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CITY OF SOUTH BEND
<br />NOTES TO FINANCIAL STATEMENTS
<br />(Continued)
<br />4. Notes and Loans Payable
<br />The primary govemment has entered into various notes/loans. Annual debt service requirements
<br />to maturity for the notes/loans are as follows:
<br />Year Ended Governmental Activities Business-Ty pe Activities
<br />December 31 Principal Interest Principal Interest
<br />
<br />2007 $ 1,502,268 $ 517,953 $ 1,301,500 $ 525,924
<br />2008 2,440,114 453,413 1,470,765 515,862
<br />2009 1,786,270 341,805 1,509,514 473,619
<br />2010 1,656,742 260,081 1,553,371 430,252
<br />2011 1,133,550 183,519 1,592,340 385,613
<br />2012-2016 1,463,750 554,052 8,388,014 1,225,720
<br />2017-2021 1,058,844 304,229 3,442,929 152,851
<br />2022-2026 717,014 82,986 - -
<br />
<br />Totals $ 11,758,552 $ 2,698,038 $ 19,258,433 $ 3,709,841
<br />5. Bond Refunding
<br />On December 16, 2006, the City of South Bend issued $7,440,000 in refunding revenue bonds
<br />with an average interest rate of 3.9715% to advance refund $8,120,000 of outstanding Economic
<br />Development Income Tax Revenue Bonds of 1997 with an average interest rate of 4.44%. The
<br />net proceeds of $7,373,571 (after payment of $112,950 in bond issue costs and $46,521 in bond
<br />premium) and local contributions of $998,140 were used to purchase U.S. Government Securi-
<br />ties. Those securities were deposited into an irrevocable trustwith an escrow agent to provide for
<br />all future debt service payments on the 1997 bonds. As a result, these bonds are considered to
<br />be defeased and the liability for those bonds has been removed from the Statement of Net
<br />Assets. The refunding resulted in the accounting loss of$398,943, which has been recognized as
<br />deferral of loss on refunding. This amount will be amortized using the straight-line method and
<br />charged to interest expense overthe next 11 years. The City in effect reduced its aggregate debt
<br />service payment by $915,262 over the next 11 years and realized an economic gain (difference
<br />between the present values of the old and new debt service payments) of $504,073.
<br />6. Changes in Long-Term Liabilities
<br />Long-term liability activity for the year ended December 31, 2006, was as follows:
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