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RFP No. 21-025 <br />EXHIBIT B <br />Given this context, Pension Obligation Bonds (POBs) in California may be viewed as a debt <br />"refinancing". POBs must be issued on a taxable basis because the pension benefits private <br />individuals (the City's current and former employees). Nonetheless, POBs present the only <br />financing tool available to significantly impact the City's required UAL payment schedule. <br />Options for City Council Consideration <br />Our study of the City's UAL and financial viability to meet its current and forecasted obligation <br />led us to assume two (2) POB funding options for City consideration; 1) a POB equal to 50% of <br />the City's current UAL; and 2) a POB equal to 90% of the City's current UAL. <br />In preparing the analysis for the 50% UAL option the following was taken into consideration: <br />1. POBs — 50% UAL <br />a. $358 Million POBs with Hybrid — Level Debt Service <br />b. 25-Year Final Maturity <br />c. Target Longest Safety Bases Only <br />$80,000,000 <br />$70,000,000 <br />$60,000,000 <br />$50,000,000 <br />50% UAL POB 25 Year (Safety Only): Hybrid Level Aggregate <br />$358 Million POB <br />$183 Million Deferred UAL Costs <br />$38 Million Budgetary Savings <br />$144 Million NPV Savings = 41% <br />AA- Scale + 25 bps = 3.16 TIC% <br />Misc. UAL Payments <br />Remaining Safety UAL <br />POB Debt Service <br />Budgetary Cash Flow Savings <br />• • Original UAL Payments <br />$40,000,000 <br />$30,000,000 <br />$20,000,000 <br />$10,000,000 <br />$0 ■+.... <br />2022 2023 2024 2025 2026 2027 2028 2029 2030 20312032 2033 2034 2035 2036 2037 2038 2039 2040 20412042 2043 2044 2045 2046 2047 2048 <br />-$10,000,000 <br />In preparing the analysis for the 90% UAL option the following was taken into consideration: <br />2. POBs-90% UAL Million <br />a. $642 Million POBs with Hybrid — Level Debt Service <br />b. 25-Year Final Maturity <br />c. Misc. Base #14 & #16 remain outstanding <br />