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ELK RIVER MUNICIPAL UTILITIES <br /> ELK RIVER,MINNESOTA <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 31,2012 AND 2011 <br /> Note 2: DETAILED NOTES ON ALL FUNDS-CONTINUED <br /> Advance Refunding <br /> On April 21,2010 the Utilities issued$1,265,000 of G.O. Capital Improvement Plan Bonds, Series 2010A,bearing <br /> an average coupon rate of 3.58 percent,to provide resources for the advance refunding of$1,270,000 of the <br /> outstanding principal of the City Hall Expansion Revenue Bonds,2002B on February 1,2013. The proceeds of the <br /> Series 2010A Bonds were deposited into an Escrow Account which shall pay issuance costs and purchase securities <br /> bearing interest to provide sufficient funds to pay the principal and interest on the 2002B bonds due April 21,2010 <br /> through February 1,2013 and pay the$1,125,000 called Revenue Bonds of 2002B on February 1,2013. As a result <br /> of the refunding issue,the 2002B bonds were defeased and the Utilities will save$97,000 in debt service payments <br /> and achieve an economic gain(the present value of the difference between the old and the new debt service)of <br /> $90,824. <br /> 44 <br />