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Finance and Management Services Agency <br />www.santa-ana.org/cm <br />Item # 40 <br />City of Santa Ana <br />20 Civic Center Plaza, Santa Ana, CA 92701 <br /> Staff Report <br />August 17, 2021 <br />TOPIC: Resolution of the City of Santa Ana Authorizing the Issuance and Refinancing of <br />the City’s Pension Obligations (Unfunded Actuarial Liability) with the California Public <br />Employees Retirement System (CalPERS) <br />AGENDA TITLE: <br />Resolution of the City Council of the City of Santa Ana, California Approving the Form of <br />a Preliminary Official Statement and Continuing Disclosure Certificate in Connection with <br />the Issuance of Bonds to Refund Certain Pension Obligations of the City and Approving <br />Additional Actions Related Thereto <br />RECOMMENDED ACTION <br />Adopt a Resolution (Exhibit 1) Approving the Preliminary Official Statement (Exhibit 2) <br />and the Continuing Disclosure Certificate (Exhibit 2-Appendix E) in connection with the <br />City of Santa Ana Pension Obligation Bonds, Series 2021A (“the Bonds”) to refinance of <br />the City’s pension obligations to CalPERS. <br />EXECUTIVE SUMMARY <br />The recommendation is the City Council’s final action to approve the sale of up to $513 <br />million of pension debt refinancing bonds. The financing team is on track to price and <br />close the bonds early September 2021. Based on many months of careful analysis, we <br />consider the recommended refinancing structure to be the best balance of maximizing <br />savings and minimizing risk. The proposed refinancing strategy follows. <br />The latest estimate of the True Interest Cost (TIC) is approximately 2.9% for the <br />bonds. However, rates could change between the latest information on August <br />10 and the scheduled pricing date of August 25. As of the latest valuation report, <br />CalPERS charges 7% on the pension debt. <br />Structure debt payments to avoid an increase from the current year budget of <br />$54.3 million for future annual pension debt payments. The current CalPERS <br />amortization schedule indicates annual payments would increase to $79.2 million <br />over the next five years without a refinancing. <br />Schedule repayment of the bonds no later than the current CalPERS amortization <br />scheduled payoff in 2046. <br />Structure a decrease in future annual pension debt payments to coincide with the <br />decrease of the Measure X rate in 2029.