South Fulton Regional Municipal Water and Sewer Authority board members June 9 received an audit report outlining the authority’s current financial status. A cash analysis by authority Financial Manager Dan Post in connection with the issuance of $42 million in Series 2003 Bonds showed that the authority has spent $7.185 million as of Dec. 31, 2005.

“I’m going to focus tonight just from the cash standpoint of where we are,” Post told the board.

The proceeds of the 2003 bond sale totaled $41,630,000, he said. Other fund sources include the net original issue premium at $279,646, debt service from the purchase of the Palmetto sewer treatment plant at $204,940, Palmetto’s sinking fund balance of $133,142 and another $111,129 in accrued interest. Those factors bring the total source of funds to $42,358,857.

Post outlined eight expense categories through which the funds were channeled. The largest portion of the $42.3 million went into the authority’s construction fund.

“We put $27.7 million into the construction account, and that is what’s going to build the treatment plant,” Post said.

A total of $7,077,440 was deposited into the capitalized interest fund, the fund from which principal and interest on the bonds will be paid for the first three and one-half years, said Post.

“Every time there is an interest payment due it comes out of this account,” he said. “That’s where the cites, before we had production of water and revenues, would have the money to pay the bond issue.”

Post said $3.7 million was designated for the debt service reserve fund while $2.4 million was put aside to pay the bond had on its treatment plant. That money stays in the account and pays the bond holder until Palmetto’s original water and sewer bonds are paid off, Post said. Other fund application areas included $481,000 for the gross bond insurance premium, $454,745 for the cost of bond issuance, an underwriter’s discount of $395,351 and an $111,925 deposit to debt service.

“That’s where the $42 million went. Now I want to talk about what we have now,” Post said. “In cash we’ve got $35,173,556. Of that, $28 million is in the construction account. It may seem strange that we’ve got more in the account now than what we started with, but that’s the power of compound interest.”

Post said said the authority has $3.1 million in the capitalized interest account. The account sits at that level because the authority is half way through the period where the interest on the bonds must be paid, he said. A remaining $3,973,660 is in the debt service reserve fund. Those funds represent the average payment required by the bond company to be put aside at closing. It represents another layer of insurance to the bond holders, Post explained.

Since inception, the authority has spent $7.185 million. Of that $3.9 million went to interest, Post said. The balance, he said, went to the purchase of property and towards the Palmetto bond.

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