05 Audit for FY01-02 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements (Continued) SeptengDer 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) E. Long-Term Liabilities (Continued) Water and Sewer Revenue Bonds and Certificates of Obligation (Continued): During the year ended Septe~Lber 30, 1998, the City defeased certain revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Amounts considered defeased are bonds which mature 2002 through 2011 and aggregate $11,785,000 at Septenlber 30, 2002. The advance refunding resulted in a difference between the reacquisition price and the new carrying amount of the old debts. This difference, reported in the accompanying financial statements as an other asset, is being charged to operations through the fiscal year 2012, using the effective interest method. On September 15, 2001, the City issued $5,130,000 Tax and Revenue Refunding Bonds, Series 2001 with an average interest rate of 3.84 percent to advance refund outstanding $5,030,000 Tax and Refunding Bonds, Series 1991 with an average interest rate of 6.45 percent. The net proceeds of $5,034,342 (after pa~nent of $95,658 plus $903,237 transferred from the Interest and Sinking Fund in underwriting fees, insurance, and other issuance costs), were used to purchase U. S. Government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the balance sheet. Amounts considered defeased are bonds which mature December 15, 2002 through 2011 and aggregate $5,030,000 at September 30, 2002. The advance refunding resulted in a difference between the reacquisition price and the new carrying amount of the old debt of $302,030. This difference, reported in the accompanying financial statements as an other asset, is being charged to operations through the fiscal year 2012, using the effective interest method. The City completed the advance refunding to reduce its total debt service payments over the next ten years by $665,596 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $533,761. Water Rights Debt: The City has rights to water storage at Pay Mayse Lake. Payments for these rights are $49,826 due annually, including principal and interest at 3.137% through 2017 and $25,211 for ten years after that. Long-term debt service requirements for the next five years and after in five year increments are as follows: