FINANCE DEPARTMENT

STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST

Vic ErganianDeputy Finance Director/City Treasurer

Finance Committee/City CouncilSeptember 8, 2014

FINANCE DEPARTMENT

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BACKGROUND

• In 2000, the City issued $32.385 Million bonds – Paseo Colorado Bonds.

• Bonds were issued as Taxable Variable Rate Demand Lease Revenue Bonds (VRDBs) and refunded in 2008.

• VRDBs legally require a liquidity facility such as a standby bond purchase agreement or a letter of credit.

• In 2000, the City entered into a SBPA with KBC Bank. The SBPA expires on 9/15/2014.

• Staff extended the SBPA to March 2015 and concurrently issued an RFP for a new SBPA.

FINANCE DEPARTMENT

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BACKGROUND

• The City issued the RFP to 28 banks including several banks located and/or headquartered in Pasadena.

• The City received two responses: >Bank of the West>Mitsubishi UFJ Financial Group (MUFG)

• Both banks have presence in Pasadena.

FINANCE DEPARTMENT

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• Staff recommends entering into a new SBPA with Bank of the West for a term of five years.

• Annual SBPA fee will be 0.30% versus the current fee of 0.58%

FINANCE DEPARTMENT

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• The City will save $48,000 in FY2015 and $292,500 during the remaining term of the contract.

• The City’s cost of the borrowing will be:> SBPA fee 0.30%> Current interest 0.35%> Remarketing fee 0.08% Total: 0.73%

• One-time cost of reissuing the bonds will be approximately $164,000.

FISCAL IMPACT

FINANCE DEPARTMENT

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RATINGS

• S&P affirmed its rating of AA+/A-1 for the bonds.

• Fitch affirmed its short-term rating of F1 for the bonds.

FINANCE DEPARTMENT

RECOMMENDATION

Joint Action: City Council and PPFA• Adopt a resolution approving the form of

and authorizing the execution and delivery of a standby bond purchase agreement with Bank of the West; approving the form of and authorizing the distribution of a reoffering memorandum; and authorizing the execution and delivery of other related documents and approval of other documents and actions in connection therewith

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