Item 23 - Pension Debt Refinancing Update and Underwriter Selection

Home Browse Search

(9) I. BACKGROUND CITY OF SANTA ANA The City of Santa Ana is a Charter City in the State of California located in northern Orange County. The City was incorporated in 1886 and operates under a Council -Manager form of government. The City currently occupies a land area of 27.2 square miles and serves a population of approximately 335,000. The City is bordered by Garden Grove, Tustin, Orange, Costa Mesa, Fountain Valley, and Westminster. The City's fiscal year begins on July 1 and ends on June 30. The City of Santa Ana is a full service City of approximately 1,050 full-time and 510 part-time employees with twelve (12) agencies (departments). City services include police, water, sewer, road maintenance, recreation, library, planning and building, and engineering services. The City contracted with the Orange County Fire Authority to outsource its fire services in 2012. The City Council is composed of an elected Mayor and six (6) Council Members. II. PROJECT PURPOSE The City of Santa Ana (the "City") is soliciting proposals from firms wishing to serve as underwriter for the City's proposed issuance of Pension Obligation Bonds ("POBs"). The City is a participant in the California Public Employees' Retirement System ("CalPERS") and maintains miscellaneous and safety retirement plans ("the Plans"). The June 30, 2019 CalPERS actuarial valuations for the City's two plans reflect a combined Unfunded Actuarial Liability (UAL) of approximately $707 million. Staff has scheduled City Council consideration to initiate the judicial validation process on March 16, 2021, authorizing a not -to -exceed Pension Obligation Bond (POB) up to ninety percent of its projected UAL as of June 30, 2021 estimated to be $671 million. The amount to be issued is subject to change at discretion of the City. Urban Futures, Inc. (UFI) is serving as Municipal Advisor to the City and Stradling Yocca Carlson & Rauth is serving as Validation, Bond and Disclosure Counsel on the engagement. III. SCOPE OF SERVICES The scope of services provided by the successful proposer or proposers must include, but not be limited to, the following: A. Provide review and comment on all documents related to the financing. B. Identify, evaluate, and explain the benefits and risks of alternative financing structures. C. Optimize the overall debt structure while maintaining future flexibility. D. Work with rating agencies to seek the highest possible credit ratings for the proposed bonds. E. Assist the financing team in assessing the benefits of credit enhancement for the bonds. F. Advise the financing team with the timing, size and structure of the bond issue. G. Develop a marketing plan to achieve the most favorable terms for the bonds. H. Market the bonds in a manner designed to achieve the lowest possible borrowing cost. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 3 of 24