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STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST

STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST. Vic Erganian Deputy Finance Director/City Treasurer Finance Committee/City Council September 8, 2014. BACKGROUND. In 2000, the City issued $32.385 Million bonds – Paseo Colorado Bonds.

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STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST

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

  2. 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.

  3. 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.

  4. 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%

  5. FISCAL IMPACT • 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.

  6. RATINGS • S&P affirmed its rating of AA+/A-1 for the bonds. • Fitch affirmed its short-term rating of F1 for the bonds.

  7. 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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