65A - CREDIT ANALYSIS FUNDING SARTC

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City of Santa Ana General Credit Analysis Schedule December 1, 2015 Page 3 It is anticipated that the City will receive a favorable rating. A favorable rating will allow the City to leverage future dollars at a reduced cost in order to address the many deferred maintenance and infrastructure needs as presented at the August 18, 2015 City Council retreat. In addition, the City will also be requesting a sensitivity analysis as it relates to its current reserve levels. The sensitivity analysis will address not only the City's General Fund Reserve but the Economic Uncertainty Reserve Account as well. The Economic Uncertainty Account was a direct result of the City's ability to meet higher than anticipated General Fund requirements. As stipulated under the City's Fiscal Policy once the City was able to hit the 10% reserve target, it allowed for the funding of an Economic Reserve Account that would be used for negative variations in the City's major revenues. Currently, $3.8 million is assigned to this account. If the sensitivity analysis of the City's current reserve levels is determined to be positive by the rating agency, then this would allow the City Council to designate some (to be determined) one- time funds for high priority projects. The Economic Uncertainty Reserve Account has been identified as a potential source to fund an immediate high priority project. The project currently identified is the Santa Ana Regional Transportation Center ( SARTC). SARTC which was constructed in 1985 is a five story facility with 35,000 square feet of rental space including conference rooms. The facility which is a major regional transportation hub has fallen in disrepair and is underutilized. Renovations would allow SARTC to be a highly utilized facility and be viewed as a major gateway to Santa Ana that would support continued efforts to link SARTC with the downtown and adjacent cities. However, in order to utilize the Economic Uncertainty Reserve Account, Council would need to consider and adopt several actions in the future: - Amend the fiscal policy to include language under the Economic Uncertainty Reserve Account to allow for one -time investments in City facilities and projects (majority vote). - Approve an appropriation adjustment assigning funds to SARTC (requires 5 votes). - Approve a replenishment plan for the Economic Uncertainty Reserve Account. Although it is still to be determined, it is anticipated that upon refurbishment of the facility that a portion of newly generated rents would be used to replenish the Economic Uncertainty Reserve Account (requires 5 votes). Upon receipt of the final credit analysis report currently scheduled for the beginning of February, staff will present findings to the FEDT committee. The next scheduled meeting during this period is March 14, 2016. However, staff will consider a special meeting in February. Depending on the FEDT meeting date, City Council consideration would be scheduled for either March 1, 2016 or March 15, 2016. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City's to meet Goal #4 City Financial Stability, Objective #2 (Provide a reliable five -year financial forecast that ensures financial stability in accordance with 65A -3