FY2016 CCDOA Financial Report as of 6302016.pdf - page 93

Notes to Financial Statements
For the Fiscal Years Ended June 30, 2016 and 2015
(g) Arbitrage Rebate Requirement
Tax-exempt bond arbitrage involves the investment of governmental bond proceeds which are
derived from the sale of tax-exempt obligations in higher yielding taxable securities that generate a
profit. The Tax Reform Act of 1986 imposes arbitrage restrictions on bonds issued by the County. Under
this Act, an amount may be required to be rebated to the United States Treasury so that all interest on
the bonds qualifies for exclusion from gross income for federal income tax purposes.
During FY 2016 and FY 2015, the Department did not make any arbitrage payments and is current on all
required arbitrage payments. As of June 30, 2016 and 2015, the Department estimated its potential
arbitrage rebate liability and accrued $542.6 thousand and $393.8 thousand, respectively, to cover
that estimated liability.
(h) Description of Bond Series Issued
Senior Lien Bonds
Series 2005A:
In September 2005, the County issued $69.6 million in Non-AMT fixed rate Airport System Senior Lien
Revenue Bonds. $25.9 million of these term bonds had scheduled maturities through 2037 and had a
stated interest rate of 4.50 percent with a yield of 4.62 percent. The remaining $43.7 million of the term
bonds were scheduled to mature in 2040 and had a stated interest rate of 5.00 percent with a yield of
4.42 percent. Interest payments were due on January 1 and July 1 of each year, and scheduled
principal payments were due on July 1. The 2005A Bonds were issued to finance the cost of certain
capital improvements to the Airport System, to purchase a reserve fund insurance policy, and to pay
certain costs of issuance. The bonds were insured by Ambac Assurance Corp ("Ambac"). No debt
service reserve was required. On April 30, 2015, the Series 2005A Bonds were refunded by the Airport
System Revenue Bonds Senior Series 2015A.
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