2010 Debt Report - Volusia County Government

ARBITRAGE
Arbitrage refers to the profit earned by investing tax-exempt bond funds in higher
yielding investments. Under Federal arbitrage regulations, an issuer of tax-exempt bonds
is allowed to earn this profit for a certain period of time during the construction of the
related project. If the issuer still has bond funds once this time period expires, the profit
is subject to rebate to the Federal government and the remaining bond funds should be
invested at rates lower than its bond yield. 1
For the fiscal year ending 9/30/2010, the County received updated arbitrage rebate
determinations on the following bond issues:
º Airport System Revenue Refunding Bonds, Series 2000, and
º Gas Tax Revenue Bonds, Series 2004
It was determined that no arbitrage rebate liability had accrued on either bond issue.
SUBSEQUENT EVENT:
Subsequent to the closing of fiscal year 2009-2010, the following action of significance
to the arbitrage discussion occurred. The following is a recap of the event.
Early in fiscal year 2011, the County received an updated arbitrage rebate determination
on the Limited Tax General Obligation Bonds, Series 2005. It was determined that an
arbitrage rebate liability had accrued in the amount of $162,989, of which 90 percent, or
$146,690, was paid to the IRS as required. 2
The following pages contain a table of arbitrage rebate calculation due dates.
1 Source: County of Volusia CAFR, Fiscal Year Ended September 30, 2010
2 Source: County of Volusia CAFR, Fiscal Year Ended September 30, 2010
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