Debt Service Reserve Fund

The fund established as a reserve for payment of Debt Service on Revenue Bonds in the event there is insufficient money to make a Debt Service payment. The Debt Service Reserve Fund may be: (a) entirely funded at the time of issuance with Bond proceeds or revenues of the Issuer or Borrower; (b) partly funded at the time of issuance and required to reach its full funding requirement over time, as revenues accumulate; or (c) funded with a surety bond.

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Debt Service

The amount of principal and interest required to be paid on an issue of bonds.

Revenue Fund

A fund into which pledged revenues may be required to be deposited as received and from which disbursements are made to pay allowable operations and maintenance expenses and to meet debt service requirements and deposit requirements to other funds.

Reasonably Required Reserve or Replacement Fund

A fund maintained to provide security to bondholders that does not exceed the least of (i) 10% of the stated principal amount of the bond issue (issue price if more than a de minimis amount of original issue discount or premium), (ii) the maximum annual principal and interest requirements of the bonds, or (iii) 125%…

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Use of bond proceeds to pay project costs prior to the issuance of bonds. Reimbursement raises questions related to whether the reimbursement qualifies as an expenditure of tax-exempt bond proceeds for federal income tax purposes.