The increased borrowing today and greater debt service
is a rational response to higher expected income in the future.
Gross annual coverage of FGR bonded debt service equaled 3.
Forecasts for cash flows show gross coverage on FGR debt declining to 3x in fiscal 2010, the result of rising debt service costs outpacing projected user charge growth despite sizable rate increases.
Bondholders have a first lien on all pledged revenue and the city covenants to set the SWRF at a level sufficient to provide for debt service
The additional bonds test requires that fee revenues during the most recent fiscal year are not less than 150% of maximum annual debt service (MADS).
The trustees are required to confirm to the state budget and control board (governor, treasurer, comptroller general, chairman of the senate finance committee, and chairman of the house ways and means committee) not later than December 1st of each year that, based on the revenues for the previous fiscal year, fee revenues are projected to be sufficient to cover debt service in the following calendar year.
Projections show pledged revenues over the period where LDC would have to make both debt service and sinking fund payments are adequate to provide for coverage of both.
Under the normal flow of funds the bond indenture calls for monthly deposits of EBITDA to the trustee with debt service and sinking fund deposits, if required, made prior to release of funds to LDC.
In addition, access to the university's legally available revenues for debt service
in the highly unlikely event that revenues from the residence halls are insufficient to meet annual debt service
requirements is a positive.
While management has indicated that available airport liquidity could have been used to make the debt service
payments, the decision to use the DSRF was made to preserve these balances for capital and other purposes.