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sale proceeds could be used to establish a reserve fund for payment of future debt service payments or such other use as the Board of Commissioners approves. Surplus Certificates of Participation Funds: After the County has paid all construction costs associated with the Courthouse Square Project and has calculated and provided for the arbitrage rebate liability (if any), the remaining surplus from the Certificates of Participation must be transferred to the 1998 Debt Service Account to be applied to the prepayment of principal on the Certificates of Participation. In selecting the maturities to be prepaid with the surplus funds, the County should consider the following: • The Certificates of Participation mature annually through June l, 2023 and bear interest at rates ranging from 3.75% per annum for certificates maturing on June l, 2001 to 5% per annum for certificates maturing on June 1, 2023. If the County elected to prepay the certificates maturing on June 1, 2023, it would be prepaying the highest rate debt and would reduce its interest payment each year that the certificates are outstanding. • During the current fiscal year ending June 30, 2001, the County will be incurring costs related to the move to Courthouse Square and has been incurring costs related to rental of office space. If the County elected to use part of the surplus to prepay the $580,000 in principal maturing on June 1, 2001, it would free up County funds for other purposes or to carry over as surplus in subsequent fiscal years. • During the month of September 2000, the County earned an average rate of approximately 6.3% on its investments. If the County elected to use the surplus to prepay certificates maturing in the earliest years, County funds that would have been used to pay these maturities could continue to be invested at a rate that is currently higher than the interest rate on the certificates. The County can achieve certain financial benefits whether it elects to prepay the earliest maturities or prepay the latest maturities. Ultimately, the County will need to examine its budget resources and requirements in selecting the certificates to be prepaid. We are available to meet with you to answer any questions or provide additional information, if desired. Sincerely, Kenneth Kuhns & Co.