Comprehensive Annual Financial Report - Metro Transit

Bi-State Development Agency of theMissouri-Illinois Metropolitan DistrictNotes to Financial StatementsJune 30, 2011 and 201018. Conduit Debt ObligationsFrom time to time, Metro has been associated with the issuance of IndustrialDevelopment Bonds and Special Facility Revenue Bonds to provide financial assistancefor the acquisition and construction of facilities deemed to be in the public interest.Special Facility Revenue BondsFor the construction of the second phase of the MetroLink system, Metro utilized fundsprovided by the proceeds from three special revenue bond issuances. These bonds arenot general obligations of Metro. The bonds are to be repaid by a party other than Metro.Accordingly, the bonds are not reported as liabilities in the accompanying financialstatements. The following is a description of the three special facility revenue bondissuances:St. Clair County MetroLink Extension Project Bonds, Series 1998 A – The $48,550,000Series 1998 A Bonds, issued July 1, 1998, are special, limited obligations of Metro,payable solely from certain project payments to be made by the Metro East TransitDistrict of St. Clair County (the “District”), pursuant to the Project Financing, Construction,and Operation Agreement dated July 1, 1998 (“Project Agreement”) between the Districtand Metro. These bonds mature serially. On September 26, 2009, St. Clair CountyTransit District deposited cash with the Trustee to legally defease the bond issue.St. Clair County MetroLink Extension Project Refunding Revenue Bonds, Series 2004 –The $5,590,000 Series 2004 Bonds, issued April 15, 2004 are special, limited obligationsof Metro, payable solely from revenue and other sources provided in the indenture, andare not general obligations of Metro. These bonds mature serially in varying amountsthrough 2028. The Series 2004 bonds provide funds to refund a portion of the Series1998 A bonds on July 1, 2004 through July 1, 2008. As of June 30, 2011, $5,435,000remains outstanding.St. Clair County MetroLink Extension Project Refunding Revenue Bonds, Series 2006 –The $39,155,000 Series 2006 Bonds, issued December 20, 2006 are special, limitedobligations of Metro, payable solely from revenue and other sources provided in theindenture, and are not general obligations of Metro. These bonds mature serially invarying amounts through 2028. The Series 2006 bonds provide funds to refund a portionof the Series 1998 A bonds on July 1, 2009 through July 1, 2028. As of June 30, 2011,the entire amount was outstanding.19.Subsequent EventsSeries 2002 Debt Service Reserve Fund. To provide further security to the bondholders,the 2002 Bond Trust Indenture specified that a Debt Service Reserve Fund (DSRF) becreated in the amount of $27,975,665 ($28.0 million). Metro had the option of cashfunding this requirement or purchasing an AAA rated surety. A surety was purchasedfrom Financial Security Assurance Corporation (FSA, now Assured Guaranty), which atthe time of issuance was rated AAA by all three credit ratings agencies. Assured57