25F - AGMT FOR FINANCIAL ADVISORY

Home Browse Search

City of Santa Ana, California Proposal for Municipal Financial Advisory Services March 12, 2020 Provided below are case studies that illustrate UFI's experience with relevant transactions similar to those the City may execute. General Fund & Tax Allocation Bonds San Ramon 2019 Certificates of Participation— In 2019, UFI served as municipal advisor to the City of San Ramon on the issuance of $20,990,000 2019 Certificates of Participation (COP's), issued to fund multiple capital improvement projects. The City of San Ramon has been a client of UFI for over ten years. In the two years leading up to the COP issuance, we provided the City with a variety of structuring options and made multiple presentations to staff and City Council. At the time of the financing, the municipal market was experiencing historical interest rate lows, and we knew that it would benefit the City to price the COP's as soon as possible. Accordingly, we led the financing team towards completing the transaction, from kick-off to closing, in 11 weeks. UFI also took the lead on developing the rating presentation and requesting that the Standard & Poor's (S&P) rating analysts meet with staff in person at City Hall (the leased asset for the transaction). We highlighted the City's robust local economy, healthy liquidity and budget flexibility, strong budget performance, good financial management, and manageable debt and contingent liabilities. S&P assigned a rating of AA+ to the COP's, the highest achievable rating for General Fund lease revenue transactions. Armed with this top-notch rating, a strong issuer name, and a favorable interest rate environment, UFI encouraged the underwriter to release a scale to investors on the morning of pricing that was even more aggressive than the preliminary scale. The bonds had a very strong reception, and the underwriters were able to improve on some maturities while taking some of the maturities back to the preliminary scale. Ultimately, we were confident that the City extracted every basis point out of the pricing. The financing resulted in a 2.66% TIC for a 20-year borrowing and allows the City to complete projects that have been prioritized by City Council. Oakland Successor Agency 2018 Tax Allocation Refunding Bonds— In 2018, UFI served as municipal advisor on the Oakland Redevelopment Successor Agency's Subordinated Tax Allocation Refunding Bonds, Series 2018-TE and Series 2018-T (Federally Taxable), issued to refund, for savings, the outstanding Coliseum Redevelopment Project Tax Allocation Bonds, Series 200613-TE, and Subordinated Housing Set Aside Revenue Bonds, Series 2011A-T (Federally Taxable). The financing team worked diligently to price this transaction only 13 weeks after the kick-off meeting. To achieve the lowest cost of borrowing and maximize savings to the Agency and taxing entities (including the City), UFI led the effort to achieve a rating upgrade from S&P for the 2018 and 2015 TABS by highlighting the significant AV growth in the Project Areas since 2015, the extremely strong all -in debt service coverage, the resiliency of the credit as evidenced by the ability to sustain an AV loss of 55% ($11.5 billion) and still maintain 1x debt service coverage, the major developments coming online, and the amended ROPS covenant that requires the Agency to request at least 50% of total bond year debt service from the January 2 RPTTF distribution. Ultimately, S&P upgraded the 2018 and 2015 Bonds by three notches from "A-" to "AA-", which drastically improved savings by lowering borrowing rates, avoiding the cost of purchasing bond insurance, and allowing for a stand-alone surety for the Debt Service Reserve Fund. Since the Agency's debt sharply drops off beginning in 2022, at which point the taxing entities would see a significant increase in residual revenues, the refunding was structured with upfront savings to maximize VUR 25F-23