Item 23 - Pension Debt Refinancing Update and Underwriter Selection

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RFP No. 21-025 EXHIBIT B SANTA ANA DEBT PROFILE There are a few refunding $14,000,000 ■1994Lease Revenue opportunities that will be s12,000,000 ■2014Private Placements available to the City's the next 4-8 ■ Streetlights $10,000,000 ■800MHz years. One opportunity we have ■ SCE $8,000,000 identified is through the Successor $6,000,000 Agency which has two refunding $4,000,000 Tax Allocation Bonds (TABS), which were issued in 2018 totaling $2,000,000 ■ ■ _ _ $73 million. Only $3.5 million of 50 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 the 2018A bonds will be callable in 2028 — they City should retain 18.7% of such savings, which would be realized by the General Fund in the form of greater RTTPF revenues from the Successor Agency. Although nominal, these refunding present an opportunity to address a potential downturn in revenues when the City's Measure X sales tax decreases in 2029 and the City's UAL peak payments occur (2028). Tax -Exempt Exchange Making cash payments to CaIPERS provides the greatest interest cost savings. The concept of tax-exempt exchange is a financing mechanism that can provide significant savings. Tax -Exempt Exchange requires a 4-step process: 1. Identify capital projects to be funded with accumulated cash balances 2. Issue tax-exempt bonds to finance these projects, instead of paying cash 3. Select Amortization Base to pre -pay, using the cash originally planned for the capital project 4. The City would use its budgeted expenditures to pay the debt service on bonds issued for capital projects, instead of making payments to CaIPERS. Listed below is a sample savings assumption using the tax-exempt strategy funding a $5.3 million CIP projects with tax-exempt bonds rather than cash. For illustation, the City could finance $10 million in traditional capital improvement that it would pay from General Fund monies (e.g., $3 million per year). As noted in the chart below, the red shaded area is a representation of the UAL payments for Miscellaneous Base #10, which is equal to $10.8 million. The blue bars represent new annual debt service payments, for the $11.0 million in tax-exempt bonds that would be issued under a tax-exempt exchange strategy. The total savings equal $9.0 million over 20 years — 63% of the amount financed. $2.6 million derived from this strategy.