Series 1989 Bonds shall be disposed of by the County subject to the following order of priority: (1) First, the County shall transfer in each month to the Operation and Maintenance•Fund the amount required to be deposited therein to pay.the Operating Expenses due or to become due for such month, provided, however, that credit shall be given for funding of such month's Operating Expenses under the Senior Lien Bond Resolution to fund an Operation and Maintenance Fund. (2) Second, the County shall deposit in each month to a fund to be known as the "Water and Sewer Revenue Bonds Sinking Fund" (the "Sinking Fund"), one-sixth (1/6th) of such sum as will be sufficient to pay interest on the Bonds as the same shall become due on the next interest payment date, together with the amount of any deficiency in prior deposits for interest on Bonds, and one -twelfth (1/12th) of the principal of Bonds maturing or subject to mandatory call for redemption on the next principal payment date with respect to the Bonds. Such deposits shall take into account the sums, if any, in the Bond Amortization Account (hereinafter defined) attributable to such payments and the sums, if any, deposited in the Sinking Fund out of proceeds from the sale of Bonds to pay interest thereon. In addition, there shall be deposited in the Sinking Fund amounts sufficient to pay the fees and charges of the Paying Agent. (3) Third, the County shall deposit into an account in the Sinking Fund to be known as the "Bond Amortization Account," such sums as are required by resolution of the County to be deposited therein at such times as are required thereby for each series of Term Bonds for purposes of the mandatory redemption thereof. (4) Fourth, the County shall deposit into an account in the Sinking Fund to be known as the "Reserve Account," a sum at least equal to and sufficient to pay the maximum amount of principal and interest on all outstanding Series 1989 Bonds becoming due in any ensuing Fiscal Year. A sum to be specified by subsequent resolution of the County will be deposited in the Reserve Account out of the proceeds of the sale of Series 1989 Bonds. To the extent the amount deposited in the Reserve Account out of the proceeds of the sale of the Series 1989 Bonds is less than the maximum amount of principal and interest on all outstanding Series 1989 Bonds becoming due in any ensuing Fiscal Year, the County will make such additional required payments or substitutions therefor as described herein. Provided, however, in no Fiscal Year shall Net Revenues in excess of twenty percent (20%) of the maximum amount of principal and interest on all outstanding Bonds becoming due in any ensuing Fiscal Year be required to be deposited in the Reserve Account. No further deposits shall be required to be made into the Reserve Account as long as there shall remain on deposit therein (including any Reserve Account insurance policy or letter of credit as described below) a sum equal to the maximum amount of principal and interest on all outstanding Bonds becoming due in any ensuing Fiscal Year. The value of the Reserve Account, including investments on deposit in the Reserve Account, shall be determined annually on the first day of the Fiscal Year by an independent firm of certified public accountants, who may be the accountants for the County, in accordance with generally accepted accounting principles. Notwithstanding the foregoing, in lieu of, in whole or in part, the required deposits into the Reserve Account, the County may cause to be deposited into the Reserve Account either an insurance policy issued by a reputable and recognized municipal bond insurer or a letter of credit from a bank or trust company whose municipal bond insurance policy or letter of credit will result in the highest rating of municipal obligations of either Moody's Investors Service or Standard & Poor's Corporation. Any such insurance policy or letter of credit shall be payable or available to be drawn upon, as the case may be (upon the giving of notice as required thereunder), on any interest payment date on which a deficiency exists which cannot be cured by money in any other fund or account held pursuant hereto and available for such purpose. If a disbursement is made under any such insurance policy or letter of credit, the County may reinstate the maximum limits of such insurance policy or letter of credit immediately following such disbursement, otherwise the amount of credit toward the Reserve Account requirement for such insurance policy or letter of credit shall be appropriately reduced. Furthermore, the County may at any time and from time to time cause to be deposited in the Reserve Account such an insurance policy or letter of credit and cause an appropriate amount to be withdrawn from the Reserve Account and released to the County. Moneys in the Reserve Account shall be used only for the purpose of the payment of maturing principal of or interest on Bonds when the other moneys in the Sinking Fund are insufficient therefor, and for no other purpose. However, upon the valuation of the Reserve Account in each year, if the moneys applied and allocated to the Reserve Account (except the investment income thereon) exceed the amount required, such excess may be withdrawn and released to the County. (5) Fifth, moneys in the Revenue Fund shall be applied to the payment of current debt service and reserve requirements of any obligations of the County issued to finance the cost of additions, acquisition, extensions and improvements to the System which are junior and subordinate to the lien of the Series 1989 Bonds on the Pledged Funds. (6) Sixth, the balance of any moneys remaining in the Revenue Fund after the above required payments have been made may be (a) deposited into a special fund to be known as the "Sewer and Water Renewal and Replacement Fund," which shall be used only for the purpose of paying the costs of extensions, enlargements, or additions to or the replacement of capital assets of the System, and for emergency repairs thereto or (b) used by the County for any lawful purpose. No further deposits to the Sinking Fund, the Bond Amortization Account or the Reserve Account shall be required when the aggregate sums deposited therein are and remain at least equal to the sum of all of the principal and interest then due and thereafter becoming due in all ensuing years for the Series 1989 Bonds then outstanding. Flow of Funds under Senior Lien Bond Resolution While any Senior Lien Bonds are outstanding, the gross revenues and receipts of the System pledged for payment of the Senior Lien Bonds, which include the Revenues pledged in connection with the Series 1989 Bonds, will be utilized by the County in the following order of priority before the Revenues are available under the Resolution for payment of the Series 1989 Bonds or any Additional Parity Bonds: 10 (1) First, the County shall transfer each month to the sinking fund for the Senior Lien Bonds created under the Senior Lien Bond Resolution, if any Senior Lien Bonds are then outstanding, the amount required by the Senior Lien Bond Resolution to be deposited therein monthly to provide for timely payment of the principal and interest on the Senior Lien Bonds currently becoming due and payable. (2) Second, while any Senior Lien Bonds are outstanding, the County shall transfer and deposit to the credit of the reserve account in the Sinking Fund for the Senior Lien Bonds under the Senior Lien Bond Resolution, the sum of 1/12 of 10% of the "Maximum Bond Service Requirement," as that phrase is defined in the Senior Lien Bond Resolution, on the Senior Lien Bonds until such time as the funds and investments therein shall equal such Maximum Bond Service Requirement, and monthly thereafter such amount as may be necessary to maintain in such reserve account the Maximum Bond Service Requirement, but not exceeding 1/12 of the Maximum Bond Service Requirement monthly. In connection with Senior Lien Bond Resolution and the Senior Lien Bonds, the County may be required to fully fund the Maximum Bond Service Requirement prior to making any payment with respect to the Series 1989 Bonds. Under the Resolution, the County has covenanted that in such event it will promptly fully fund such Maximum Bond Service Requirement of the Senior Lien Bonds with available revenues and funds other than the Revenues pledged to secure the Series 1989 Bonds. (3) Third, the County shall transfer in each month to the Operation and Maintenance Fund the amount required to be deposited therein to pay the Operating Expenses due or to become due for such month. (4) Fourth, while any Senior Lien Bonds are outstanding, the County shall transfer and deposit into a special fund to be known as the "Indian River County Water and Sewer System Renewal and Replacement Fund," an amount equal to 1/12 of 5% of the gross revenues of the System (excluding Impact Fees) for the preceding Fiscal Year. Such fund shall be used only for the purpose of paying the cost of extensions, enlargements, improvements or additions to or the replacement of capital assets of the System, and for emergency repairs thereto. Impact Fees on deposit in the Renewal and Replacement Fund shall only be used to pay the cost of extensions, enlargements, improvements or additions to the System made necessary by the inclusion of new customers of the System. (5) Fifth, the balance of any moneys remaining after the above required payments have been made may be used by the County for any lawful purpose. 11 FUTURE FINANCING PLANS Prior Pledge to and Lien for Series 1986 Bonds In December 1987 the County issued 6 3/8% Water and Sewer Revenue Bonds, Anticipation Notes in an aggregate principal amount of $9,200,000 ("1986 Anticipation Notes") in anticipation of the receipt by the County of the proceeds from the sale of its $9,200,000 Water and Sewer Revenue Bonds, Series 1986 (the "Series 1986 Bonds"). The County currently anticipates that the Series 1986 Bonds will be sold to FmHA pursuant to the laws of the State of Florida, Resolution No. 86-35 and the Senior Lien Bond Resolution, as amended and supplemented (collectively, the "Series 1986 Bond Resolution"), and certain Letters of Condition between FmHA and the County ("FmHA Letters of Condition"), on or prior to December 1, 1990. Pursuant to the Series 1986 Bond Resolution and the FmHA Letters of Condition the County anticipates that it will pledge to, and grant a lien on, the revenues and receipts of the System for payment of the Series 1986 Bonds when issued, with such pledge and lien being senior to the pledge of, and lien on, the Net Revenues of the System for payment of the Series 1989 Bonds. FmHA has also issued a commitment to provide a $450,000 loan to the County for the purchase and improvement of a utility system in the "Bent Pine" area of the County, subject to fulfillment by the County of certain conditions (the "Bent Pine Commitment"). Any bonds sold to FmHA issued by the County in connection with the Bent Pine Commitment would likely involve a pledge of, and grant of a lien on, the revenues and receipts of the System, which pledge and lien would also be senior to the pledge of, and lien on, the Net Revenues of the System granted to secure payment of the Series 1989 Bonds. Other than bonds sold to FmHA as described above (the "Senior Lien Bonds"), the County shall not issue any other bonds or obligations senior to or having priority to the Net Revenues of the System pledged for payment of the Series 1989 Bonds. Issuance of Additional Parity Bonds Additional Parity Bonds, payable on a parity from the Net Revenues with the Series 1989 Bonds, may be issued from time to time to finance any portion of the costs of the construction and/or acquisition of additions, extensions and improvements to the System, or of any physically separate water or sewer system declared by resolution of the Board to be part of the System, or for refunding purposes, in the manner provided and upon compliance with both of the following conditions: (1) There shall have been obtained and filed with the County a certificate of an independent firm of certified public accountants of suitable experience and responsibility: (i) stating that the books and records of the County relating to the collection and receipt of the 12 Revenues and the Operating Expenses have been audited by them for the Fiscal Year immediately preceding the date of sale of the proposed obligations or for any twelve (12) consecutive month period out of the eighteen (18) consecutive months immediately preceding the date of sale of the proposed obligations; (ii) setting forth the Revenues, the Uniform Charges, the Operating Expenses and the Net Revenues for the audited period referred to in (i) above, with respect to which such certificate is made; and (iii) stating that either: (a) the Uniform Charges less Operating Expenses, as adjusted as hereinafter provided, were equal to at least times the largest amount of principal and interest which will mature and become due in any Fiscal Year thereafter on all Bonds then outstanding, excluding the proposed Additional Parity Bonds or (b) when Revenues include receipts and revenues in addition to the Uniform Charges, the Net Revenues, as adjusted as hereinafter provided, were equal to at least times the largest amount of principal and interest which will mature and become due in any Fiscal Year thereafter on all Bonds then outstanding, excluding the proposed Additional Parity Bonds. For purposes of (iii) above Revenues, Uniform Charges and Operating Expenses may be adjusted so as to fairly represent the operation of the System, provided that the amount and a detailed reason for each such adjustment is set forth in such certificate; and (2) There shall have been obtained and filed with the County a certificate of the Consulting Engineers stating either: (i) the Uniform Charges less Operating Expenses, as each are estimated by the Consulting Engineers, for the first twelve (12) months following completion of the project for which the Additional Parity Bonds are being issued shall equal at least times the largest amount of principal and interest which will become due in any succeeding Fiscal Year on the Bonds, including the proposed Additional Parity Bonds or (ii) when Revenues include receipts and revenues in addition to the Uniform Charges, that the Net Revenues, as estimated by the Consulting Engineers, for the first twelve (12) months following completion of the project for which the Additional Parity Bonds are being issued shall equal at least times the largest amount of principal and interest which will become due in any succeeding Fiscal Year on the Bonds, including the proposed Additional Parity Bonds. For purposes of the foregoing, Senior Lien Debt Service, Required Renewal Fund Payments and Senior Lien Bonds Reserve Account Payments shall be treated as Operating Expenses. See "FUTURE FINANCING PLANS - Prior Pledge to and Lien for Series 1986 Bonds." Additional Parity Bonds may not be issued at any time at which the County is in default in performing any of the covenants and obligations under the Resolution, or all payments herein required to 13 have been made into the accounts and funds, as provided under the Resolution, have not been made to the full extent required. The foregoing conditions shall not apply with respect to Additional Parity Bonds the proceeds of which will be used to complete a project a substantial portion of the cost of which has been or will be paid out of the proceeds of Bonds issued under the Resolution. The County presently has outstanding an aggregate of $3,900,000, 6 7/8% Water Revenue Bonds, Series 1988, Anticipation Notes due December 1, 1991 (the "1988 Anticipation Notes"). Such Notes were issued in anticipation of the receipt by the County of the proceeds from the future sale of its Water Revenue Bonds, Series 1988 which have been authorized in an amount up to $4,000,000 (the "Series 1988 Bonds"). The County expects that the Series 1988 Bonds will be sold at public or private sale pursuant to the laws of the State of Florida and Resolution No. 88-44 duly adopted by the County on August 2, 1988, as amended and supplemented from time to time, on or prior to the maturity of the 1988 Anticipation Notes. Upon issuance, the Series 1988 Bonds will be either (i) payable on a parity from the Net Revenues with the Series 1989 Bonds or (ii) payable from and secured by a pledge of and lien upon the Surcharges from the North Beach Water System operations of the System, which Surcharges are not included in the Net Revenues pledged in the Resolution as of the date hereof. MUNICIPAL BOND INSURANCE [To Be Furnished] 14 DEBT SERVICE SCHEDULE The following table presents the annual debt service requirements of the County for the Series 1989 Bonds: Year Ending September 30, 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total General Principal 5 Interest THE SYSTEM Total $ The County owns and operates water and sewer systems (collectively, the "System"), which were established in 1978. The County provides water and sewer services to a portion of the County's population, with a majority of the other County residents 15 being serviced by private wells and septic tanks and the City of Vero Beach, Florida, which operates its own water and sewer systems. The County presently operates two water plants, the South County plant ("South County Plant") and the North Beach plant ("North Beach Plant"). The water plants have a present nominal capacity of 3 million gallons per day ("MGD"). In addition, the County purchases 750,000 gallons of water per day from the City of Vero Beach, Florida. The County is currently expanding the storage capacity of the South County Plant to 5 million gallons, which expansion is expected to be completed by the summer of 1989. Also under construction is a transmission line connecting different areas of the County's water system. On November 1, 1988, the County consummated the purchase of the business and assets of the North Beach Water Company consisting of the North Beach Plant and a distribution system in the northern portion of the County ("NBWC System"). The County's sewer system currently consists of four small wastewater plants and two regional plants. The County also has the right to have treated up to 1.39 MGD at the municipally -owned Vero Beach wastewater plant. The County is expanding each of its regional plants from a treatment capacity of 1 MGD to a capacity of 2 MGD, with completion of such expansion expected in 2 years. System Staff The System presently employs 58 persons. The System is managed by Terrance G. Pinto, Director of Utilities. It is the opinion of management that the System enjoys excellent labor relations. Water and Sewer Customers The number of County water and sewer customers, expressed as the number of equivalent residential units ("ERUs"), for the years 1984-1988 is set forth below: October 31 1984 1985 1986 1987 1988 Water ERUs 5,701 6,832 9,827 11,193 12,005 Sewer ERUs 3,351 3,437 8,824 9,339 9,552 The NBWC System presently provides approximately 2,000 additional Water ERUs. Rate Structure Rates charged by the County for water service and sewer service are charged upon reservation of such service. For water service the County charges a $1.82 billing charge per connection, a $5.34 base 16 facility charge per ERU per month and $1.99 volume charge per 1,000 gallons of water consumption. For sewer service the billing charge is $1.84 per connection, the base facility charge is $1.53 per ERU per month and the volume charge is $2.86 per 1,000 gallons of water consumption. Since February 1, 1987 a 6% surcharge has been added to the current monthly charge. in addition, customers of the NBWC System are charged up to an additional $13.00 surcharge per ERU per month. Outstanding Debt As of February 28, 1989, there was an aggregate of $21,978,200 principal amount of indebtedness of the County outstanding in connection with the System, consisting of (i) $8,878,200 outstanding principal amount of the Original Bonds, (ii) $9,200,000 outstanding principal amount of the 1986 Anticipation Notes, and (iii) $3,900,000 principal amount of 1988 Anticipation Notes. Selected Financial Data The following table sets forth selected financial data for the System for the Fiscal Years ended September 30, 1984 through September 30, 1988. The data has been derived from the Water and Sewer System Fund and are summaries of (i) audited financial statements for the Fiscal Years ended September 30, 1984 and September 30, 1985 which were examined and reported on by May Zima & Co., Daytona Beach, Florida, which was acquired by Arthur Young & Company in 1986, (ii) the audited financial statements for Fiscal Year ended September 30, 1986 examined by Arthur Young & Company, Daytona Beach, Florida, and (iii) the audited financial statements for Fiscal Years ended September 30, 1987 and September 30, 1988 examined by Coopers & Lybrand, Orlando, Florida. 17 Annual Debt rvi (3) Original Bonds 576 414 521 546 547 Series 1989 Bonds 550+ Estimated Debt Service Coverage 1.81 1.91 1.95 3.15 3.13 2.59 (1) From Indian River County, Florida, Office of Management and Budget (2) "Revenues" as used herein has the same meaning as ascribed in the Resolution. (3) Does not include interest on the 1986 Anticipation Notes or the 1988 Anticipation Notes, which interest has been capitalized. t Preliminary, Subject to Change. The County attributes the increase in revenues for the fiscal years ended September 30, 1984 through September 30, 1988 primarily to growth of the System. The County also receives Impact Fees in connection with the operation of the System. Impact Fees are not pledged as a security for the Series 1989 Bonds. While the County may pledge the Impact Fees in the future, the County presently has no intention to pledge 18 SUMMARY OF REVENUES OF THE SYSTEM Fiscal Years Ended September 30 - Audited Projected (1) 14$4 1985 12@5 19187 12@Q 14$4 (thousands of dollars) Revenues (2) Operating $1,847 $1,948 $2,452 $3,118 $3,531 3,750 Interest Income 302 241 355 373 536 350 Total Revenues 2,149 2,189 2,807 3,491 4,067 4,100 Operating and Maintenance Expenses Personal Services 445 481 544 684 800 1,035 Materials, Supplies and Other 660 918 1.247 1.083 1.557 1.640 Total Expenses 1,105 1,399 1,791 1,767 2,537 2,675 Net Revenues Available for Debt Service 1,044 790 1,016 1,724 1,710 1,425 Annual Debt rvi (3) Original Bonds 576 414 521 546 547 Series 1989 Bonds 550+ Estimated Debt Service Coverage 1.81 1.91 1.95 3.15 3.13 2.59 (1) From Indian River County, Florida, Office of Management and Budget (2) "Revenues" as used herein has the same meaning as ascribed in the Resolution. (3) Does not include interest on the 1986 Anticipation Notes or the 1988 Anticipation Notes, which interest has been capitalized. t Preliminary, Subject to Change. The County attributes the increase in revenues for the fiscal years ended September 30, 1984 through September 30, 1988 primarily to growth of the System. The County also receives Impact Fees in connection with the operation of the System. Impact Fees are not pledged as a security for the Series 1989 Bonds. While the County may pledge the Impact Fees in the future, the County presently has no intention to pledge 18 Impact Fees as security for the Series 1989 Bonds. Impact Fees for the last five fiscal years ending September 30 are as follows: Fiscal Impact Fees Year (000's) 1984 $ 178 1985 1,867 1986 1,092 1987 1,739 1988 2,852 1989 (Projected) 1,400 The following information has been provided by the County and is included only for the purpose of general background information. The Bonds are not general obligations of the County and are payable only from the specific sources described in this Official Statement, See "DESCRIPTION OF THE BONDS" and "SECURITY AND SOURCES OF PAYMENT". Description Indian River County (the "County") was established in 1925 by an Act of the Legislature separating it from St Lucie County. The County encompasses approximately 497 square miles and is located in the middle of Florida on the eastern coast, approximately 135 miles north of Miami, 190 miles south of Jacksonville, and 135 miles east of St, Petersburg. The County is bounded on the north by Brevard County, on the south by St, Lucie County, on the west by Osceola and Okeechobee Counties and on the east by the Atlantic Ocean. The City of Vero Beach is the seat of County government and the largest city in the County. Other incorporated cities located within the County are Fellsmere, Indian River Shores, Orchid and Sebastian. There are approximately 100 miles of waterfront land in the County, including about 23 miles of Atlantic beaches. Government Indian River County has a five -member Board of County Commissioners (the "Commission"). Each member represents one of five districts, elected at large (County -wide) for staggered terms of four years. The Chairman and Vice -Chairman are elected by the Commission. A County Administrator is appointed by the Board and is responsible for administrative and fiscal control of the resources 19 of the County. The following is a list of the Commissioners and the expiration of their respective term. Name Office Term Expires Gary C. Wheeler Chairman November, 1990 Carolyn K. Eggert Vice Chairman November, 1990 Don C. Scurlock, Jr. Member November, 1992 Richard N. Bird Member November, 1992 Margaret C. Bowman Member November, 1992 The Commission apportions and levies County taxes and controls the expenditure of all County funds, except schools which are controlled by the School Board of Indian River County. The budget year of the County runs from October 1 to the following September 30. Operating revenue is raised from ad valorem taxes, real and personal property taxes, user fees with supplements from state and federal sources. The Commission operates a County Road System and has power to establish, build, maintain, repair, protect and preserve these public facilities. Other elected officials serving County -wide are a Property Appraiser, Tax Collector, Supervisor of Elections, Sheriff and Clerk of the Circuit Court who is also Ex -Officio Clerk of the Board of County Commissioners. Population The 1980 Census population of the County was 59,896, while the estimated 1988 population was 87,313, an increase of 46%. Vero Beach, the largest city in the County, and the County Seat, had a 1980 Census population of 16,176 and an estimated 1988 population of 17,783. In 1980, Indian River County ranked twenty-eighth out of 67 counties in Florida in terms of total population, representing 0.61% of the total state population at that time. As illustrated in the following table, the population of the County has more than tripled since 1960. It is anticipated that the growth of the County will continue. 20 Year Population % Increase 1930 6,724 -- 1940 8,957 33% 1950 11,872 33 1960 25,309 113 1970 35,992 42 1980 59,896 66 1985 76,442 28 1986 80,023 5 1987 83,515 4 1988 87,313 5 Source: U.S., Census and University of Florida, Bureau of Economic and Business Research While the population of the County has been steadily increasing, so has the median age of the resident population. The number of persons age 18-44 is the largest age category. The following table illustrates the percentage of population in the various age groups for 1986. Age Group 1986 0-17 15,853 18-44 26,758 45-64 18,411 65+ 19,001 Components of Population Change 1980 Census ...................................... 1986 ............................................ TotalChange ................................. Components of Change due to Natural Increase...... Components of Change due to Net Migration ........ Percentage of Change due to Natural increase...... Percentage of Change due to Net Migration......... 19.8% 33.4 23.0 23.8 59,896 80,023 20,127 337 19,790 1.67% 98.33% Source: Bureau of Economic Analysis, Florida Department of Commerce. Industry The economy of the County is based upon agriculture (citrus and cattle), tourism, light manufacturing, wholesale and retail trade and commercial fishing. The Florida Crop and Livestock Reporting Service reports that in the 1987-1988 crop year Indian River County had 65,162 acres of citrus which produced 22,408,000 boxes of oranges, grapefruit and specialty fruit. The County was third among all Florida counties 21 in total citrus production, but second in grapefruit production. Part of the citrus fruit is sold to the fresh fruit market, and there are also 21 major packing houses and one citrus juice processing plant located in the County. Approximately 62,208 acres of improved pasture and rangelands are utilized for dairy farming and beef cattle production, while approximately 44,100 acres remain as forest and woodlands. The largest manufacturer in the County is the Piper Aircraft Corporation, which currently has approximately 1,450 employees involved in the manufacture and sale of light aircraft and related services. The Piper plant is located adjacent to the Vero Beach Airport. Fellsmere Joint Venture has extensive citrus and cattle interests in the County, employing approximately 600 persons at the peak of the citrus season. Their agricultural properties, including a citrus packing plant, are located west of Fellsmere in the central part of the County. Other industries include lumber and millwork plants, cabinet and Millwork plants, machine shops, welding shops, sheet metal fabricators, mattress ticking, mattress and springs, thermostats, aircraft instruments, steel and wood truss construction, architectural and ornamental iron works, stone and marble products, asphalt plant, pilot training school, welding school, television antennas, wholesale seafood, metal windows and awnings, printing, air handling systems, ready mix concrete, concrete blocks, precast concrete products, electronic components, plating and machine shop equipment, screw machine parts, aircraft parts and supplies, factory built homes, dairy products, newspaper, radio stations and temperature controls. Twelve banks, eight savings and loan associations and nineteen securities brokerage offices provide financial services within the County. The Atlantic beaches and the excellent climate in the County provide the basis for a year-round tourist industry. There are numerous hotels and motels in the County as well as retail and service establishments geared to serving the tourist trade. Forty-six miles of riverfront on the Indian River, many miles of canals and lakefront and about 23 miles of Atlantic Ocean beaches as well as two state parks, five county parks, and eight public and six private golf courses provide ample opportunity for outdoor recreation. The Los Angeles Dodgers baseball club trains at Dodgertown. The 340 -acre complex is also home to the largest and most advanced baseball school in the world. Employment Indian River County employment fluctuates seasonally with most unemployment occurring from July through October, the slower months in both the tourist and citrus picking seasons. 22 Employment by sector for the calendar year 1987 is as follows: Source: State of Florida, Department of Labor and Employment Security. Major employers in Indian River County and their approximate current level of employment are as follows: Establishment Percent of Category Distribution Agriculture ....................... 12.1% Manufacturing ..................... 6.9 Construction .... ... .... .. 9.8 Transportation, Communications & School system Utilities .................... 2.7 Wholesale Trade ................... 1.7 Retail Trade ...................... 24.2 Finance, Insurance & Real Estate... 5.7 Services ......................... 30.2 Government ........................ 6.7 1081 100% Source: State of Florida, Department of Labor and Employment Security. Major employers in Indian River County and their approximate current level of employment are as follows: Establishment Product or Service Employment Piper Aircraft Corporation Light aircraft 1450 manufacturer Indian River County School system 1265 School District Indian River County County government 1090 Indian River Memorial Hospital M6didal s6rviagt 1081 Fellsmere Management Citrus & Cattlo 600 City of Vero Beach City government 496 Humana Hospital Sebastian Acute care facility 312 Publix Corporation Retail grocery 280 Indian River Exchange Packers Citrus 276 K -Mart Corporation General merchandise 230 Source: Indian River County. 23 The following table sets forth County per capita income and compares the annual average unemployment rate in the County compared to the State of Florida and national annual averages. Per Capita Fiscal Population Income Year Ended (1) (2) Annual Annual Annual Average Average Average Unemployment Unemployment Unemployment Rate - Rate - Rate - County (3) State (3) National (3) 1978 53,300 $ 8,021 8.6% 6.6% 6.1% 1979 56,800 8,864 8.5 6.0 5.8 1980 59,896 9,917 8.7 5.9 7.1 1981 63,100 11,891 8.9 6.8 7.6 1982 66,915 11,909 12.4 8.2 9.7 1983 69,414 12,285 14.0 8.6 9.5 1984 74,162 13,527 9.0 6.3 7.2 1985 76,442 15,362 9.0 6.2 7.3 1986 80,023 15,895 9.2 5.8 7.1 1987 83,515 17,033 8.7 5.4 6.4 1988 87,313 17,745 7.2 5.0 5.5 Sources: (1) U.S. Census and Bureau of Economic and Business Research, University of Florida. (2) U.S. Department of Commerce, Bureau of Economic Analysis, Unpublished Data. (3) Florida Department of Labor and Employment Security Bureau of Research and Information. N/A - Not Available. Transportation Rail transportation in the County is handled by Florida East Coast Railway, while numerous freight truck lines are available to serve the County. Highways providing surface travel are Interstate 95, U.S. 1 and State Road AlA for north -south travel and State Road 60 for travel to the west, while the Florida Turnpike courses south and northwest through the southwest corner of the County. The area is served by Greyhound Bus Lines for passenger and package service. Vero Beach Municipal Airport provides scheduled airline service to County citizens, while one other airport in the County serves both charter and private aircraft. Health Care The Indian River Hospital District, encompassing all but six square miles of the County, has a 347 -bed facility in Vero Beach. The Humana Hospital Sebastian, a private for profit acute care 24 facility, is located in the northern part of the County on U.S. 1. There are presently over 150 physicians serving the hospitals and area residents. The Sunshine Rehabilitation Center offers physical and speech therapy to handicapped children and adults. Education The education system is administered on a County -wide basis by the School Board of Indian River County. The five -member Board, elected for staggered four-year terms each, appoints a Superintendent of Schools. The County has twelve elementary schools, one middle -junior school, two middle schools, one junior high and one senior high. There is one Special Education School for all grades. Enrollment for the 1988-89 school year is 10,802 students. There are 1,265 instructional and non -instructional personnel with 732 teachers. In addition to the public school system, there are several parochial and private schools. The Indian River Community College, with its main campus located in Ft. Pierce, about 15 miles from Vero Beach, has branch campuses in Vero Beach and in Okeechobee and Martin Counties. The state -supported community college offers a general college program for the first two years and a wide variety of technical and vocational instruction. The Mueller Center in Vero Beach has a 40 -acre campus, ten classrooms and office facilities. Communications and Electric Utilities One daily newspaper is published in the County. There are five local radio stations. Telephone service is supplied by Southern Bell. Vero Beach Electric System and Florida Power & Light Company supply electricity. SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION The following constitutes a summary of certain provisions of the Resolution. This summary does not purport to be a complete description of the terms of the Resolution and accordingly, is qualified by reference thereto and subject to the full text thereof. Copies of the Resolution may be obtained from the County. The covenants of the County set forth in the Resolution are subject to any stricter covenants which may be imposed upon the County in the Senior Lien Bond Resolution, which shall be observed while any Senior Lien Bonds are outstanding. Retirement of Original Bonds. The Resolution authorizes the County to purchase and redeem the Original Bonds with proceeds of the Series 1989 Bonds pursuant to and as more fully described in the letter dated January 10, 1989, to the County from FmHA, the holder of the Original Bonds. 25 jrbitracre and Tax Covenants. The County covenants in the yn that it will make no use of the proceeds of the Series is which would cause the Series 1989 Bonds to be "arbitrage ithin the meaning of Section 103(b)(2) and Section 148 of nal Revenue Code of 1986, as amended, and it will comply other requirements of applicable provisions of the Internal 'ode of 1986, as amended. cation of the Bond Proceeds. All moneys received from the He Series 1989 Bonds shall be deposited and applied by the follows; 1;1) All accrued interest on the Series 1989 Bonds shall be .into the Sinking Fund and applied exclusively for the f interest first becoming due on the Series 1989 Bonds. 1;2) A sum, if any, specified by subsequent resolution of Sf shall be deposited into the Reserve Account in the land. 1;3) The amount necessary to purchase and redeem all of the ng Original Bonds shall be paid to the FmHA. (4) Next, the amount necessary to pay all engineering t:s and expenses of financial reports, studies and tis, legal fees, fees of financial advisors, insurance costs of the issuance of the Series 1989 Bonds, and all alar costs incurred in connection with the retirement of real Bonds and the issuance of the Series 1989 Bonds shall r provided for. r any reason any proceeds of the Series 1989 Bonds are not for or are not applied to the payment of such costs, then ;Vrs shall be deposited by the County into the Sinking Fund anly to pay the principal of and interest on the Series ante Account is established wherein amounts sufficient to aLited States of America all amounts due with respect to the 819 Bonds under the provisions of Section 148(f) of the kevenue Code of 1986, as amended, or under similar ,s of subsequent Federal revenue laws will be transferred funds and accounts created under the Resolution. tments. All moneys in all funds and accounts created by Ytion, including without limitation, the Revenue Fund, the and, the Bond Amortization Account and the Reserve Account, -cured in the manner by which deposits of public funds are 1, to be secured by State law and may be invested only in �stments specified in Section 125.31 Florida Statutes (the �d Investments"). Moneys on deposit in the Revenue Fund Inking Fund (except the Reserve Account therein) may be Ind reinvested only in Authorized Investments maturing not I. the date on which the proceeds thereof will be needed. 26 Non -Arbitrage and Tax Covenants. The County covenants in the Resolution that it will make no use of the proceeds of the Series 1989 Bonds which would cause the Series 1989 Bonds to be "arbitrage bonds" within the meaning of Section 103(b)(2) and Section 148 of the Internal Revenue Code of 1986, as amended, and it will comply with all other requirements of applicable provisions of the Internal Revenue Code of 1986, as amended. Application of the Bond Proceeds. All moneys received from the sale of the Series 1989 Bonds shall be deposited and applied by the County as follows; (1) All accrued interest on the Series 1989 Bonds shall be deposited into the Sinking Fund and applied exclusively for the payment of interest first becoming due on the Series 1989 Bonds. (2) A sum, if any, specified by subsequent resolution of the County shall be deposited into the Reserve Account in the Sinking Fund. (3) The amount necessary to purchase and redeem all of the outstanding Original Bonds shall be paid to the FmHA. (4) Next, the amount necessary to pay all engineering fees, costs and expenses of financial reports, studies and projections, legal fees, fees of financial advisors, insurance premiums, costs of the issuance of the Series 1989 Bonds, and all other similar costs incurred in connection with the retirement of the Original Bonds and the issuance of the Series 1989 Bonds shall be paid or provided for. If for any reason any proceeds of the Series 1989 Bonds are not necessary for or are not applied to the payment of such costs, then such moneys shall be deposited by the County into the Sinking Fund and used only to pay the principal of and interest on the Series 1989 Bonds. A Rebate Account is established wherein amounts sufficient to pay the United States of America all amounts due with respect to the Series 1989 Bonds under the provisions of Section 148(f) of the Internal Revenue Code of 1986, as amended, or under similar provisions of subsequent Federal revenue laws will be transferred from the funds and accounts created under the Resolution. Investments. All moneys in all funds and accounts created by the Resolution, including without limitation, the Revenue Fund, the Sinking Fund, the Bond Amortization Account and the Reserve Account, must be secured in the manner by which deposits of public funds are authorized to be secured by State law and may be invested only in those investments specified in Section 125.31 Florida Statutes (the "Authorized Investments"). Moneys on deposit in the Revenue Fund and the Sinking Fund (except the Reserve Account therein) may be invested and reinvested only in Authorized Investments maturing not later than the date on which the proceeds thereof will be needed. 26 Moneys in the Reserve Account may be invested and reinvested in Authorized Investments maturing not later than five (5) years from the date of purchase. Except as may be provided in a resolution adopted in connection with the issuance of Additional Parity Bonds, any and all income from such investments shall be deposited into the Rebate Account to the extent required and the excess, if any, into the Revenue Account. Defeasance. If at any time the County shall have paid, or shall have made provision for the payment of, the principal, interest and premiums, if any, with respect to any of the Series 1989 Bonds, then, and in that event, the pledge of and lien on the Pledged Funds in favor of the Registered Owners of such Bonds shall no longer be in effect. The Resolution provides that, for purposes of the preceding sentence, the deposit of sufficient cash and/or direct obligations of the United States or obligations the principal of and interest on which are fully guaranteed by the United States, none of which permit redemption prior to maturity at the option of the obligor ("Federal Securities"), or bank certificates of deposit fully secured as to principal and interest by Federal Securities (or deposit of any other securities or investments which may be authorized by law from time to time and sufficient under such law to effect such a defeasance) in irrevocable trust with a banking institution or trust company, for the sole benefit of the Holders, the principal of and interest on which will be sufficient to pay when due the outstanding Series 1989 Bonds, shall be considered "provision for payment". Events of Default: Remedies. No event of default is expressly stated in the Resolution. In addition, no trustee has been appointed under the Resolution to enforce any failure by the County to pay principal of or interest on the Series 1989 Bonds, when due, or to enforce any remedies provided by the Resolution to the holders of the Series 1989 Bonds. Any Holder of any Series 1989 Bond may either at law or in equity by suit, action, mandamus or other proceeding in any court of competent jurisdiction, protect or enforce any and all rights existing under Florida law or granted and contained in the Resolution, and may enforce and compel the performance of all duties required by the Resolution or by any applicable state or Federal statutes to be performed by the County or any officer thereof. Modification. No adverse material modification or amendment of the Resolution, or of any resolution amendatory thereof or supplemental thereto, may be made without the consent in writing of the Holders of 51% or more in aggregate principal amount of the Series 1989 Bonds and any Additional Parity Bonds then outstanding affected by such adverse material modification or amendment; provided, however, that no modification or amendment shall permit a change in the maturity of any Series 1989 Bonds or any Additional Parity Bonds or a reduction in the rate of interest thereon or in the amount of the principal obligation thereof, or affect the unconditional promise of the County to levy, impose and/or collect the Revenues, or to pay the principal of and interest on the Series 27 1989 Bonds or any Additional Parity Bonds as the same shall become due or reduce the percentage required above for an adverse material modification or amendment, without the consent of the Holders of all of the Series 1989 Bonds or any Additional Parity Bonds affected thereby. The foregoing shall not apply with respect to supplemental resolutions adopted for the sole purpose of issuing Additional Parity Bonds or junior and subordinate obligations issued in accordance with the Resolution or any resolution authorizing the issuance of Senior Lien Bonds to FmHA as contemplated by the Resolution. Operation and Maintenance. The County will maintain the System and all parts thereof in good condition and will operate the same in an efficient and economical manner making such expenditures for equipment and for renewals, repairs and replacements as may be proper for the economical operation and maintenance thereof. No Mortgage or Sale of the System. The County will not sell, mortgage, pledge or otherwise encumber the System or any part thereof, or any Revenues to be derived therefrom, except as provided in the Resolution (which contemplates, without limitation, the issuance of Senior Lien Bonds to the FmHA and the issuance of Additional Parity Bonds), and will not sell, lease or otherwise dispose of any substantial portion of the System, except as set forth below. The County may sell, lease or otherwise dispose of the property comprising a substantial portion of the System in the event that (a) such property is determined by resolution of the Board, upon the recommendation of the County Administrator and the Consulting Engineers, to be no longer necessary or useful or profitable for the System; and (b) the sale, lease or other disposition of such property is determined by resolution of the Board, upon recommendation of the County Administrator and the Consulting Engineers, not to impair the ability of the County to comply during the current or any future Fiscal Year with the rate covenant set forth above. The proceeds derived from any sale, lease or other disposition of a substantial portion of the System shall be used for the retirement of outstanding Series 1989 Bonds, subject to the prior application thereof for any then outstanding Senior Lien Bonds. Any other proceeds derived from the sale, lease or other disposition of a portion of the System shall be placed in an appropriate fund of the County relating to the renewal or replacement of the System, provided, however, all or a portion of any such proceeds may be used for the retirement of outstanding Series 1989 Bonds if authorized by resolution of the Board upon the recommendation of the County Administrator and the Consulting Engineers. Insurance. For so long as any of the Series 1989 Bonds are outstanding, and to the extent practicable, the County will carry adequate fire and windstorm insurance on all buildings, structures and other appropriate properties of the System which are subject to 28 loss through fire or windstorm, will carry adequate public liability insurance, and will otherwise carry insurance of all kinds and in the amounts normally carried in the operation of similar facilities and properties in Florida. Any such insurance shall be carried for the benefit of the Registered Owners of the Series 1989 Bonds, subject to the prior application thereof for any then outstanding Senior Lien Bonds. All moneys received from losses under any of such insurance, except public liability, are hereby pledged by the County as security for the Series 1989 Bonds, until and unless such proceeds are used to remedy the loss or damage for which such proceeds are received, in which event the repairing of the property damaged or the replacement of the property destroyed shall be commenced within a reasonable time after the receipt of such proceeds and shall proceed on a reasonable and continuous basis. No Free Service. The County will not render or cause to be rendered any free use of any nature of the System, nor will any preferential rates be established for users of the same class. Operating Budget. On or before the last day of each Fiscal Year, the County shall adopt an annual budget for the System for the ensuing Fiscal Year, which shall include a budget for Operating Expenses. The Operating Expenses incurred in any Fiscal Year will not exceed the reasonable and necessary amounts required therefor and the County will not expend any amount or incur any obligation for the operation, maintenance and repair of the System in excess of the amount provided for the purpose in the annual budget for the then current Fiscal Year except upon resolution of the Board declaring that such expenses are necessary for the operation and maintenance of the System. If the budget discloses that the estimated Revenues and other revenues, funds and receipts pledged hereunder, if any, will be insufficient during such Fiscal Year, after payment of the Operating Expenses, to meet the rate covenant set forth herein, the County shall forthwith revise the rates, fees and charges imposed with respect to the System in order to cure such estimated deficiency and to comply with the rate covenant. There shall be included in the budget amounts necessary to provide for the orderly replacement of the depreciable capital assets of the System. Consulting Engineers. The County will annually retain the Consulting Engineers for the purpose of providing the County with competent engineering counsel with respect to the economical and efficient operation of the entire water and sewer system of the County and in connection with the making of capital improvements thereto and renewals and replacements thereof. The County may, however, employ additional engineers at any time with relation to specific engineering and operation problems arising in connection therewith. 29 No Competing Systems. To the full extent permitted by law, the County will not grant, renew, extend or allow to expand any franchise or permit for any system similar to the System within the service area of the System. TAX EXEMPTION In the opinion of Rhoads & Sinon, Boca Raton, Florida, Bond Counsel, assuming continuing compliance by the County with certain covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the "Code"), in order to preserve the federal income tax exemption of the interest on the Series 1989 Bonds, interest on the Series 1989 Bonds is exempt from present federal income taxes under existing statutes, regulations and decisions; provided, however, that such exemption does not extend to corporations to the extent that they are required to include such interest in the calculation and payment of alternative minimum taxes imposed under the Code, or the "Environmental Tax" under Section 59A of the Code, or to certain foreign corporations doing business in the United States of America to the extent that they are subject to the branch profits tax imposed under Section 884 of the Code. Further, interest on the Series 1989 Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum taxes imposed on individuals and corporations. Interest on the Series 1989 Bonds is exempt from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, banks, and savings associations. The County will issue its certificate to the effect that on the basis of the facts, estimates and circumstances in existence on the date of delivery of the Series 1989 Bonds, it is not expected that proceeds of the Series 1989 Bonds will be used in a manner that would cause the Series 1989 Bonds to be "arbitrage bonds" under Section 103(b)(2) of the Code, as contemplated by the United States Treasury regulations relating to "arbitrage bonds". Such certificate will be accompanied by an opinion of Bond Counsel, based upon the facts, estimates and circumstances set forth in said certificate, that the Series 1989 Bonds are not currently "arbitrage bonds," under existing statutes, regulations and decisions. Corporate Alternative Minimum Taxes; Environmental Tax; Branch Profits Tax Interest on the Series 1989 Bonds may be includible in a corporation's "adjusted net book income" or "adjusted current earnings" upon which alternative minimum taxable income is calculated for tax years beginning in 1987 and thereafter, and such interest may also be included in corporate alternative minimum taxable income that is subject to the environmental tax imposed under Section 59A of the Internal Revenue Code of 1986, as amended 30 (the "Code"). In addition, such interest may be includible in the amount upon which certain foreign corporations are required to pay the branch profits tax imposed under Section 884 of the Code. Prospective corporate purchasers of the Series 1989 Bonds should consult their professional tax advisors concerning the potential impact of receipt of interest income on such Bonds upon their Federal tax liability. Financial Institutions' Costs of Carrying Tax -Exempt Bonds Under the Code, financial institutions are denied 100 percent of the interest expense deduction that is allocable, by formula, to the carrying of tax-exempt obligations acquired after August 7, 1986; the former provision of the Internal Revenue Code of 1954, which provided for a 20 percent disallowance of the interest expense deduction, continues to apply with respect to tax-exempt obligations acquired on or before August 7, 1986, as well as to new issues specifically designated as "qualified tax-exempt obligations" under Section 265 of the Code, as discussed below. A general exception to the 100 percent disallowance rule of Section 265 of the Code is provided for certain tax-exempt obligations that are not "private activity bonds" as defined in the Code (other than "qualified 501(c)(3) bonds") and that are issued by a governmental issuer that reasonably expects to issue (together with any of its subordinate entities and authorities) not more than $10,000,000 in principal amount of tax-exempt obligations in the same calendar year. The exception applies only if the issuer specifically designates the issue as "qualified tax-exempt obligations" under Section 265 of the Code. Financial institutions considering the purchase of the Series 1989 Bonds should consult with their professional tax advisors to determine the effect of the interest expense disallowance related to tax-exempt bonds upon their Federal income tax liability. The Series 1989 Bonds have not been designated by the issuer as "qualified tax-exempt obligations" for purposes of Section 265 of the Code. Other Federal Income Tax Consequences Ownership of the Series 1989 Bonds may also result in other Federal income tax consequences to certain taxpayers, including, but not limited to, financial institutions, property and casualty insurance companies, certain subchapter S corporations with substantial passive income and subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the bonds. No opinion or representation concerning these matters is being given or made by the issuer of the Series 1989 Bonds, Bond Counsel or any other party associated with issuance, offering or sale of the Series 1989 31 Bonds. Prospective purchasers of the Series 1989 Bonds should consult their own tax advisors concerning these matters. NON -ARBITRAGE BONDS The County has covenanted in the Resolution with the purchasers of the Series 1989 Bonds that it will make no use of the proceeds of the Series 1989 Bonds which will cause the Series 1989 Bonds to be or become "arbitrage bonds," and has further covenanted in the Resolution to comply with the requirements of Section 103 and 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder from time to time, during the term of the Series 1989 Bonds, if and to the extent applicable to maintain continuously the Federal income tax exemption of interest on the Series 1989 Bonds. Officials of the County have executed a certificate concerning the use of the proceeds of the Series 1989 Bonds in conformity with regulations issued under Sections 103 and 148 of the Code. LITIGATION In the opinion of the County Attorney, no legal proceedings are pending or threatened that materially affect the County's ability to perform its obligations to the holders of the Series 1989 Bonds or that materially affect the financial condition of the System. In the opinion of the County Attorney, there is no litigation or controversy of any nature now pending or, to the County's knowledge, threatened to restrain or enjoin the issuance, sale, execution or delivery of the Series 1989 Bonds or in any way contesting the validity of the Series 1989 Bonds or any proceedings of the County taken with respect to the authorization, sale or issuance of the Series 1989 Bonds or the pledge or application of any moneys provided for the payment of the Series 1989 Bonds. RATINGS It is expected that Moody's Investors Service and Standard & Poor's Corporation will assign a rating of "Aaa" and "AAA," respectively, to the Series 1989 Bonds on the understanding that the standard insurance policy, insuring the timely payment of the principal of and interest on the Series 1989 Bonds, will be issued by upon delivery of the Series 1989 Bonds. No application has been made to any other agency for a rating on the Series 1989 Bonds. A rating reflects only the views of the rating agency at the time such rating is given, and neither the County nor the Underwriter make any representation as to the appropriateness of any rating. An explanation of the significance of the rating may be obtained from the rating agency providing such rating. There is no assurance that the ratings on the Series 1989 Bonds will continue 32 for any given period of time or that the ratings will not be suspended, lowered or withdrawn entirely if, in the judgment of the respective rating agency, circumstances so warrant. Any suspension, downward revision or withdrawal of either such rating may have an adverse effect on the market price of the Series 1989 Bonds. The County and the Underwriter have undertaken no responsibility either to bring to the attention of the Registered Owners of the Series 1989 Bonds any proposed suspension, change in or withdrawal of either such rating or to oppose any such suspension, revision or withdrawal. UNDERWRITING The Series 1989 Bonds are being purchased by Gulfstream Financial Associates, Inc. (the "Underwriter"), subject to certain terms and conditions set forth in a bond purchase agreement between the County and the Underwriter, including the approval of certain legal matters by Bond Counsel and the existence of no material change in the affairs of the County from that set forth in this Official Statement. The aggregate purchase price payable by the Underwriter is $ 6�3013r't.So plus accrued interest on the Series 1989 Bonds from April is', 1989 to the date of delivery of the Series 1989 Bonds, The Series 1989 Bonds are offered for sale to the public at the price set forth on the cover page of this Official Statement. The Series 1989 Bonds may be offered and sold to certain dealers at prices lower than such offering prices, and such public offering prices may be changed, from time to time, by the Underwriter. LEGALITY The issuance of the Series 1989 Bonds is subject to the approval of Rhoads & Sinon, Boca Raton, Florida, Bond Counsel to the County, whose unqualified approving opinion, in substantially the form attached hereto as Appendix B will be available at the time of delivery of the Series 1989 Bonds. Certain legal matters will be passed upon for the County by Charles P. Vitunac, Esq., County Attorney, and for the Underwriter by Gunster, Yoakley, Criser & Stewart, P.A., West Palm Beach, Florida. MISCELLANEOUS The references to, and excerpts of, all documents referred to herein do not purport to be complete statements of the provisions of such documents and reference is directed to all such documents for full and complete statements of all matters of fact relating to the Series 1989 Bonds, the security for the payment of the Series 1989 Bonds, and the rights and obligations of Registered Owners thereof. 33 The information contained in this Official Statement has been compiled from official and other sources deemed to be reliable and, while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representation of fact, and no representation is made that any such estimates will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holders of the Series 1989 Bonds. ADDITIONAL INFORMATION The brief descriptions of the Resolution, the Series 1989 Bonds, the Senior Lien Bond Resolution and other documents pertaining to the Series 1989 Bonds contained in this Official Statement are qualified in their entirety by reference to the originals of such documents, copies of which are avail,.':le from Indian River County, Florida, 1840 25th Street, Vero Beach, Florida 32960, Attention: Joseph A. Baird, during the period of the initial offering of the Series 1989 Bonds. AUTHORIZATION OF OFFICIAL STATEMENT The delivery of this Official Statement has been duly authorized by the Board of County Commissioners of the County. At the time of delivery of the Series 1989 Bonds, the Chairman of the Board of County Commissioners and the County Administrator, acting on behalf of the County, will furnish a certificate to the effect that nothing has come to their attention which would lead them to believe that the Official Statement. as of its date and as of the delivery of the Series 1989 Bonds, contains an untrue statement of a material fact or omits to state a material fact which should be included therein for the purposes for which the Official Statement is intended to be used, or which is necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. INDIAN RIVER COUNTY, FLORIDA Gary C. Wheeler, Chairman, Board of County Commissioners James E. Chandler, County Administrator 34 INDIAN RIVER COUNTY, FLORIDA FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 1988 TABLE OF CONTENTS REPORTOF INDEPENDENT ACCOUNTANTS.....................................................A-1 GENERAL PURPOSE FINANCIAL STATEMENTS (COMBINED STATEMENTS - OVERVIEW) Combined Balance Sheet - All Fund Types and Account Groups....................................................................A-4 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Fund...................................................A-6 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - AllGovernmental Fund Types.......................................................A-8 Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types................................A-12 Combined Statement of Changes in Financial Position - AllProprietary Fund Types.......................................................A-13 Notes to Financial Statements......................................................A-14 COMBINING FINANCIAL STATEMENTS Enterprise Funds: Combining Balance Sheet..........................................................A-53 Combining Statement of Revenues, Expenses and Changesin Retained Earnings...................................................A-57 Combining Statement of Changes in Financial Position.............................A-59 EXHIBIT A INDIAN RIVER COUNTY, PIARIDA CONSINIM SIILAKN TM ALL FUND TYPES AND ACCOUNT GROUPS September 10, 1949 SPIICIAL Dow CAPITAL ASS!?S ODIUM Man SUMS PROJECTS Equity in pooled cash and Investments $12,239,882 $12,560,536 $1,962,456 52,777,719 Acaounts receivable - net 20,968 22,511- 27.7]6 Spacial assessments receivable - deferred - 100,990 7,671,669 - Due from other funds 169,696 119,459 23,049 - Due from other governments 244,167 117,166 - - Interest receivable 103,950 581422 1615!6 - Inventbries 65,978 - - - Deposits - 70,000 - - Restricted assets& Cash and lnvestmentsl Sinking funds - - - - Renewal and replacement and capital projects - - - - Customer deposits - - - - Capital construction - - - - Due from other funds - - - - Property, plant and equipment - - - - Accumulated depreciation - - - - Unamoctlted bond costs - - - - Intangible some%• - - - - Amount available in debt service funds - - - - Amount to be provided for retirement of general long-term debt Total Assets 117.aaa.a71 !1].765.970 !6.]7..16■ 52.]97.05] LIAmILI?IS.! ARD FUND SOOIM Liabilities& Deficit in pooled cash and investments 3 - f - 3 27.080 3 69,112 Accounts payable 696,269 610,511 - 101,149 Retainage payable - 28,700 - 24,790 Notes payable - current portion - - - - Due to other funds 162,970 7,605 - 11800,000 Due to other governments 179,408 16,601 - - Defected compensation- - - - Other deposits held in escrow 59,663 - - - Defected revenues 12,667 100,990 1,671,669 - Payable from restricted asseta& Accounts payable - - - - Retainage payable - - - - Accrued interest payable - - - - Bonds payable - current portion - - - - Customer deposits - - - - Clomuce costs payable - - - - Accrued compensated absences - Capital Leaman - Notes payable - Bond anticipation notes - Bonds payable - net of discounts Total liabilities 1.091.179 606.207 1.696.734 1.941.611 Commitments and Contingencies Fund Squity& Investment In general fixed assets - - - - Contributions - - - _ Retained sacningss Reserved - - - _ Unreserved - (deficit) - - - fund balances& Reserved 60,000 - 1,879,610 9461511 Unreserved - (daficlt) 11.755.642 12.641.713 - 1569.090 Total fund equity - (deficit) 11.795.682 12.641,711 1.87!.110 615.662 Total Liabilities and fund Squity 112.saa.a71 !1].266.970 !S.]7 6.166 12.797.0111 lEDtSIElARY S301D T!F!S FIDUCIARY 9 106,637 799,559 36,675 $0,373 INTERSAL FOND TYPES AL'CQINT GROUPS NOVICE - - 112,269 GODOAL TOTALS 700,000 2,132,666 (FLOW TRUST AM GOOAL LGNG-tOsl (NOtONANOUN SNTOFRIIE 1lf.096 aGI FIRSD ASSETS OOW ONLY) e 1.281,985 $ 42.098 $ 6.511.170 e - 8 - 1 36,871,434 833.032 8,252 957 - - 909.676 - S06,357 - - - - 3,572,639 6,286 - - - - - - 332.666 266.687 - 12,271 - - - 607,795 - 658.086 213.306 219,773 11,108 - - 690,165 - - - - - 70.000 3,712.066 - - - - 3.712,066 5.266,736 - - - - 5,266.736 630.560 - - - - 630,560 9.619,367 - - - - 9,619,367 1.600,000 - 11000,000 67.030,256 229.632 - 63,923,366 - 91,183.230 (6.986.292) (131,737) - - - (5,119,019) 369,725 - - - _ 369,725 271,096 - - - - 271.896 ' - 1,079,610 11879.610 ��3LiF7[Fi7 6 32,216 8 - 7 - $ - 9 - 9 106,637 799,559 36,675 $0,373 - - 2,156,656 700.000 - _ 57,690 - - 112,269 - _ 700,000 2,132,666 17,369 - 739,696 - - 973,272 - - 1lf.096 - - 196,096 5.700 - 3,313,730 - - 3.379,875 1.027 - - - - 3,586.333 1.666,703 - - - - 1,666,705 S06,357 - - - - 1506,557 635.212 - - - - 633,212 566.000 - - - - 566,000 658,711 - - - - 01,781 1151916s0 - - - - 11519,$50 MOSS 13,165 - - 666,619 776,839 126,975 - - - 325,273 650,268 3911,653 - - - - 39S,655 9,200,000 - 21,133,827 - - - - - - 15,902,675 9,200,000 37.036,502 37,622,618 69,660 6,519,960 - 16,912,S67 66,079,350 63.923.366 - 63.923,366 22,862.532 612,620 - - - 23.65S.1S2 2.137.771 - - - - 2.137,771 3,672,769 (296.262) - - - 3.370,367 - - - 2,903,963 13,566 23.eQ.BsO 28,652, 092 318.378 1s.s6c 42,9:3.366 99.662.607 166.0743. s 361.018 2 6.!36.506 263.923.344 216S76O7y ��,80 � s1s.91:.567 The acoospanylnq notes •Re an Integcal pact of the financial statements. S. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUND Year Ended September 30, 1988 Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Total revenues Expenditures: Current: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture/Recreation Debt Service: Principal Interest Capital Projects Total expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Proceeds of refunding bonds Payment to refund bond holders Lease -purchase proceeds Total other financing sources (uses) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances at Beginning of Year Residual Fund Equity Transfers Fund Balances at End of Year C -M GOVERNMENTAL 8,357,330 SPECIAL GENERAL REVENUE $ 23,703,906 S 6,826,616 234,219 9,756 4,079,118 2,155,926 2,035,151 1,443,450 353,825 155,257 2,420,511 1,475,707 32,826,730 12,066,712 8,357,330 235,578 10,897,826 4,194,399 727,949 - - 6,201,994 81,902 - 1,242,481 893,415 1,717,763 147,076 161,649 15,835 27,281 7,783 23,214,181 11,696,080 9,612,549 370,632 4,586,539 4,633,027 (8,783,807) (1,871,047) 71,010 (4,126,258) 2,761,980 5,486,291 6,195,318 114,073 SS 11 795,, 6822 3,132,612 9,529,101 SS 12��61y71 FUND TYPES (2,705,817) FIDUCIARY FUND TYPE 7,081,633 - 1,925,099 EXPENDABLE 11,144,665 (34,742) (520,008) TRUST TOTALS Dan CAPITAL (INMATE (MEMORANDUM SERVICE PROJECTS WELFARE) ONLY) $ 1,260,544 $ 278,046 $ - S 32,069,112 - - - 243,975 1,391,226 286,000 - 7,912,270 - - - 3,478,601 - - - 509,082 1,394,652 114,633 69,217 5,474,720 4,046,422 678,679 69,217 49,687,760 8,592,908 60,470 15,152,695 - 727,949 - - 6,201,994 - - 81,902 - - 2,135,896 - - - 1,864,839 2,452,900 - - 2,630,384 1,798,000 - - 1,833,064 - 3,384,496 3,384,496 4,250,900 3,384,4% 60,470 42,606,127 (204,478) (2,705,817) 8,747 7,081,633 - 1,925,099 - 11,144,665 (34,742) (520,008) - (11,209,604) 7,215,000 - - 7,215,000 (7,215,000) - - (7,215,000) - - - 71,010 (34,742) 1,405,091 - 6,071 (239,220) (1,300,726) 8,747 7087,704 2,232,703 1,716,168 6,799 19,680,089 (114,073) S 1.879,410 S 415.442 S 15,546 S 26.767.793 The accompanying notes are an integral part of the financial statements. 7. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL ALL GOVERNMENTAL FUND TYPES Year Ended September 30, 1988 GENERAL VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) Revenues: Taxes S 23,557,183 S 23,703,906 S 146,723 Licenses and permits 187,500 234,219 46,719 Intergovernmental 3,904,949 4,079,118 174,169 Charges for services 2,462,560 2,035,151 (427,409) Fines and forfeitures 382,000 353,825 (28,175) Miscellaneous 1,494,095 2,420,511 926,416 Total revenues 31,988,287 32,826,730 838,443 Expenditures: Current: General Government 9,248,104 8,357,330 890,774 Public Safety 11,442,178 10,897,826 544,352 Physical Environment 775,912 727,949 47,963 Transportation - _ - Economic Environment 84,962 81,902 3,080 Human Services 1,283,429 1,242,481 40,948 Culture/Recreation 1,925,491 1,717,763 207,728 Debt Service: Principal 157,620 161,649 (4,029) Interest 28,857 27,281 1,576 Capital Projects Total expenditures 24,946,573 23,214,181 1,732,392 Excess of Revenues Over (Under) Expenditures 7,041,714 9,612,549 2,570,835 Other Financing Sources (Uses): Operating transfers in 4,664,465 4,586,539 (77,926) Operating transfers out (8,832,441) (8,783,807) 48,634 Proceeds of refunding bonds - _ _ Payment to refund bond holders - Lease -purchase proceeds 71,010 71,010 Total other financial sources (uses) (4,096,966) (4,126,258) (29,292) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses SS 2944,778 5,486,291 S�241.54�3 Fund Balances at Beginning of Year 6,195,318 Residual Fund Equity Transfers 114,073 Fund Balances at End of Year S. SPECIAL REVENUE VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) DEBT SERVICE VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) S 6,476,694 $ 6,826,616 $ 349,922 S 1,247,335 S 1,260,544 S 13,209 1,000 9,756 8,756 - - - 2,225,232 2,155,926 (69,306) 1,429,357 1,391,226 (38,131) 1,221,295 1,443,450 222,155 - - - 143,400 155,257 11,857 - - - 901,667 1,475,707 574,040 1,317,000 1,394,652 77,652 10 969,288 12,066,712 1,097,424 3,993,692 4,046,422 52,730 381,715 235,578 146,137 - - - 4,618,957 4,194,399 424,558 - - - 9,198,225 6,201,994 2,996,231 - - - 898,888 893,415 5,473 - - - 265,000 147,076 117,924 - - - 15,836 15,835 1 2,590,000 2,452,900 137,100 7,784 7,783 1 2,072,982 1098,000 274,982 15,386,405 11,696,080 3,690,325 4,662,982 4,250,900 412,082 (4,417,117) 370,632 4,787,749 (669,290) (204,478) 464,812 5,891,848 4,633,027 (1,258,821) - - - (5,646,863) (1,871,047) 3,775,816 (54,122) (34,742) 19,380 - - - 7,215,000 7415,000 - - - - (7,215,000) (7,215,000) - 244,985 2,761,980 2,516,995 (54,122) (34,742) 19,380 SS (4,172,132) 3,132,612 S 7,304.744 S (723,412) (239,220) 51922 9,529,101 2,232,703 - (114,073) S 12� 661,713 S 1� 8799.410 The accompanying notes are an integral part of the financial statements. 9. INDIAN RIVER COUNTY, FLORIDA C01MINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONTINUED ALL GOVERNMENTAL FUND TYPES Year Ended September 30, 1988 CAPITAL PROJECTS VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVQRABLE) Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Total revenues Expenditures: Current: General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture/Recreation Debt Service: Principal Interest Capital Projects Total expenditures Excess of Revenues over (Under) Expenditures Other Financing Sources (Uses): S 21,000 $ 278,046 S 257,046 150,000 286,000 136,000 5,200 114,633 109,433 176,200 678,679 502,479 6,883,181 3,384,496 3,498,685 6,883,181 3,384,496 3,498,685 (6,706,981) (21705,817) 4,001,164 Operating transfers in 4,508,865 1,925,099 (2,583,766) Operating transfers out (522,000) (520,008) 1,992 Proceeds of refunding bonds - _ _ Payment to refund bond holders Lease -purchase proceeds - _ Total other financial sources (uses) 3,986,865 1,405,091 (2,581,774) Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances at Beginning of Year Residual Fund Equity Transfers Fund Balances at End of Year 10. S (2,720,116) (1,300,726) s 1�419.390 1,716,168 S 415,442 TOTALS (MEMORANDUM ONLY) VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) S 31,302,212 S 32,069,112 S 766,900 188,500 243,975 55,475 7,709,538 7,912,270 202,732 3,683,855 3,478,601 (205,254) 525,400 509,082 (16,318) 3,717,962 5,405,503 1,687,541 47,127,467 49,618,543 2,491,076 9,629,819 8,592,908 1,036,911 16,061,135 15,092,225 968,910 775,912 727,949 47,963 9,198,225 6,201,994 2,996,231 84,982 81,902 3,080 2,182,317 2,135,896 46,421 2,190,491 1,864,839 325,652 2,763,456 2,630,384 133,072 2,109,623 1,833,064 276,559 6,883,181 3,384,496 3,498,685 51,879,141 42,545,657 9,333,484 (4,751,674) 7,072,886 11,824,560 15,065,178 11,144,665 (3,920,513) (15,055,426) (11,209,604) 3,845,822 7,215,000 7,215,000 - (7,215,000) (7,215,000) - 71,010 71,010 80,762 6,071 (74,691) S (4.670.912) 7,078,957 S 11.749.869 19,673,290 L.U.752.247 The accompanying notes are an integral part of the financial statements. INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF REVENUES EXPENSES AND CHANCES IN RETAINED EARNINGS ALL PROPRIETARY FUND TYPES Year Ended September 30, 1988 12. INTERNAL SERVICE TOTALS (FLEET (MEMORANDUM Operating Revenues: ENTERPRISE MANAGEMENT) ONLY) Charges for services: Landfill Golf course $1,957,590 $ - $1,957,590 County building 1,106,587 - 1,106,587 Water and sewer 747,119 3,530,826 - 747,119 Housing Authority 204,550 - 3,530,826 Vehicle maintenance - 204,550 Total operating revenues - 7,546,672 974,796 974,796 974,796 8,521,468 Operating Expenses: Personal services Materials, supplies, services and 2,354,047 335,419 2,689,466 other operating Depreciation and amortization 4,092,784 639,430 4,732,214 Total operating expenses 1,430,158 7,876,989 24,401 999,250 1,454,559 8,876,239 Operating Income (Loss) (330,317) (24,454) (354,771) Nonoperating Revenues (Expenses): Interest income 758,197 Operating grants 61,741 758,197 Gain on disposal of equipment 7094 1,002 61,741 8,796 Interest expense Amortization expense (722,216) (722,216) Loss on disposal of equipment (4,921) 129,451) - (4,921) Total nonoperating revenues (29,451) (expenses) 71,144 1,002 72,146 Operating Transfers: Operating transfers in 64,939 - 64,939 Income (Loss) Before Extraordinary Gain (194,234) (23,452) (217,686) Extraordinary Gain on Defeasance of Debt 77,069 - 77,069 Net Income (Loss) Add: Depreciation on Fixed Assets Acquired (117,165) (23,452) (140,617) with Contributed Capital 540,967 - 540,967 Increase (Decrease) in Retained Earnings 423,802 (23,452) 400,350 Retained Earnings (Deficit) at Beginning of Year 5,386,558 (2701790) 5,115,768 Retained Earnings (Deficit) at End of Year S5,810,360 S (294,242) 55,5�6,118 The accompanying notes are an integral part of the financial statements. 12. V INDIAN RIVER COUNTY, FLORIDA COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION ALL PROPRIETARY FUND TYPES Year Ended September 30, 1988 Applications of Working Capital: Increase in restricted assets INTERNAL - 13,424,914 Acquisition of fixed assets SERVICE TOTALS Increase in other assets (FLEET (MEMORANDUM Decrease in ENTERPRISE MANAGEMENT) ONLY) Sources of Working Capital: notes payable 700,000 - 700,000 From operations: revenue bonds payable 1,463,028 1,463,028 Net income (loss) before extraordinary item $ (194,234) $ (23,452) $ (217,686) Add expenses not creating current (30,641) - (30,641) liabilities or using current assets - (354,660) 2,937 (351,723) depreciation and amortization 1,435,079 24,401 1,459,480 Working capital provided from 5(1.150,919) S (16,599) S(1,167,518) operations exclusive of extra- ordinary item 1,240,845 949 1,241,794 Extraordinary item 77,069 - 77,069 Disposal of fixed assets net of accumulated depreciation 5,273 - 5,273 Increase in current liabilities payable from restricted assets 4,259,489 - 4,259,489 Increase in other liabilities 108,610 294 108,904 Increase in capital leases 36,750 - 36,750 Increase in notes payable 1,006,554 - 1,006,554 Increase in bond anticipation notes payable 9,200,000 - 9,200,000 Increase in revenue bonds payable 8,240,000 - 8,240,000 Increase in contributions 4,312,571 500 4,313,071 Total sources of working capital 28,487,161 1,743 28,488,904 Applications of Working Capital: Increase in restricted assets 13,424,914 - 13,424,914 Acquisition of fixed assets 13,683,963 18,342 13,702,305 Increase in other assets 323,701 - 323,701 Decrease in capital leases 42,474 - 42,474 Decrease in notes payable 700,000 - 700,000 Decrease in revenue bonds payable 1,463,028 1,463,028 Total applications of working capital 29,638,080 18,342 29,656,422 Net Increase (Decrease) in Working Capital S(1,150.919) S (16,599) S(1.167,518) Component Elements of Net Increase (Decrease) in Working Capital: Equity in pooled cash and investments S (510,300) S (17,903) S (528,203) Accounts receivable - net 182,797 4,274 187,071 Other receivables (31,890) - (31,890) Inventories 28,189 (5,907) 22,282 Deficit in equity in pooled cash and investments (30,641) - (30,641) Accounts payable (354,660) 2,937 (351,723) Other liabilities (434,414) - (434,414) Net Increase (Decrease) in Working Capital 5(1.150,919) S (16,599) S(1,167,518) The accompanying notes are an integral part of the financial statements. 13. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS Year Ended September 30, 1988 1. Summary of Significant Accounting Policies: Indian River County, Florida (the "County") is a political subdivision of the State Of Florida. It is governed by an elected Board Of County Commissioners (the "Board") which is governed by state statutes and regulations. In addition to the members of the Board, there are five elected Constitutional Officers: Clerk of the Circuit Court, Sheriff, Tax Collector, Property Appraiser, and Supervisor of Elections. The Constitutional Officers, except the Supervisor of Elections, main- tain separate accounting records and budgets. The accompanying financial statements present the combined financial position and combined results of operations of the various fund types and account groups and the changes in financial position of the proprietary fund types for the funds controlled by the Board and its Constitutional Officers. The Board funds a portion or, in certain instances, all of the operating budgets of the County's Constitutional Officers. The payments by the Board to fund the opera- tions of the Constitutional Officers are recorded as operating transfers out on the financial statements of the Board and as operating transfers in or charges for services on the financial statements of the Constitutional Officers. Accordingly, such amounts and the budget relating to those amounts have been eliminated in the accompanying combined financial statements. The accounting policies of the County conform to generally accepted accounting principles, as applicable to governments. The following significant policies. Is a summary of the more A. Reporting Entity - Generally accepted accounting principles require that finan- cial operations of governmental departments, agencies, commissions or authori- ties over which the governmental unit's elected Officials have oversight respon- sibility be included in the reporting entity's financial statements. Criteria used to determine if an agency should be included in the County's report were the oversight responsibility and the scope of public service. Oversight responsibility implies that an agency is dependent on another. The manifestations of oversight responsibility are financial interdependency, selection of governing authority, designation of management, ability to significantly influence Operations, and accountability for fiscal matters. The manifestations of Scope of public service are whether the activity is for the benefit of the reporting entity and/or its residents and whether the activity is conducted within the geographic boundaries of the reporting entity and is generally available to the citizens of that entity. 14. INDIAN RIVER COUNTY, FLORIDA NOTES To FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: A. Reporting Entity - Continued - Applying the criteria above has caused the inclusion of the following entities: Indian River County Housing Authority (IRCHA) - The IRCHA was included in the report because the Board provides the primary funding for the operations of the IRCHA. The Board maintains budgetary control over the operating costs of the IRCHA. In addition, they provide use of certain furniture and equipment to the IRCHA at no charge. Due to the proprietary nature of the IRCHA's operations, the IRCHA is reported as an enterprise fund. For budgetary control, the Board maintains a Special Revenue Fund to account for the operating costs of the IRCHA. Funding is provided from operating transfers from the Board's General Fund and operating grants received from the State of Florida. Since the oper- ating costs of IRCHA have been properly reported in the enterprise fund, the Special Revenue Fund has been eliminated for the purposes of this report. Appropriations from the Board totaled $71,977 and the related actual operating costs totaled $71,296 for the fiscal year. The IRCHA cannot overspend appropri- ations in total. Indian River County Law Library (IRCLL) - The IRCLL was included in the report because a member of the Board serves on the IRCLL Board, the facilities for the IRCLL are provided by the Board, and funds are provided to the IRCLL under a special act passed by the Florida State Legislature at the request of the Board. The IRCLL is reported as a special revenue fund. North Indian River County Fire District, West Indian River County Fire District, and South Indian River County Fire District - The fire districts were included in the report because the Board sits as the Board for each fire district, approves the budget and sets the millage rate for each fire district, and desig- nates the management of each fire district. The fire districts are reported as special revenue funds. The following entities, which meet the scope of public service criteria, have been excluded from this report: Indian River County School Board District (IRCSBD) - The IRCSBD has a separately elected board, maintains its own financial records and reports to the Florida Department of Education. Indian River County Hospital (IRCH) - The IRCH has a separately elected board, maintains its own financial records, can issue debt with the approval of its board or the voters, and issues its own report. Indian River County Nosguito Control District (IRCNCD) - The IRCNCD has a sepa- rately elected board, maintains its own financial records, and issues its own report. 15. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30; 1988 1. Summary of Significant Accounting Policies Continued: Indian River_ County Health Department (IRCHD) - The Board does provide some funds for the operations of the IRCHD, sets part of the fee schedule, and must provide the facilities for the IRCHD. However, the Florida Department of Health and Rehabilitation appoints the management of the IRCHD, maintains the financial records, and includes the IRCHD in its own report. The funds and facilities provided by the Board are mandated by the Florida State Statutes. B. Fund Accounting - The accounts of the County are organized on the basis of funds and account• groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Government resources are allo- cated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are con- trolled. The purpose of the County's various funds and account groups is as follows: Governmental Funds General Fund - The General Fund is the general operating fund of the County. It is used to account for all financial resources, except those required to be accounted for in another fund. Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Funds - Debt Service Funds are used to account for the accu- mulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by the proprietary funds). Proprietary Funds Enterprise Funds - Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges: or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. 16. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: Proprietary Funds - Continued Internal Service Fund - The Fleet Management Internal Service Fund is used to account for the financing of goods and services provided by the Fleet Management Department to other departments or agencies of the County, on a cost -reimbursement basis. Fiduciary Funds Trust and Aaency Funds - Trust and Agency Funds are used to account for assets held by the County in a trustee capacity or as an agent for indi- viduals, private organizations, other governments, and/or other funds. These include Agency Funds and an Expendable Trust Fund. Account Groups General Fixed Assets - To account for all fixed assets of the County, except fixed assets of proprietary funds. General Lona -Term Debt - To account for all the outstanding principal balances of general and special obligation bonds, notes, capital leases and compensated absences of the County, except long-term obligations of proprietary funds. C. Measurement Focus Governmental Fund Types - General, Special Revenue, Debt Service and Capital Projects Funds are accounted for on a "spending" or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on the balance sheets. Accordingly, the reported unreserved fund balance (net current assets) is considered a measure of available, spend- able or appropriable resources. Governmental Fund Type operating statements present increases (revenues and other financing sources) and decreases (expendi- tures and other financing uses) in net current assets. Proprietary Fund Types - The Enterprise and Internal Service Funds are accounted for on an "income determination" measurement focus. Accordingly, all assets and liabilities are included on the balance sheet, and the reported fund equity (total reported assets less total reported liabilities) provides an indication of the economic net worth of the fund. operating statements for the Proprietary Fund Types report increases (revenues) and decreases (expenses) in total eco- nomic net worth. Fiduciary Fund Types - The Expendable Trust Fund is accounted for in the same manner as Governmental Funds. The Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. 17. I F INDIAN RIVER COUNTY, FLORIDA j NOTES TO FINANCIAL STATEMENTS - CONTINUED E Year Ended September 30, 1988 j 1. Summary of Significant Accounting Policies - Continued: F. Investments - Investments consist of repurchase agreements, U.S. Treasury Securities, U.S. Government Agency Securities, Certificates of Deposit and savings accounts that are recorded at cost, which approximates market value. G. Allowance for Doubtful Accounts - The County provides an allowance for water and sewer accounts receivable that may become uncollectible. At September 30, 1988, this allowance was $4,000. No other allowances for uncollectible accounts are maintained since other fund accounts receivable are considered collectible as reported at September 30, 1988. H. Inventories - All inventories are stated at the lower of cost or market on the basis of the "first -in, first out" method of accounting. The effect of this method is to assign a balance sheet cost which reflects current replacement values. Supply inventories in the General Fund are accounted for using the consumption method. This. method requires that items be charged to inventory as purchased and to expenditures when consumed. Land inventory in the Housing Authority Enterprise Fund consists of developed land held for resale to low income citizens. All costs incurred to develop land are included in inventory and are removed from inventory when the land is sold based on the relative value of the lots within inventory. Inventories in other proprietary funds consist of materials and supplies held for consumption. Inventory of the Clerk of the Circuit Court, included in the combined Agency Funds, represents documentary stamps on consignment from the State of Florida. Stamps are carried at cost, which is their face value. Inventory in the Expendable Trust Fund (Inmate Welfare Trust) consists of supplies held for resale to inmates accounted for on the consumption method. This method requires that items be charged to inventory as purchased and to expenditures when consumed (sold). I. Property, Plant and Equipment (1) Property, plant and equipment purchased in the Governmental Fund Types are recorded as capital outlay expenditures at the time of purchase. Such assets are capitalized at cost in the General Fixed Assets Account Group, except for certain improvements other than buildings ("infrastructure") such as roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems. Donated and confiscated assets are recorded in the general fixed assets at their fair market value at the time received. No depreciation has been provided on general fixed assets. 19. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: I. Property. Plant and Equipment - Continued The Board holds legal title for the general fixed assets used in the operations of the Board, Property Appraiser, Tax Collector, Super%isor of Elections, and Clerk of the Circuit Court and is accountable for them under Florida law. The Sheriff is accountable for and thus maintains general fixed asset records pertaining only to equipment used in his operations. These assets have been combined with the Board's general fixed assets in the General Fixed Assets Account Group. (2) Property, plant and equipment of the Proprietary Fund types are recorded at cost. Donated property, plant and equipment are capitalized at their fair market value at the time received. Depreciation is provided using the straight-line method over the estimated useful lives of the various classes of depreciable assets. The estimated useful lives of the various classes of depreciable assets are as follows: Assets Years Building and improvements 25 - 40 Machinery and equipment 3 - 10 Utility distribution systems 25 - 50 J. Capitalization of Interest - Interest costs related to bond issues are capital- ized during the construction period. These costs are netted against applicable interest earnings on construction fund investments. During the current period, the Solid Waste Disposal District and Water and Sewer System Enterprise Funds incurred interest expense during the construction period totaling $645,493 Related interest earnings on construction fund investments totaled $459,962 for net capitalized interest of $185,531. K. Unamortized Bond Costs - Bond issue costs and legal fees associated with the issuance of revenue bonds are amortized over the life of the bonds using the straight-line method of accounting. L. Unamortized Bond Discount - Bond discount associated with the issuance of Proprietary Fund revenue bonds are amortized according to the interest method, which results in a constant rate of interest being applied to the amount out- standing at any given time. For financial reporting, Unamortized bond discount is netted against applicable long-term debt. M. Intangible Assets - Land use rights purchased by the Water and Sewer System Fund from the Golf Course Fund for irrigating the golf course with treated effluent are being amortized using the straight-line method over the estimated useful life of 20 years. 20. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 L- Summary of Significant Accounting Policies - Continued: N. Deferred Revenues - Deferred revenues reported in applicable Governmental Fund Types represent unearned revenues or revenues which are measurable but not available and, in accordance with the modified accrual basis of accounting, are reported as deferred revenue. The deferred revenue will be recognized as revenue in the fiscal year they are earned or become available. 0. Accrued Compensated Absences - The County records compensated absences in the Governmental Fund Types as an expenditure for the amount accrued during the year that would normally be liquidated with expendable available financial resources. The remainder of the liability is reported in the General Long -Term Debt Account Group. Proprietary Fund Types accrue compensated absences in the period they are earned. P. Contributions - The contributions accounted for in the Proprietary Fund Types represent contributions from other funds, State and Federal Aid programs, and impact fees charged to new customers for their anticipated burden on the existing system. Depreciation expense on contributed fixed assets is reflected in the statement of revenues, expenses and changes in retained earnings. Depreciation on contributed fixed assets is transferrred to the related contribution accounts (reducing contributions) instead of retained earnings. 0. Budgets and Budgetary Accounting - The County uses the following procedures in establishing the budgetary data reflected in the financial statements: (1) The Constitutional Officers submit, at various times, to the Board and to certain divisions within the Department of Revenue, State of Florida, a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. (2) The Department of Revenue, State of Florida, has the final authority on the operating budgets for the Tax Collector and Property Appraiser included in the General Fund. (3) On or before July 15 of each year, the Director of the Office of Management and Budget, as the Board's designated budget officer, submits to the Board a tentative budget for the ensuing fiscal year. The tenta- tive budget includes proposed expenditures and the means of financing them. 21. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 1. Summary of Significant Accounting Policies - Continued: 0. Budgets and Budgetary Accounting - Continued (4) During September, public hearings are held pursuant to Section 200.065 of the Florida Statutes in order for the Board to receive public input on the tentative and final budget. Based on the public input received, the Board shall require such changes to be made as it shall deem necessary, provided the budget remains in balance and subject to the budget preparation and adoption procedures as defined in Section 129.03 of the Florida Statutes. (5) Prior to October 1, the budget is legally enacted through passage of an ordinance setting forth total revenues and total expenditures by fund. (6) It is unlawful to expend in any fiscal year more than the total amount budgeted in each fund's budget pursuant to Section 129.07 of the Florida Statutes. (7) Budgeted amounts as shown in the financial statements are as originally adopted, with the exception of the General Fund, which was increased $538,455 by resolutions adopted by the Board. (8) Formal budgetary integration is used as a measurement control device for all governmental funds of the County. The level on which expenditures may not legally exceed appropriations is the fund level. (9) Budgets for the governmental fund types are adopted on a basis consistent with generally accepted accounting principles. (10) Appropriations for the County lapse at the close of the fiscal year. R. Total Columns on Combined Statements - Overview - Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable in a consolidation. Interfund eliminations have not been made in the aggregation of these data. 22. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATENENTS - CONTINUED Year Ended September 30, 1988 2. Cash and Investments: The County maintains a cash and investment pool that is available for use by all funds except those whose cash and investments must be segregated due to bond cove- nants or other legal restrictions. Deposits - At September 30, 1988, the carrying amount of the County's deposits was $5,778,518 and the bank balance was $4,115,923. These deposits were loot collater- alized by federal depository insurance or by collateral pursuant to the Public Depository Security Act of the State of Florida. Various deposits were earning interest from 4.75-7.91. Investments - Florida Statutes, the Board of County Commissioners' Investment Policy, and various bond covenants authorize investments in certificates of deposit, savings accounts, repurchase agreements, the Local Government Surplus Funds Trust Fund administered by the Florida State Board of Administration, obligations of the U.S. Government, and government agencies unconditionally guaranteed by the U.S. Government. Certificates of deposit, savings accounts and bank balances, which are reported as deposits above, whose value exceeds the amount of federal depository insurance are 100% collateralized pursuant to the Public Depository Security Act of the State of Florida. The County's investments are categorized below to give an indication of the level of risk assumed at year end. Category 1, defined as insured or collateralized with securities held by the County or by its agent in the County's name, includes invest- ments that are insured or registered or for which the securities are held by the County or its agent in the County's name. Category 2, defined as collateralized with securities held by the pledging financial institution's trust department or agent in the County's name, includes uninsured and unregistered investments for which the securities are held by the broker's or dealer's trust department or agent in the County's name. Schedule of Investments at September 30, 1988 Repurchase agreements U.S. Government securities U.S. Government agency securities Local Government Surplus Funds Trust Fund Total Investments Category Carrying Market 1 2 Amount Value $ - $ 461,970 $ 461,970 $ 461,970 5,284,553 - 5,284,553 5,216,969 27,291,631 - 27,291,631 26,885,403 532.576,184 S 461,970 33,038,154 32,564,342 14,783,156 14,783,156 547,821,330 $47,347498 In addition to the investments categorized above, the County's employee deferred compensation plan (see Note 8) investments were $196,094, which are held by a trustee but not in the County's name. Investments are carried at market value. 23. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 3. Property Tax Revenues: Property tax revenues recognized for the 1987-88 fiscal year were levied in October, 1987. Virtually all unpaid taxes are collected via the sale of tax certificates Prior to fiscal year end, therefore, there were no material taxes receivable at fiscal year end. Key dates in the property tax cycle (latest date where appropriate) are as follows: Revenues for Fiscal Year Ending September 30, 1988 Assessment roll certified June 26, 1987 Property taxes levied October 12, 1987 Date of lien October 12, 1987 Beginning of fiscal year for which taxes have been levied October 1, 1987 Tax bills rendered November 1, 1987 Property taxes payable: Maximus discount November 30, 1987 Delinquent April 1, 1988 Tax certificates sold on unpaid property taxes June 1, 1988 4. Property, Plant and Equipment: A. General Fixed Assets - A summary of changes in the General Fixed Assets Account Group follows: Total Buildings Property, and Construction Plant and Land Improvements Equipment In ProgressEquipment Balance at October 1, 1987 $12,512,128 $12,536,079 $11,077,629 6 5,225,713 $41,351,549 Additions 473,282 41854,322 2,769,982 1,180,491 9,278,077 Deletions 347,750 - 920,394 50438,138 6,706,282 Balance at Septem- ber 30, 1988 S12,637660 S17.3�401 $12.927.227 S 966,066 $43.923,344 24. �. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 4. Property, Plant and Equipment - Continued: 8- Proprietary Fund Type Fixed Assets - A summary of proprietary fund type Property. plant and equipment follows: Internal Enterprise Service Land S 1,893,209 S - Buildings, distribution systems and improvements 29,779,905 78,193 Equipment 3,312,472 151,439 Construction in progress 12,044,668 Total Property, Plant and Equipment 47030,254 229,632 Less: Accumulated depreciation 4,986,282 131,737 Total SS 42�� S 97.895 S. Interfund Accounts: Fund Receievable Payable General Fund S 169,696 S 142,970 Special Revenue Funds: Policy Academy 6,280 - Court Facilities 4,515 - South Co. Fire District 111,527 - North Co. Fire District 12,408 - West Co. Fire District 1,750 - Vero Lakes Estates 10689 - Street Lighting Districts 1,634 - Law Enforcement Forfeiture Proceeds 56 7,405 Debt Service Funds: Beach Bonds 23,089 - Capital Projects Funds: Library Construction - 11500,000 Jail - Phase III - 300,000 Enterprise Funds: Water and Sewer System 10800,000 - Agency Funds: Clerk - 57,345 Sheriff - 5,725 Tax Collector - 119,199 Totals S 2.132,644 S 2.132.444 25. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt: A. Enterprise Fund Revenue Bonds - The County has adopted resolutions for bonds payable that provide for various covenants. These covenants are listed below for each bond payable. Solid Waste Disposal System'Revenue Bonds, Series 1988 (1) Pledge of Revenue - The Series 1988 bonds are payable from and secured by a lien on net revenues of the system, including the proceeds derived from the collection of disposal charges which are annual assessment charges against assessable property for the disposal of solid waste. (2) Establishment of Various Accounts a. Operating account to pay all operating and maintenance costs of the system. b. Sinking Fund account to pay principal and interest payments coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution. Since the amounts are funded from gross revenues and are restricted, a corresponding reserve has been established in the retained earnings. c. Reserve account to accumulate an amount equal to the maximum amount of principal and interest coming due in any ensuing fiscal year. When the maximum amount is obtained, no further deposits are necessary. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been established in the retained earnings. d. Renewal and Replacement Fund and capital projects account to pay for the costs of enlargements, replacements or emergency repairs to the system. The amounts to be maintained in these accounts are determined by consulting engineers. The amounts in these accounts are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been established in the retained earnings. (3) Other Covenants - The resolution provides for several additional covenants such as required revenue rates, minimum insurance levels, adoption of annual budget, certain required engineering reports. 26. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 S. Lona -Term Debt - Continued: (4) Bonds Issued - At September 30, 1988, these revenue bonds consisted of the following: Outstanding at Rates and Original September 30, Description Date Maturity Issue 1988 1988 Solid Waste Disposal System 5.25%-7.4% Revenue Bonds 6/1 and 12/1 6/1/02 $8,240,000 $ 8,240,000 Less: Current portion 390,000 Long -Term Portion S 7.850,000 Recreational (Golf Course) Revenue Bonds (1) Pledge of Revenue - The revenue bonds are secured by a lien on the net revenues derived from the operations of the project and racetrack and jai alai fronton funds accruing annually to the County. (2) Establishment of Various Accounts a. Operating accounts to reflect all transactions which relate to the project. b. Sinking Fund account to pay principal and interest coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution. C. Reserve Fund account to accumulate an amount equal to the maximum amount of principal and interest coming due in any ensuing fiscal year. This account may be established at the option of the Board of County Commissioners. The amounts in this account are restricted by the bond resolution. d. Renewal and Replacement Fund account to pay for the costs of exten- sions, enlargements, additions, replacements or emergency repairs to the system. The amounts deposited into this account are determined by the County Administrator. The amounts in this account will be restricted by the bond resolution. 27. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: Recreational (Golf Course) Revenue Bonds - Continued (3) Other Covenants a. The proceeds of this bond issue are to finance the construction of a public golf course and related clubhouse facility, and interest on the bonds for the first three years. b. The bond resolution provides for additional covenants such as annual audit requirement and minimum insurance levels. (4) At September 30, 1988, these revenue bonds consisted of the following: Outstanding at Rates and Original September 30, Dates Maturity Issue 1988 1985 Recreational 6.40%-7.50% Revenue Bonds 9/1 9/1/15 $2,720,000 S 2,720,000 Less: Current portion Unamortized discount Long -Ter■ Portion Water and Sewer Revenue Bonds 66,373 S 2.653,627 On September 8, 1983, the County, with the approval of existing bondholders, revised certain covenants and terms. Covenants and terms associated with previous resolutions were dissolved. The following is a summary of the current covenants: (1) Pledge of Revenues - The revenue bonds are secured by a pledge of all gross revenues of the system and impact fees. (2) Establishment of Various Accounts a. Revenue Fund account to pay all operating and maintenance costs of the system. b. Sinking Fund account to pay principal and interest coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been estab- lished in the retained earnings. 28. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: (2) Establishment of Various Accounts - Continued c. Reserve Fund account to accumulate an amount equal to the maximum amount of principal and interest coming due in any ensuing fiscal year. When the maximum amount is obtained, no further deposits are necessary. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been established in the retained earnings. d. Renewal and Replacement Fund account to pay for the costs of exten- sions, enlargements, additions, replacements or emergency repairs to the system. The amounts deposited into this account are determined by a percentage of revenues. The amounts in this account are restricted by the bond resolution. Since the amounts are derived from operating revenues and are restricted, a corresponding reserve has been estab- lished in the retained earnings. (3) Investment Restrictions - The resolution provides that all monies in the above funds and accounts may only be invested in direct obligations of the U.S. Government, or in obligations unconditionally guaranteed by the U.S. Government. (4) Other Covenants - The resolution provides for several additional cove- nants, such as required revenue rates, annual audit, minimum insurance levels and capital project reserve amounts determined by the County's consulting engineers. (5) Bonds Issued - At September 30, 1988, revenue bonds consisted of the following: Outstanding at Rates and Original September 30, Description Dates Maturity Issue 1988 1979 Water and Sewer 5% Revenue Bonds 9/1 and 3/1 9/1/2018 $ 402,500 $ 366 500 1979 Water and Sewer Revenue Bonds - 5% Series II 9/1 and 3/1 9/1/2020 $ 236,000 221,000 1960 Water and Sewer 5• Revenue Bonds 10/1 and 4/1 9/1/2022 $5,825,900 5,592,000 1985 Water and Sewer 51 Revenue Bonds 9/1 and 3/1 9/1/2024 $2,750,700 2,698,700 Total 8,878,200 Less: Current portion 103,000 Long -Term Portion S 8,775,200 29. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: Housing Authority Revenue Bonds - Continued • The Housing Authority collects fees, rentals and other charges for the use of the facilities of the project, and out of such funds pays the principal of and interest on the land, the necessary expenses of operating and maintenance and all reserve and sinking fund require- ments. Fees, rentals and other charges will not be reduced so as to be insufficient to provide funds for such purposes. • Establishment of Various Accounts - The Loan and Grant Resolution provides for the creation and establishment of the following accounts, which are to be deposited with a depository in the State of Florida, which is a member of the Federal Deposit Insurance Corporation and which is eligible under the laws of the State of Florida to receive public funds: a. Revenue Account to deposit all gross revenues and provide for payment of costs of operation and maintenance of the project. b. Bond Service Accounts: • Interest Account to deposit monthly from Revenue Account 1/12 of all interest coming due on the next interest payment date. Principal Account to deposit monthly from Revenue Account 1/12 of the principal amount which will become due on such annual maturity date. Renewal, Replacement and Improvement Account to deposit from the Revenue Account $1,584 per month. In addition, at the end of each fiscal year, all excess funds remaining in the Revenue Account are deposited in the Renewal Replacement and Improvement Account until the amount on deposit quals $190,000. c. Investment Restrictions - Monies in any account created ii. the resolution may be invested in authorized investments which matu.� not later than 15 days prior to the dates on which the monies wil be needed for the purpose of such fund. Authorized investments as specified by the resolution are as follows: Direct obligations of the U.S. Government Bonds, debentures or notes backed by the full faith and credit of the U.S. Government 31. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 S. Lona -Term Debt - Continued: Annual Debt Service Payments - Enterprise Fund Bonds Payable - The annual debt service payments to amortize the bonds payable outstanding at September 30, 1988 are as follows Advance Refunding of Enterprise Fund Debt - In June, 1988, the County defeased $1,050000 Solid Waste Disposal System Revenue Bonds, Series 1977 upon issuance of the 08,240,000 Solid Waste Disposal District, Solid Waste Disposal System Revenue Bonds, Serlee 1990. The defeasance resulted in the recognition of an accounting yarn or #77,969 and in en economic Loss (01910renoe between the j?rek'gsnt value o; the 4904 agrriaea payments vn the 9113 and pew dept) or $13.130. 32. l Water and Golf Course Fiscal Year Sewer Landfill Recreational Ending Revenue Revenue Revenue Housing September 30, Bonds Bonds Bonds Authority Total 1989 S 546,910 S 938,430 S 201,360 $ 72,080 $ 1,758,780 1990 546,760 937,955 201,360 71,550 1,757,625 1991 545,360 935,405 241,360 72,020 1,794,145 1992 545,260 935,895 243,800 71,480 1,796,435 1993 547,885 934,050 245,830 71,940 1,799,705 1994-1998 2,731,375 4,683,555 1,213,960 360,320 8,989,210 1999-2003 2,729,875 3,757,335 1,217,415 359,860 8,064,485 2004-2008 2,731,475 - 1,216,375 359,660 4,307,510 2009-2013 2,730,775 - 1,213,375 358,710 4002,860 2014-2018 2,731,275 - 484,500 358,960 3,574,735 2019-2023 2,224,825 - - 71,710 2,296,535 2024-2025 163,485 163,485 Totals 18,775,260 13,122,625 6,479,335 2,228,290 40,605,510 Liss: Amounts representing Interest 9,897,060 4,882,625 3,759,335 320,290 18,859,310 Total Bonds Payable 8,878,200 8,240,000 2,720,000 10908,000 21,746,200 Less% Current portion 103,000 390,000 - 53,000 546,000 Unamor- tizsd (Seal dilreawat - - 66,171 - 66, d77 s e s 7.9 5JAJA, U SL,@ SZL,LJ7,U27 Advance Refunding of Enterprise Fund Debt - In June, 1988, the County defeased $1,050000 Solid Waste Disposal System Revenue Bonds, Series 1977 upon issuance of the 08,240,000 Solid Waste Disposal District, Solid Waste Disposal System Revenue Bonds, Serlee 1990. The defeasance resulted in the recognition of an accounting yarn or #77,969 and in en economic Loss (01910renoe between the j?rek'gsnt value o; the 4904 agrriaea payments vn the 9113 and pew dept) or $13.130. 32. l INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: B. Enterprise Fund Bond Anticipation Notes - In December, 1987, the County issued 6 3/81 Water and Sewer Revenue Bond, Series 1986, Anticipation Notes in the principal amount of $9,200,000. These notes were issued in anticipation of their receipt by the County of the proceeds from the sale of its $9,200,000 Water and Sewer Revenue Bonds, Series 1986. The County currently expects the Series 1986 Bonds will be sold to the United States Department of Agriculture, Farmers Home Administration pursuant to the laws of the State of Florida and the Resolution No. 86-35 duly adopted by the County on June 18, 1986, as amended and supplemented, on or prior to December 1, 1990. At September 30, 1988, revenue bond anticipation notes consisted of the following: Rates Outstanding at and Original September 30, Dates Maturity Issue 1988 Water and Sewer Revenue Bonds, Series 1986 Anticipation Notes 6.375% 12/1/90 59,200,000 59,200,000 C. Chanaes in General Lona -Term Debt - A summary of changes in general long-term debt follows: 33. Balance Balance October 1, September 30, 1987 Additions Deletions 1988 Accrued Compensated Absencess Board $ 420,475 $ 84,489 $ - $ 504,964 Clerk of Court 31,165 7,214 6,615 31,764 Sheriff 97,188 41,206 37,387 101,007 Tax Collector 23,429 2,944 - 26,373 Property Appraiser - 20,511 - 20,511 572,257 156,364 44,002 684,619 Capital Leases: Board 135,591 - 32,352 103,239 Clerk of Court 228,282 - 81,675 146,607 Sheriff 11,317 - 61900 4,417 Tax Collector 56,557 71,010 56,557 71,010 431,747 71,010 177,484 325,273 33. 34. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: Bonds Payable: Refunding and Improvement Revenue Bonds - 1985 Series Capital Improvement 9,385,000 - 250,000 9,135,000 Revenue Bonds - 1987 Series General Obligation 3,655,000 - 115,000 3,540,000 Bonds - 1983 Beach Acquisition 1,125,000 - 1,125,000 - Special Assessment Bonds - lot 4,190,575 - 4,190,575 Special Assessment - Bonds - 8.47% - 3,227,675 3,227,675 18,355,575 3,227,675 5,680,575 15,902,675 Totals S19,3� 5� $3,4_50049 55,902 S16,9911�2,567 D. General Lona -Term Debt (1) Revenue Bonds - On July 10, 1985, the Board adopted a resolution autho- rizing the issuance of $25,000,000 of Refunding and Capital Improvement Revenue Bonds. On November 1, 1985, the Board issued $9,855,000 of Refunding and Improvement Bonds, 1985 Series. The proceeds of this issue legally defeased the County's Capital Improvement Revenue Bonds, Series 1980 and 1981, and provided funds to finance the cost of construction and to reimburse the County for certain capital projects. On July 1, 1987, the Board issued $3,655,000 of Capital Improvement Revenue Bonds, 1987 Series. The proceeds of this issue provide funds for construction of certain capital projects. The bonds and Interest thereon, from both these issues, are payable solely from and secured by a first, lien upon and pledge of the County's half -cent sales tax and related investment income. INDIAN RIVER CCUN TY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Ter■ Debt - Continued: The revenue bond resolution, as dated July 10, 1985, and as amended and supplemented, provides for the following: a. The Revenue Bonds consist of: Balance Interest Outstanding Rates and Original September 30, Dates Maturity Issue 1988 Refunding and Improve- ment Revenue Bonds, 1985 Series - 5.51-8.751 Serial Bonds 9/1 A 3/1 1997 g 4,000,000 $ 39280,000 Ter■ Bond 9% 2000 1,735,000 1,735,000 Ter■ Bond 9.125% 2002 1,440,000 1,440,000 Term Bond 9.125% 2005 2,680,000 2,680,000 9.8551000 9,135,000 Capital Improvement Revenue Bonds, 1987 Series - 4.751-7.30% Serial Bonds 9/1 A 3/1 2000 2,165,000 2,050,000 Term Bond 7.751 2005 1,490,000 1,490,000 3,655,000 3,540,000 513,510,000 512,675,000 b. Disbursements or expenditures of bond proceeds which have been desig- nated as construction funds shall be made only after written approval of the County Administrator or his designee. c. Establishment and maintenance of various funds - Revenue Fund to record County sales tax monies received by the County from the State. Sinking Fund to pay principal and interest payments coming due during the current fiscal year. The amounts in this account are restricted by the bond resolution and thus, a reserve of fund balance has been established for them. d. Other covenants - The resolution provides for several additional covenants such as required books and records and annual audit. 35. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATENENTS - CONTINUED Year Ended September 30, 1968 6. Lona -Term Debt - Continued: (2) Special Assessment Bonds - The proceeds of the initial special assessment bonds were used to extend the water and sewer distribution systems along Florida State Road 60. During the current fiscal year, the County refinanced the outstanding bonds in order to obtain a lower interest rate. The refinancing resulted in economic gains of $24,615 and $316,638 for the Route 60 Waterline bonds and Route 60 Sewerline bonds, respec- tively. The payments of principal and interest on special assessment bonds and all other required payments are being paid solely from the proceeds of the assessments levied against benefiting property owners. There is no secon- dary lien on the assets or the revenues of the County's Water and Sewer System, however, if through foreclosure proceedings the property cannot be sold at auction, then the County must acquire it for its market value. At September 30, 1988, special assessment bonds consisted of the following: 36. Outstanding at Rates and Original September 30, Description Dates Maturity Issue 1988 Route 60 Waterline 8.47% construction 5/1 1997 S 430,000 $ 430,000 Route 60 Sewerline 8.47% construction 1/1 1996 2,797,675 2,797,675 53.227.675 53.227.675 36. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: (3) The annual debt service requirements to amortize all revenue bonds and general obligation bonds and special assessment bonds outstanding at September 30, 1988 are as follows: 37. Revenue Bonds Refunding Fiscal and Capital Year Improvement Improvement Ending 1985 Series 1987 Series 1989 $ 10064,159 $ 371,598 1990 10060,596 370,347 1991 1460,076 368,523 1992 1,062,506 371,097 1993 1,062,344 367,760 1994-1998 5,312,481 1,844,460 1999-2003 5410,538 1,846,688 2004-2007 2,124,150 743,275 Totals 18,056,850 6,283,748 Less: Amount representing Interest 8,921,850 2,743,748 Total S 9.135,000 53,540,000 Special Assessment Bonds Fiscal Route Route Year 60 60 Ending Waterline Sewerline Total 1989 S 84,199 S 586,672 S 2,106,628 1990 80,152 557,052 2,068,147 1991 76,105 527,432 2,032,136 1992 72,058 497,811 2,003,472 1993 68,012 468,192 1,966,308 1994-1998 231,579 1,226,850 8,615,370 1999-2003 - - 7,157,226 2004-2007 - - 2,867,425 Totals 612,105 3,864,009 28,816,712 Less: Amount representing interest 182.105 1,066,334 12,914,037 Total S 430,000 S 2,791.675 S15.9�6755 37. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Long -Term Debt - Continued: (5) The revenue, general obligation, and special assessment bonds are reported in the General Long -Term Debt Account Group since they do not represent obligations of any governmental or proprietary fund types. E. Summary of Defeased Debt Outstanding The following outstanding revenue bonds are legally defeased. Since governmental obligations are held in escrow for the payment of principal and interest, the bonds are not liabilities of the County. Capital Improvement Revenue Bonds: Series 1980 Series 1981 Solid Waste Disposal System Revenue Bonds, Series 1977 Retired Outstanding During at Fiscal Year September 30, 1988 S 55.000 S 15.000 1988 x,4,025.000 S 670.000 F. Capital Leases and Notes Payable (1) General Long -Term Debt Capital Leases - The County has entered into several lease -purchase agreements to purchase various types of equipment with lease terms varying from 24 to 60 months. The following is a schedule of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments, as of September 30, 1988: Present Value of Net Minimum Lease Payments 5103.239 S146,607 S 4,417 S71.010 S325.273 38. Board of Clerk of Year Ending County The Circuit Tax September 30, Commissioners Court Sheriff Collector Total 1989 S 43,999 $ 57,447 $ 4,767 S40,777 $146,990 1990 32,948 56,369 - 40,072 129,389 1991 23,051 41,796 - - 64,847 1992 21,830 13,785 - 35,615 Total Minimum Lease Payments 121,828 169,397 4,767 80,849 376,841 Less: Amount representing interest 18,589 22,790 350 91839 51,568 Present Value of Net Minimum Lease Payments 5103.239 S146,607 S 4,417 S71.010 S325.273 38. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued: F- Capital Leases and Note Payable - Continued The following is an analysis of the leased property under capital leases: Capitalized Cost Board of Clerk of Type of County the Circuit Tax Property Commissioners Court Sheriff Collector Total Computer equip- ment S - $225,695 $ - $ 71,010 $296,705 Copier equip- ment - 2,745 12,143 - 14,888 Automotive equipment 107,790 - - - 107,790 Communication equipment 84,837 - - - 84,837 S19� 5228,440 512.143 S 71,010 S504i220� The equipment listed above is recorded in the General Fixed Assets Account Group. (2) Enterprise Funds Capital Leases - The County has entered into two lease - purchase agreements to purchase golf course equipment with a lease term of 48 months. This equipment is recorded in the County's Golf Course Enterprise Fund as depreciable assets. The following is a schedule of future minimum lease payments under these capital leases, together with the present value of the net minimum lease payments, as of September 30, 1988: Year Ending September 30, 1989 S 52,645 1990 52,645 1991 31,637 Total Minimum Lease Payments 136,927 Less: Amount representing interest 11,952 Present Value of Net Minimum Lease Payments S124,975 39. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 6. Lona -Term Debt - Continued:• F. Capital Leases and Notes Payable - Continued (3) Enterprise Funds Note Payable - The County issued a note in the amount of $1,006,554 at 9.25% for the purchase of a sod farm for the Water and Sewer System. The sod farm has been recorded as land in the Water and Sewer Enterprise Fund. The balance at September 30, 1988 is $1,006,554. The note payable will mature as follows: 1989 $ 793,106 1990 334,910 Total payments 1,128,016 Less: Amount representing interest 121,462 Total (4) Housing Authority Note Payable - At September 30, 1988, the Housing Authority had a note payable of $89,101 to a bank with interest at prime, due November 7, 1988. Payments are applied on the above note to interest and then principal. The proceeds of this note was used to retire a note payable to the State of Florida, Department of Community Affairs. 7. Retirement• A. Florida Retirement System The County's employees, except certain firemen, participate in the Florida Retirement System (FRS), a multiple employer cost sharing defined benefit retirement system, administered by the Florida Department of Administration. The FRS has five classes of membership with descriptions and contribution rates in effect during the period ended September 30, 1988 as follows (contribution rates are in agreement with the actuarially determined rates): Regular Class - Members not qualifying for other classes (13.14% rate). Senior Management Service Class - Members of senior management who do not elect the optional annuity retirement program (13.88% rate). Special Risk Class - Members employed as law enforcement officers, firefighters, or correctional officers and meet the criteria set to qualify for this class (15.11% rate). 40. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 7. Retirement - Continued; A. Florida Retirement System - Continued Special Risk Administrative Support Class - Special risk members who are transferred or reassigned to non -special risk and meet the criteria (15.44% rate). Elected State Officer's Class - Certain elected State and County officials (varies from 11.50% to 20.94% rates). The FRS provides vesting after ten years of creditable service. Members are eligible for normal retirement after vesting (10 years or more creditable service for regular members). Early retirement may be taken anytime; but there is a five percent benefit reduction for each year prior to normal retirement age (less than 30 years service or 62 years of age for regular members). Members are also eligible for in -line -of -duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. The County's contributions to the FRS, which are based on Section 121, Florida Statutes, through September 30, 1988 were $2,279,360 on covered payroll of $16,508,439, for a 13.811 contribution rate. Total payroll for the County was $16,913,425. The most recent actuarial report was prepared as of July 1, 1987 which recom- mends an increase in contribution rates over the next five years in order to meet normal cost and fund the unfunded actuarial accrued liability. The report indicated two major changes in procedures and assumptions. The investment return was changed to 8% from 9% and the asset valuation method was changed. Section 121.031(3) of the Florida Statutes requires that an actuarial review of the FRS be performed biannually. The conclusions of the review are included in the annual report of the FRS. 41. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEKENTS - CONTINUED Year Ended September 30, 1988 7. Retirement - Continued: A. Florida Retirement System - Continued As of June 30, 1987, the FRS had 83,403 retirees and beneficiaries, 10,584 vested but terminated potential annuitants and 453,939 active members. Of the active members, 172,514 are vested. The total annual payroll of the vested members was $9,353,674,000. Total June 30, 1987 (in millions) Pension benefit obligation: Active member contributions $ 512 Employer -financed vested benefits 11,799 Bmployer-financed non -vested benefits 2,142 Total 14,453 Annuitants and other 6,104 Other inactive members 262 Total pension benefit obligation 20,819 Net assets available for benefits 13,977 Unfunded pension benefit obligations 5 6,842 The amount of the total pension benefit obligation is based on a standardized measurement established by the GASB Statement No. 5. The standardized measure- ment is the actuarial present value of credited projected benefits. This pension valuation method reflects present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date and is adjusted for the effects of projected salary increases and any changes in benefits. Because the standardized measure is used only for disclosure purposes only, the measurement is independent of the actuarial computation made to determine contributions to the pension plan which is the entry age actuarial cost method. For further information, including 10 -year historical trend information, refer to the State of Florida's Comprehensive Annual Financial Report or the various publications available from the Florida Department of Administration. 42. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 B. Firefighters Pension Plan In October, 1981, the South Indian River County Fire District took over opera- tions of the City of Vero Beach's Fire Department. Full-time firemen were given the option of joining the Florida Retirement System or remaining in the City's plan. Twenty full-time firemen and all of the volunteers elected to remain in the City's plan. Those who joined the Florida Retirement System received refunds of their contributions from the City's plan. The City has by Statute retained fiduciary responsibility for this PERS. Employer contributions to the PERS are made by the County. Benefits vest after 10 years of service. Firefighters who retire at the earlier of age fifty-five and ten years of'contributing service or age fifty-two and twenty-five years of contributing service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 2.50 percent of their base compensation over the highest five years of employment, multipled by credited service. The PERS also provides death and disability benefits. These benefits and other requirements are established by State Statute and City of Vero Beach ordinance. The firefighters are required to contribute 7 percent of their compensation. The PEAS also receives contributions from the State for insurance premium refunds. The County is required to contribute the remaining amount necessary to pay the annual normal cost plus an amount sufficient to fund any unfunded accrued liability over 40 years. Funding Status and Progress - The amount shown as the "pension benefit obliga- tion" is a standardized disclosure measure of the present value of pension bene- fits, adjusted for the effects of projected salary increases and step -rate bene- fits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the PERS on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine contributions to the PERS. The pension benefit obligations were computed as a part of actuarial valuations performed as of January 1, 1968. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets compounded annually of 6 1/21, and (b) projected salary increases of 7% a year compounded annually attributable to inflation. 43. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1986 7. Retirement - Continued: B. Firefighters Pension Plan - Continued Total unfunded pension benefit obligations are as follows: There were no current year changes in actuarial assumptions or benefit pro- visions that would affect the pension benefit obligation. Actuarially Determined Contribution Requirements and Contributions Made - The County's funding policy provides for actuarially determined periodic contribu- tions to the plans. The required contributions are actuarially determined and include normal costs (after deducting expected employee contributions) and the amount of the additional unfunded obligations created due to increases in plan benefits over a period of 40 years. Employer contribution rates are determined using the frozen entry age actuarial funding method. The Fireman's PERS uses the aggregate actuarial cost method which does not produce a past service liability that is amortized over a fixed number of years. Instead, the value of all projected benefit in excess of current asset is paid off over the future working years of the covered employee. Therefore, this method automatically funds the remaining value of benefits while there are still active members. The significant actuarial assumptions used to determine the actuarially deter- mined employer contribution requirement are the same as those used to compute the actuarial present value of credited projected benefits. There were no changes in the current year in actuarial assumptions, actuarial funding method, or benefit provisions. 44. January 1, 1988 Pension Benefit Obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits S 942,997 Current employees - Accumulated employee contributions including allocated investment earnings 237,339 Employer -financed vested 1,293,598 Employer -financed nonvested 73,744 Total Pension Benefit Obligation 2,547,678 Net Assets Available for Benefits, at cost 2,470,577 Net Assets Over (Under) Pension Benefit Obligation S (77,101) Net Assets Available for Benefits at Market Value S2.495.126 There were no current year changes in actuarial assumptions or benefit pro- visions that would affect the pension benefit obligation. Actuarially Determined Contribution Requirements and Contributions Made - The County's funding policy provides for actuarially determined periodic contribu- tions to the plans. The required contributions are actuarially determined and include normal costs (after deducting expected employee contributions) and the amount of the additional unfunded obligations created due to increases in plan benefits over a period of 40 years. Employer contribution rates are determined using the frozen entry age actuarial funding method. The Fireman's PERS uses the aggregate actuarial cost method which does not produce a past service liability that is amortized over a fixed number of years. Instead, the value of all projected benefit in excess of current asset is paid off over the future working years of the covered employee. Therefore, this method automatically funds the remaining value of benefits while there are still active members. The significant actuarial assumptions used to determine the actuarially deter- mined employer contribution requirement are the same as those used to compute the actuarial present value of credited projected benefits. There were no changes in the current year in actuarial assumptions, actuarial funding method, or benefit provisions. 44. INDIAN RIVER COUNTY, FLORIDA WQTTEB TO FINANCIAL STATENENTS - CONTINDED Year Ended September 30, 1988 7. Retirement - Continued: S. Firefighters Pension Plan - Continued The contributions made to the plan during the fiscal year ended September 30, 1988 were based on the actuarial reports dated January 1, 1987 and January 1, 1988. An analysis of contributions made during the current fiscal year is as follows: Contributions made: Employee - 71 of compensation State - $ 28,349 Premium Tax Refunds 78,527 Employer - Additional amount necessary to pay the annual normal cost and amortize any unfunded actuarial accrued liability 21,157 Total Contributions Current Year Covered Payroll $404,986 Contributions as a Percentage of Current Year Covered Payroll: Employee 7.01 State 19.41 Employer 5.21 Trend Information - The required three-year and ten-year historical trend infor- mation is unavailable at this time. S. Deferred Compensation Plan: The County offers its employees deferred compensation plans created in accordance with the Internal Revenue Code, Section 457. The plan permits them to defer a portion of their compensation until future years. The monies placed in the deferred compensation plan are not available to employees until termination, retirement, death, or an unforseeable emergency. All amounts of compensation deferred under the plan,. all property and rights pur- chased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or beneficiary) solely the property and rights of the County, subject only to the claims of the County's general creditors. Participants' rights under the plan are equal to those of general creditors in an amount equal to the fair market value of the deferred account for each participant. The County has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The County believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. 45. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 9. Segment Information: The County maintains Enterprise Funds for its Water and Sewer System, Solid Waste System, County Building, and Golf Course and Housing Authority Funds. Segment information for the year ended September 30, 1988 follows: Solid Water Housing Waste Golf County and Sever Author - System Course Building System ity Total Operating Revenues $1,957,590 $1,106,587 $ 767,119 5 3,S30,826 $ 206,550 S 7,566,672 Depreciation and Amortisation Expense 261,668 Operating Income (Loss) 4731,531) Operating Transfers: In (Out) - Net Income (Loss) (571,157) Fixed Asseta: Addition* 1,506,760 Deletions - net of accumulated depreciation I05 Net Working Capital 577,859 Total Asset* 12,320,063 Bonds and other Long - Term Liabilities - (net): Payable from operating revenues 7,673,869 Total Equity 1,756,261 Current Year Increase in Contributions 112,901 96. 167,S62 117,110 (76,076) 120.167 3,959 (16,920( 2,866.693 2,7BS,561 (16,055) 29,200 935.202 90.270 236.923 119,596 326,563 23,258 12,031,702 1,109 - 962,91S 1,272,908 11022,S00 67,260,303 76,366 1,430,156 (65,069) (330,317) 66,939 66.939 SS,669 (117,165) 21096 13,683,963 - S,273 (60,670) 2,736,092 2,626.022 66,075,381 17,629 18,312,352 11855,000 30,866,611 986,563 25,308,173 617,970 28,652,692 - 61199,669 - 6,312,570 INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1968 10. Operating Leases: The County has entered into operating leases, both as lessor and lessee. Lease terms vary from 5 to 30 years. Lease revenues totaled $45,000 and lease expendi- tures totaled $41,428 for the year ended September 30, 1988. Future Minimum Lease Receipts The following is a schedule by years of minimum future rentals to be received from the School Board on noncancellable operating leases for office space as of September 30: Year Ending September 30, 1989 $ 45,000 1990 45,000 1991 45,000 1992 45,000 1993 45,000 Remaining 753,750 Total future minimum lease receipts S978,750 The property being leased to the School Board is included in the County -s General Fixed Asset Account Group and has a carrying value, which approximates cost, of $734,000. Future Minimum Lease Payments The following is a schedule by years of minimum future rentals to be paid by the County (Tax Collector) for noncancellable operating leases for office space as of September 30: Year Ending September 30 1989 $ 59,816 1990 59,816 1991 59,816 1992 33,000 Total future minimum lease payments 5212,448 37, INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 11. Fund Equity: A. The County has established certain reserves for restricted assets of the Enterprise Funds. These assets are restricted by various covenants within the revenue bond issues, as described in Note 6. Reserved retained earnings at September 30, 1988 consist of the following: Water and Golf Sewer Housing Course System Authority Total Reserved for debt service $201,360 S 372,767 $ 4,417 S 578,544 Reserved for renewal and replacement - 440,839 119,566 560,405 Reserved for capital projects - 1,015,601 - 1,015,601 Total S201y360 S1.829,207 S 123,983 S2,154,550 B. The following is a summary of changes in Proprietary Fund contributions by Fund: Internal Enterprise Funds Service Fund olater waste Golf County and Sewer Housing Fleet System Course Building Syst" authority Management Total Contributions at October 1. 1987 $10,000 $422,013 S 12.181 $10,088,914 $538,221 $612,120 $19,683,049 Increase in contributions 112;901 - - 4,199,670 - 500 4,317,071 Depreciation on contributed assets 4.363 - - 520.616 1$.988 540,967 Contributions at 1988 September 30. UIL= 122.613 s l:.lel LULM i6"&M 521.767.56. 52].455.15] 48. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 11. Fund Equity - Continued: C. The County has established certain reserves within the fund equity section of the governmental funds. Reserved fund balances at September 30, 1988 consist of the following: Amount Board of County Commissioners: General Fund: Reserved for emergency management S 40.000 These funds are segregated in compliance with an agreement between the County and a mobile hose park to be used solely for emergency management purposes, a general fund type expenditure. Debt Service Funds: Reserved for debt service - Refunding and Improvement Bonds $1,637,571 Route 60 Sewer Assessment Bonds 189,960 Route 60 Water Assessment Bonds 51,879 These reserves represent fund balances restricted to debt service requirements of the revenue and general obligation bonds. Capital Projects Funds: Reserved for capital projects - Sheriff's Office and Communication Center S 358,322 County Jail 18 Community Health Building 75,759 Minimum Security Facility 550,434 These reserves are the fund balances that are restricted to specified capital projects. 49. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 12. Fund Equity Deficit: The following funds had deficits in fund balance or retained earnings at September 30, 1988: Fund Deficit Capital Projects Funds: Golden Sands Park $101,836 Library Construction 239,276 Jail - Phase III 227,976 Enterprise Funds: Golf Course 438,068 Internal Service Fund: Fleet Management 294,242 The deficit fund balances in the Capital Project Funds will be eliminated by inter - fund transfers and the issuance of debt in future periods. The retained earnings deficit in the Fleet Management Internal Service Fund will be eliminated by anticipated operating income in future periods. The Golf Course began operations during the fiscal year ended September 30, 1987. The retained earnings deficit in the Golf Course Enterprise Fund will be eliminated by anticipated operating income in future periods. 13. Commitments and Contincencies: A. Litigation - The County is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management, based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial position of the County. 50. INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUEp Year Ended September 30, 1988 13. Commitments and Contingencies - Continued: B. Construction Commitments - The County has various construction contracts out- standing at September 30, 1988. In the Capital Projects Funds projects are for Golden Sands Park and various road projects. In the Enterprise Funds, the landfill expansion and various water and sewer projects are under construc- tion. A summary of these projects at September 30, 1988 is as follows: Capital Proiects Enterprise Total Total contract price $ 447,057 $9,336,560 S 9,783,617 Total paid as of September 30, 1988 28,760 5,576,600 5,605,360 Remaining commitment at September 30, 1988 SS 418.2977 $3,759,960 S 4,178,257 C. Grants - Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures are disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the County. In the opinion of management, any such adjustments would not be significant. 14. Change in Accounting Estimate: During the current fiscal year, the County issued the Solid Waste Disposal System Revenue Bonds, which are in part to fund the costs of closure of Segment I of the Solid Waste Disposal District Landfill. The additional funding is necessary due to certain recent regulatory requirements which have escalated the costs of closure past the original estimates. Based on an engineering report made available in the current year, the County estimates the total costs of closure to be $1,658,000 for which $1,519,850 has been considered current and accrued in the current year in the Solid Waste Disposal District Enterprise Fund. 15. Subsequent Events: Water and Sewer System - On December 1, 1988, the County issued $3,900,000 in 6 7/88 Water Revenue Bond, Series 1988, Anticipation Notes. The notes were issued in anticipation of the receipt by the County of the proceeds from the future sale of its $4,000,000 Water Revenue Bonds, Series 1988. The County currently expects that the Series 1988 Bonds will be sold at public or private sale pursuant to the laws of the State of Florida and Resolution No. 88-44 duly adopted by the County on August 2, 1988. 51. INDIAN RIVER COUNTY, FLORIDA CONSINING BALANCE SB7SCl ALL ENTERPRISE FUNDS September 30, 1988 ASSETS Current Assets: Equity in pooled cash and investments Accounts receivable - net Due from other governments Interest receivable Inventories Total current assets Restricted Assets: Cash and investments: Sinking Fund Renewal and replacement and capital projects Customer deposits Capital construction Due from other funds Total restricted assets Property, Plant and Equipment: Land Buildings, distribution systems and improvements Equipment Construction in progress Less accumulated depreciation Total property, plant and equipment Other Assets: Unamortized bond costs Intangible assets Total other assets Total Assets 53 SOLID WASTE DISPOSAL GOLF DISTRICT COURSE S 230,437 S 1,200 237,570 713 138,785 - - 41,374 606,792 43,287 1,372,430 201,360 23,150 - 7,378,323 - 8,773,903 201,360 553,988 108,134 605,364 2,247,419 2,108,581 453,213 634,174 3,902,107 2,808,766 (1,217,910) (206,920) 2,684,197 2,601,846 255,171 - 255,171 512,320,063 52,846,4993 WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS $ 961,156 S 29,336 S 31,516 S 1,253,645 67 585,570 9,112 833,032 - 448 5,836 6,284 - 107,702 - 246,487 - 165,532 6,400 213,306 961,223 8881588 52,864 2,552,754 - 2,132,267 6,007 3,712,064 - 5,147,168 119,566 5,266,734 - 430,703 5,017 458,870 - 2,241,044 - 9,619,367 - 1,800,000 - 1,800,000 - 11,751,182 130,590 20,857,035 - 1,084,661 146,426 1,893,209 - 24,604,459 2,322,663 29,779,905 142,101 562,742 45,835 3,312,472 - 11,408,398 2,096 12,044,668 142,101 37,660,260 2,517,020 47,030,254 (80,824) (3,404,282) (76,346) (4,986,282) 61,277 34,255,978 2,440,674 42,043,972 - 94,554 - 349,725 - 270,000 1,894 271,894 - 364,554 1,894 621,619 S1,022,500 547,260,302 S2,626,022 $66,0380 The accompanying notes are an integral part of the financial statements. 54. INDIAN RIVER COUNTY FLORIDA COMBINING BALANCE SHEET - CONTINUED ALL ENTERPRISE FUNDS September 30, 1988 LIABILITIES AND FUND EQUITY Current Liabilities (Payable from Current Assets): Deficit in equity in pooled cash and investments Accounts payable Notes payable Due to other governments Other deposits held in escrow Deferred revenues Total current liabilities (payable from current assets) Current Liabilities (Payable from Restricted Assets): Accounts payable Retainage payable Accrued interest payable Bonds payable - current portion Customer deposits Closure costs payable Total current liabilities (payable from restricted assets) Other Liabilities: Accrued compensated absences Capital leases Notes payable Bond anticipation notes Bonds payable - net of unamortized discount Total other liabilities Total liabilities Fund Equity: Contributions Retained earnings: Reserved for debt service Reserved for renewal and replacement Reserved for capital projects Unreserved (deficit) Total retained earning■ (deficit) Total fund equity (deficit) Total Liabilities and Fund Equity 55, SOLID WASTE DISPOSAL GOLF DISTRICT COURSE S - S 30,641 26,933 28,339 200 1,027 28,933 60,207 487,735 55,952 - 184,333 16,780 390,000 - 23,150 1,519,850 2,661,020 16,780 23,869 6,959 - 124,975 7,850,000 2,653,627 7,873,869 2,785,561 10,563,822 2,862,548 118,538 422,013 - 184,580 1,637,703 (622,648) 1,637,703 (438,068) 1,756,241 (160055) $12,3200,06 3 S2,846 ,493 The accompanying notes are an Integral part of the financial statements. 56. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS 1,575 $ 32,216 5,605 733,824 2,858 799,559 - 700,000 - 700,000 7,203 10,166 - 17,369 51500 - - 5,700 ' - - 1,027 18,308 1,443,990 4,433 1,555,871 - 978,970 - 1,466,705 - 450,605 - 506,557 - 232,509 1,590 435,212 - 103,000 53,000 546,000 - 430,703 4,928 458,781 ' - - 1,519,850 - 2,195,787 59,518 4,933,105 17,629 30,598 - 79,055 - - - 124,975 - 306,554 89,101 395,655 - 9400,000 - 9,200,000 - 8,775,200 11855,000 21,133,827 17,629 18,312,352 11944,101 30,933,512 35,937 21,952,129 2,008,052 37,422,488 12,181 21,767,567 522,233 22,842,532 - 372,768 4,417 561,765 - 440,839 119,566 560,405 - 1,015,601 - 1,015,601 974,382 1,711,398 (28,246) 3,672,589 974,382 3,540,606 95,737 5,810,360 966,563 S1,0�00 25,308,173 547,260.302 617,970 S2,626,022 28,652,892 S66,075,380 The accompanying notes are an Integral part of the financial statements. 56. INDIAN RIVER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES EXPENSES AND CHANGES IN RETAINED EARNINGS ALL ENTERPRISE FUNDS Year Ended September 30, 1988 Operating Revenues: Charges for services Total operating revenues Operating Expenses: Personal services Materials, supplies, services and other operating Depreciation and amortization Total operating expenses Operating Income (Loss) Nonoperating Revenues (Expenses): Interest income Operating grants Gain on disposal of equipment Interest expense Amortization expense Loss on disposal of equipment Total nonoperating revenues (expenses) Operating Transfers: Operating transfers in Income (Loss) Before Extraordinary Gain Extraordinary Gain on Defeasance of Debt Net Income (Loss) Add: Depreciation on Fixed Assets Acquired by Contributed Capital Increase (Decrease) in Retained Earnings Retained Earnings (Deficit), at Beginning of Year Retained Earnings (Deficit), at End of Year 57. SOLID WASTE DISPOSAL GOLF DISTRICT COURSE 51457,590 21,106,587 1,957,590 1,106,587 528,573 451,276 1,918,700 390,639 241,848 147,562 2,689,121 989,477 (731,531) 117,110 141,184 18,802 6,662 - 5,452 _ (38,990) (211,530) (1,861) (2,458) (29,142) 83,305 (195,186) (648,226) (78,076) 77,069 (571,157) (78,076) 4,363 (566,794) (78,076) 2,204,497( 359,992) S1,637,703 S (438,068) The accompanying notes are an integral part of the financial statements. 58. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS S 747,119 $3,530,826 $ 204,550 S 7,546,672 747,119 3,530,826 204,550 7,546,672 492,178 799,830 82,190 2,354,047 135,471 1,556,671 91,103 4492,784 29,200 935,202 76,346 1,430,158 656,849 3,291,903 249,639 7,876,989 90,270 238,923 (45,069) (330,317) 57,530 536,443 4,238 758,197 - - 55,079 61,741 2,105 237 - 7,794 - (448,418) (23,278) (722,216) (602) - (4,921) (309) - (29,451) 59,326 87,660 36,039 71,144 ' - 64,939 64,939 149,596 326,563 55,889 (194,234) - - 77,069 149,596 326,583 55,889 (117,165) - 520,616 15,988 540,967 149,596 847,199 71,877 423,802 824,786 2,693,407 23,860 5,386,558 SS 974,3822 S3,540,606 SS5,7377 Sa,81�,60 The accompanying notes are an integral part of the financial statements. 58. INDIAN RIVER COUNTY, FLORIDA CONSINING STATEMENT OF CHANGES IN FINANCIAL POSITION ALL ENTERPRISE FUNDS Year Ended September 30, 1987 59. SOLID WASTE DISPOSAL GOLF DISTRICT COURSE Sources of Working Capital: From operations: Net income (loss) before extraordinary item $ (648,226) S (78,076) Add expenses not creating current liabilities or using current assets: Depreciation and amortization 243,709 150,020 Working capital provided from operations exclusive of extraordinary item (404,517) 71,944 Extraordinary item 77,069 - Disposal of fixed assets net of accumulated depreciation 205 3,959 increase in current liabilities payable from restricted assets 2,501,357 - Increase in other liabilities 4,286 1,840 Increase in capital leases Increase in notes payable - 36,750 Increase in bond anticipation notes payable _ Increase in revenue bonds payable 8,240,000 _ Increase in contributions 112,901 Total sources of working capital 10,531,301 114,493 Applications of Working Capital: Increase in restricted assets 7,664,044 Acquisition of fixed assets 1,506,760 120,147 Increase in other assets 246,801 Decrease in capital leases Decrease in notes payable - _ 42,474 Decrease in revenue bonds payable 1,307,028 _ Total applications of working capital 10,724,633 162,621 Net Increase (Decrease) in Working Capital SS (1933,33332) SS (48,1228) Component Elements of Net Increase (Decrease) in Working Capital: Equity in pooled cash and investments $ (538,221) $ (103,483) Accounts receivable - net 104,144 Due from other governments 713 Interest receivable 91,943 Inventories - Deficit in equity in 9 Y pooled cash and investments - 21,147 Accounts payable - 135,870 35,870356 (30,641) Other liabilities 52,641 ---11 L7 8 0 Net Increase in Working Capital SS (193,332) S (48.128 59. The accompanying notes are an integral part of the financial statements. 60. WATER COUNTY AND SEWER HOUSING BUILDING SYSTEM AUTHORITY TOTALS S 149,596 $ 326,583 S 55,889 S (194,234) 29,200 935,804 76,346 1,435,079 178,796 1,262,387 132,235 1,240,845 - - - 77,069 11109 - - 5,273 - 1,701,356 56,776 4,259,389 3,444 9,939 89,101 108,610 - - - 36,750 - 1,006,554 - 1,006,554 - 9,200,000 - 9,200,000 - - - 8,240,000 - 4,199,670 4,312,571 183,349 17,379,906 278,112 28,487,161 - 5,633,070 127,800 13,424,914 23,258 12,031,702 2,096 13,683,963 - 75,900 11000 323,701 - - - 42,474 - 700,000 - 700,000 - 103,000 53,000 1,463,028 23,258 18,543,672 183,896 29,638,080 S 160,091 S(1.163,766) S 94,216 S(1,150,919) $ 177,259 $ (51,843) 6 51988 $ (510,300) (5,412) 106,475 (23,123) 182,797 - - (122,413) (122,413) (1,690) 270 - 90,523 - 26,241 (19,199) 28,189 - - - (30,641) 2,637 (564,567) 19,044 (354,660) (12,703) (680,342) 2331919 (434,414) S 160,091 S(1.163.766) S 94,216 5(1,150,919) The accompanying notes are an integral part of the financial statements. 60. APPENDIX B FORM OF OPINION OF BOND COUNSEL APPENDIX C SPECIMEN MUNICIPAL BOND INSURANCE POLICY APPENDIX D DEFINITIONS 1. "Act" shall mean Chapters 125 and 159, Florida Statutes (1987), as amended, and other applicable provisions of law. 2. "Additional Parity Bonds" shall mean additional bonds issued in compliance with the terms, conditions and limitations contained in the Resolution which have an equal lien on the Pledged Funds, as herein defined, and rank equally in all respects with all other Bonds issued under the Resolution as to lien and security for payment. 3. "Authorized Investments" shall mean those investments specified in Section 125.31, Florida Statutes (1987), as amended. 4. "Board" shall mean the Board of County Commissioners of Indian River County, Florida. 5. "Bond Amortization Account" shall mean the account created pursuant to the Resolution into which funds shall be deposited for purposes of the mandatory redemption of Term Bonds. 6. "Bond Registrar" shall mean Florida National Bank, St. Petersburg, Florida. 7. "Bonds" shall mean the Series 1989 Bonds together with any Additional Parity Bonds hereafter issued under the Resolution. 8. "Consulting Engineers" shall mean such qualified and recognized consulting engineers, having a nationwide and favorable reputation for skill and experience in the construction and operation of systems such as the System at the time retained by the County to perform the acts and carry out the duties as provided in the Resolution for the Consulting Engineers. 9. "Costs" shall mean all expenses necessary, appurtenant or incidental to the acquisition or construction of any property, real, personal or mixed, deemed necessary or desirable for carrying out the purposes of the System, including, without intending to limit the generality of the foregoing, the cost of any land or interest therein or of any fixtures, equipment or personal property necessary or convenient therefor; costs of acquiring any water or sewer system or other property in place, or any undivided interest therein, which can be operated as part of the System or which may be declared by resolution of the Board to be part of the System; engineering, legal and financing expenses; expenses for estimates of costs and of revenues; expenses for surveys; the fees of fiscal agents, financial advisors and consultants; administrative expenses relating solely to such acquisition or construction; the capitalization of interest for a reasonable period after the issuance of Bonds to finance any portion of the Costs of such acquisition or construction; the creation and establishment of reasonable reserves for debt service and operation and maintenance; the discount on the sale of Bonds to finance any portion of the Costs of such acquisition or construction; and such other costs and expenses as may be necessary or incidental to such acquisition or construction. 10. "County" shall mean Indian River County, Florida. 11. "Federal Securities" shall mean direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, which are not redeemable prior to maturity at the option of the obligor. 12. "Fees in lieu of Franchise Fees" shall mean the fees paid by the Utility Services Department of the County to the County in consideration for the use of public streets and rights-of-way in the County and to defray costs incident to the regulation by the County of the services and facilities of the Utility Services Department of the County. 13. "Fiscal Year" shall mean the period beginning with and including October 1st of each year and ending with and including the next September 30th. 14. "FmHA" shall mean the Farmers Home Administration, United States Department of Agriculture. 15. "Franchise Fees" shall mean the fees paid by water and/or sewer utilities, other than the Utility Services Department of the County, to the County in consideration for the use of public streets and rights-of-way in the County and to defray costs incident to the regulation by the County of the services and facilities of such utilities. 16. "Impact Fees" shall mean the fees or charges imposed upon new customers of the System to provide funds for the payment of all or a portion of the costs and expenses of additions, extensions and improvements to the System made necessary by the inclusion of such new customers. 17. "Net Revenues" shall mean the Revenues less Operating Expenses. 18. "Operating Expenses" shall mean the current expenses paid or accrued for the operation, maintenance and repair of all facilities constituting a part of the System, as determined in accordance with generally accepted accounting methods, and shall include, without limiting the generality of the foregoing, 2 insurance premiums, administrative expenses of the County related solely to the System, costs of labor, materials and supplies used for such operation and charges for the accumulation of appropriate reserves for current expenses not annually recurrent but which are such as may reasonably be expected to be incurred in accordance with such accepted accounting methods, but shall exclude payments into the Sinking Fund or the Reserve Account therein and any allowances for depreciation_ or for renewals or replacements of capital assets of the System. 19. "Operation and Maintenance Fund" shall mean the account created pursuant to the Resolution for the purposes of receiving and maintaining funds transferred from the Revenue Fund for the payment of Operating Expenses. 20. "Original Bonds" shall mean the bonds of the County known as the Water and Sewer Revenue Bonds, Series 1979, dated August 30, 1979, the Water and Sewer Revenue Bonds, Second Series 1979, dated May 21, 1981, the Water Revenue Bonds, Series 1980 (South County Water System), dated September 30, 1982, and the Water and Sewer Revenue Bonds, Series 1982, dated April 30, 1985. 21. "Paying Agent" shall mean Florida National Bank, St. Petersburg, Florida. 22. "Pledged Funds" shall mean the Net Revenues, together with any other receipts, revenues and funds pledged in connection with the Bonds. 23. "Record Date" shall mean the 15th day of the month immediately preceding an interest or other applicable payment date for the Bonds. 24. "Registered Owner" or any similar term shall mean any person who shall be the owner of any outstanding Bond or Bonds as shown on the books of the County maintained by the Bond Registrar. 25. "Renewal and Replacement Fund" shall mean the account created pursuant to the Resolution into which funds shall be deposited for the purpose of providing funds for payment of the costs and expenses of renewals and replacements to the System. 26. "Required Renewal Fund Payments" shall mean the amounts required to be deposited in each month to the credit of the renewal and replacement fund under Section 3.04(E) of the Senior Lien Bond Resolution so long as the Senior Lien Bonds are outstanding. 27. "Reserve Account" shall mean the account in the Sinking Fund created pursuant to the Resolution whereby a sum at least equal to and sufficient to pay the maximum amount of principal 3 and interest on all outstanding Bonds becoming due in any ensuing Fiscal Year, subject to certain conditions, shall be held. 28. "Resolution" shall mean Resolution No. 89-19 relating to the Bonds, adopted by the County on February 14, 1989, as the same may be amended and supplemented. 29. "Revenue Fund" shall mean the account created pursuant to the Resolution into which all Revenues of the System shall be deposited by the County. 30. "Revenues" shall mean (1) the Uniform Charges; (2) such Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees as the Board, by resolution, may pledge specifically in connection with the Bonds; and (3) such other receipts and revenues of the County as the Board, by resolution, may pledge specifically in connection with the Bonds. "Revenues" shall not include, however, such receipts and revenues as, from time to time, may be released from the pledge in accordance with the terms of the Resolution. 31. "Senior Lien Bond Resolution" shall mean Resolution No. 82-61 of the County, together with all amendments and supplements thereto, providing for the issuance and security of the Senior Lien Bonds. 32. "Senior Lien Bonds" shall mean sewer and water revenue bonds that may be issued to FmHA as permitted by the Resolution. 33. "Senior Lien Bonds Debt Service" shall mean the principal and interest payable on bonds issued to FmHA and having a right to payment from and a lien on the Pledged Funds senior to the lien granted for the benefit of the holders of Bonds issued under this Resolution, as permitted by the Resolution. 34. "Senior Lien Bonds Reserve Account Payments" shall mean the amounts required to be deposited in each month to the credit of the reserve account in the sinking fund for the Senior Lien Bonds under Section 3.04(C)(4) of the Senior Lien Bond Resolution so long as any Senior Lien Bonds are outstanding. 35. "Series 1989 Bonds" shall mean the Water and Sewer Revenue Refunding Bonds, Series 1989, authorized and issued pursuant to the Resolution. 36. "Sinking Fund" shall mean the account created pursuant to the Resolution for the purpose of providing funds for payment of interest on the Bonds. 37. "Special Assessments" shall mean the fees, charges and costs lawfully assessed by the County against properties benefitted by construction or reconstruction of sewer or water facilities and representing an apportionment of the costs of such improvements to such properties. 38. "Surcharges" shall mean special rates, fees and charges for water or sewer service imposed for a limited time and purpose by ordinance adopted by the Board and in addition to the usual uniform water and sewer service rates, fees and charges of the County. 39. "System" shall mean the water and sewer systems now owned and operated by the County, wherever located in the County, together with any and all improvements, extensions and additions thereto hereafter constructed or acquired, and any physically independent water or sewer system hereafter made a part of the System by resolution of the Board together with any and all improvements, extensions and additions thereto thereafter constructed or acquired. Without intending to limit the generality of the foregoing sentence, "System" shall include all property, real, personal and mixed, rights, powers, licenses, easements, rights of way privileges, franchises and all other property or interests in property of whatsoever nature, including but not limited to vehicles, rolling stock, buildings, pipes, pumps, machinery, tanks, mains, conduits, meters and other equipment, used or useful in connection with ownership, operation and maintenance of such water or sewer systems by the County. 40. "Term Bonds" shall mean the Bonds of a series all of which are stated to mature on one date but which shall be subject to earlier retirement by operation of the Bond Amortization Account. 41. "Uniform Charges" shall mean all receipts and revenues of the County derived from the imposition, collection and enforcement of uniform water and sewer service rates, fees and charges for the use of and'the services furnished or to be furnished by the facilities constituting the system, including the earnings and interest income derived from the investment of moneys on deposit in various funds and accounts established in connection with the System, but excluding Surcharges, Impact Fees, Special Assessments, Franchise Fees and Fees in lieu of Franchise Fees. 256/440 RIDER A F -a. The Series 1989 Bonds due May 1, 2019 are subject to mandatory redemption by lot prior to maturity in the years and amounts set forth below at a price a al to 100% of principal amount. Accrued interest is also payable on the redemption date. Mandatory Redemption Requirements Principal P Principal P Year Amount Year Amount 2010 265,000 2015 380,000 2011 285,000 2016 410,000 2012 310,000 2017 440,000 2013 330,000 2018 475,000 2014 355,000 2019 510,000 INDIAN RIVER COUNTY, FLORIDA NATER AND SEWER REVENUE REFUNDING EMS SERIES 1969 DEET SERVICE SCHEDULE DATE PRINCIPAL COUPON INTEREST PERIOD TOTAL FISCAL TOTAL 5/ 1/90 65,000.00 6.700000 499,359.33 564,359.33 564,359.33 5/ 1/91 70,000.00 6.600000 473,755.00 543,755.00 543,755.00 5/ 1/92 75,000.00 6.900000 468,995.00 543,995.00 543,995.00 5/ 1/93 801000.00 6.950000 463,820.00 543,820.00 543,620.00 5/ 1/94 85,000.00 7.000000 458,260.00 543,260.00 543,260.00 5/ 1/95 95,000.00 7.050000 452,310.00 547,310.00 547,310.00 5/ 1/96 100,000.00 7.100000 445,612.50 545,612.50 545,612.50 5/ 1/97 105,000.00 7.100000 438,512.50 543,512.50 543,512.50 5/ 1/98 115,000.00 7.150000 431,057.50 546,057.50 546,057.50 5/ 1/99 125,000.00 7.200000 422,835.00 547,835.00 547,835.00 5/ 1/ 0 130,000.00 7.250000 413,835.00 543,835.00 543,835.00 5/ l/ 1 140,000.00 7.400000 404,410.00 544,410.00 544,410.00 5/ 1/ 2 150,000.00 7.400000 394,050.00 544,050.00 544,050.00 5/ 1/ 3 160,000.00 7.400000 382,950.00 542,950.00 542,950.00 5/ 1/ 4 175,000.00 7.400000 371,110.00 546,110.00 546,110.00 5/ 1/ 5 185,000.00 7.400000 358,160.00 543,160.00 543,160.00 5/ 1/ 6 200,000.00 7.400000 344,470.00 544,470.00 544,470.00 5/ 1/ 7 215,000.00 7.400000 329,670.00 544,670.00 544,670.00 5/ 1/ 8 230,000.00 7.400000 313,760.00 543,760.00 543,760.00 5/ 1/ 9 250,000.00 7.400000 296,740.00 546,740.00 546,740.00 5/ 1/10 265,000.00 7.400000 278,240.00 543,240.00 543,240.00 5/ 1/11 285,000.00 7.400000 258,630.00 543,630.00 543,630.00 5/ 1/12 310,00D.00 7.400000 237,540.00 547,540.00 547,540.00 5/ 1/13 330,000.00 7.400000 214,600.00 544,600.00 544,600.00 5/ 1/14 355,000.00 7.400000 190,180.00 545,180.00 545,180.00 S/ 1/15 380,000.00 7.400000 163,910.00 543,910.00 543,910.00 S/ 1/16 410,000.00 7.400000 135,790.00 545,790.00 545,790.00 5/ 1/17 440,000.00 7.400000 105,450.00 545,450.00 545,450.00 5/ 1/16 475,000.00 7.400000 72,890.00 547,890.00 547,890.00 5/ 1/19 510,000.00 7.400000 37,740.00 547,740.00 547,740.00 ---------- --"'---- '----- 6,510,000.00 9,858,641.83 16,368,641.83 ACCRUED 25,233.58 25,233.58 6,530,000.00 9,633,406.25 16,343,408.25 DATED 4/15/89 NITS DELIVERY OF 5/ 4/89 BOND YEARS 133,489.333 AVERAGE COUPON 7.365 AVERAGE LIFE 20.505 N I C % 7.410511 % USING 99.4638710 T I C t 7.550791 t From Delivery Date BOND INSURANCE: 0.680000 t OF (TOTAL DEBT SERVICE ONLY) 111,306.76 GulLatream Financial Associates, Inc. RUNDATE: 04-26-1989 9 16:10:16 PILEHANE: IR EEY: BERIES1989 April 27, 1989 Board of County Commissioners Indian River County, Florida 1840 25th Street Vero Beach, Florida 33296 Re: 6,510,000 Indian River County, Florida Water and Sewer Revenue Refunding Bonds, Series 1989 Ladies and Gentlemen: In connection with the proposed issue by Indian River County, Florida (the "County") of $6,510,000 principal amount of Water and Sewer Revenue Refunding Bonds, Series 1989 (the "Bonds"), Gulfstream Financial Associates, Inc. (the "Underwriter") is to underwrite a public offering of the Bonds. Arrangements for underwriting the Bonds will include a Bond Purchase Agreement between the County and the Underwriter. The purpose of this letter is to furnish, pursuant to the provisions of Section 218.385(4), Florida Statutes, as amended, certain information in respect of the arrangements contemplated for the underwriting of the Bonds as follows: (a) The nature and estimated amounts of expenses to be incurred by the Underwriter in connection with the issuance of the Bonds are set forth in Schedule I attached hereto. (b) No person has entered into an understanding with the Underwriter or, to the knowledge of the Underwriter, with the County for any paid or promised compensation or valuable consideration, directly or indirectly, expressly or implied, to act solely as an intermediary between the County and the Underwriter or to exercise any influence to effect any transaction in the purchase of the Bonds. (c) The underwriting spread (i.e., the difference between the price at which the Bonds will be initially offered to the public by the Underwriter and the price to be paid to the County for the Bonds, exclusive of accrued interest in both cases) will -be 1.675% of the principal amount of the Bonds. (d) No other fee, bonus or other compensation is estimated to be paid by the Underwriter in connection with the issuance of the Bonds to any person not regularly employed or retained by the Underwriter. C C N (e) The name and address of the Underwriter is set forth in Schedule II attached hereto. We understand that you do not require any further disclosure from the Underwriter pursuant to Section 218.385(4), Florida Statutes. Very truly yours, GULFSTREAM FINANCIAL ASSOCIATES, INC. By: Jdf;211� Title, vile PM&AAk 256/443 SCHEDULE I Estimated Amount 20,000.00 1,627.50 325.50 y SCHEDULE II Gulfstream Financial Associates, Inc. 2500 North Military Trail Boca Raton, Florida 33431