FINANCE DEPARTMENT STANDBY BOND PURCHASE AGREEMENT WITH BANK

FINANCE DEPARTMENT STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST Vic Erganian Deputy Finance Director/City Treasurer Finance Committee/City Council September 8, 2014

BACKGROUND FINANCE DEPARTMENT • 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. 2

BACKGROUND FINANCE DEPARTMENT • 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. 3

FINANCE DEPARTMENT • 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% 4

FISCAL IMPACT FINANCE DEPARTMENT • The City will save $48, 000 in FY 2015 and $292, 500 during the remaining term of the contract. • The City’s cost of the borrowing will be: > SBPA fee > Current interest > Remarketing fee Total: 0. 30% 0. 35% 0. 08% 0. 73% • One-time cost of reissuing the bonds will be approximately $164, 000. 5

RATINGS FINANCE DEPARTMENT • S&P affirmed its rating of AA+/A-1 for the bonds. • Fitch affirmed its short-term rating of F 1 for the bonds. 6

RECOMMENDATION FINANCE DEPARTMENT 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 7