COG Comprehensive Annual Financial Report

7. Special Obligation Bonds On November 17, 2005, the City issued $8,400,000 in Special Obligation Bonds Series 2005 bearing interest payable semiannually at fixed rates from 3.75% to 5.0% on June 1 and December 1, with final maturity in 2020. The original issue premium amounted to $224,026. The proceeds of these bonds were used for the construction of a solid waste transfer station along with related equipment and improvements. A portion of the Local Option Sales Tax is pledged for payment of debt service on the Bonds. Certain financial covenants are contained in the bond order, among the most restrictive of which provide the City maintain a long-term debt service ratio, as defined, of not less than 2.0. The coverage ratio at June 30, 2018 is 25.63. The City demonstrated compliance with bond covenants during Fiscal Year 2017-18. Special Obligation Bonds Debt Service Requirements to Maturity are:

Annual Requirements

Fiscal Year

Principal

Interest

Total

2018-19 2019-20

$ 750,000 $

76,750 $ 826,750

785,000

39,249

824,249

$ 1,535,000 $

115,999 $ 1,650,999

8. Combined Enterprise System Revenue Bonds The City has participated in the capital markets by issuing over $200 million Combined Enterprise System Revenue Bonds since 1995, to fund the on-going capital improvement program of the City’s water and sanitary sewer utility. Certain maturities of the debt through 2009 have been defeased, by placing the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payments on the old debt. Accordingly, the trust account assets and the liability for the defeased bonds are not reflected in the City’s financial Statements. At June 30, 2018, $154,005,000 of Combined Enterprise System Revenue Bonds is considered defeased. The Combined Enterprise System is currently comprised of only the City’s water and sanitary sewer system. Principal and interest requirements will be provided by an appropriation in the year in which they become due. On June 14, 2018 the City entered into an agreement with PNC Bank, N.A. for a Combined Enterprise System Revenue Bond Anticipation Note drawdown program in the amount of $85,000,000. As of June 30, 2018, $8,552,671 has been drawn down for improvements to the City’s water and sewer systems. This agreement committed funds for the water and sewer improvements for 2018-2020 capital projects. On August 17, 2017, the City issued $90,690,000 Series 2017 A&B Refunding Combined Enterprise System Revenue Bonds payable semiannually at a fixed rate ranging from 3.25% to 5.0% on June 1 and December 1. The $64,700,000 Series 2017A matures on June 1, 2047; the bond was issued to redeem in whole $43,316,551 of the City’s Combined Enterprise System Revenue Bond Anticipation Note, Series 2016, and the remaining cost of improvements of the 2017 Water & Sewer projects. The $25,990,000 Series 2017B matures on December 1, 2030; the bond was issued to defease $29,600,000 of the City’s Combined Enterprise System Revenue Green Bonds, Series 2009A. The aggregate difference in debt service between the refunded debt net cash flow of $42,013,400 and the refunding debt net cash flow of $36,703,482 was $5,309,918. The net proceeds of $31,673,412 (after payment of $701,122 in underwriting fees and other issuance cost) were placed in escrow in an irrevocable trust to provide for all future debt service payments on the old certificates. As a result, a portion of the liability for the 2016 Bond Anticipation Note and 2009A Series has been removed from the Water Resources Fund. The net present value savings as a result of the refunding was $4,033,863. On February 1, 2016, the City issued $29,310,000 Series 2016 Refunding Combined Enterprise System Revenue Bonds payable semiannually at a fixed rate ranging from 2.0% - 5.0% on June 1 and December 1, with a final maturity in 2045. This bond was issued to redeem in whole the City’s Combined Enterprise System Revenue Bond Anticipation Note Series 2014 which had an outstanding principal amount of $30,000,000 and has been removed from the Water Resources Fund. On June 23, 2015, the City issued $33,985,000 Series 2015 Refunding Combined Enterprise System Revenue Bonds payable semiannually at a fixed rate ranging from 3.0% - 5.0% on June 1 and December 1, with a final maturity in 2029. This bond was issued to defease $35,810,000 of certain Series 2007A and 2014A Combined Enterprise System Revenue 38bb