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HomeMy WebLinkAboutItem 23 - Pension Debt Refinancing Update and Underwriter SelectionFinance and Management Services https://www.santa-ana.org/finance Item # 23 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report May 18, 2021 TOPIC: Pension Debt Refinancing Update and Underwriter Selection AGENDA TITLE: Pension Debt Refinancing Update and Underwriter Selection RECOMMENDED ACTION 1. Receive and File Pension Debt Refinancing Update. 2. Approve the Selection of the following Underwriter(s) to assist the City with refinancing its existing Pension Debt: • Bank of America Securities, Inc.- Senior Manager • Stifel Financial Corp. — Co -Manager Ramirez & Co., Inc. — Co -Manager EXECUTIVE SUMMARY On March 16, the City Council adopted a resolution authorizing the initiation of judicial validation proceedings (Validation) to refinance the City's employee pension debt. While the Validation is in process, Staff and the City's financial advisor, Urban Futures, Inc. (UFI), conducted a competitive procurement process for bond underwriting services. The Underwriter's role is to develop disclosure documents related to the City's potential debt, assist with a presentation to a credit rating agency, market the bonds to investors, and ultimately sell the bonds. DISCUSSION Subsequent to the March 16, 2021 City Council action, the City's Validation Counsel, Stradling Yocca Carlson & Rauth (Stradling), filed a validation action with the County of Orange Superior Court (Court). The Court has commenced the process to determine that the City can refinance its existing employee pension debt. The Court distributed a publication of summons to all interested parties, which include the City's employee bargaining groups. The City is on track to receive a decision (i.e. judgement) from the Court on the legality of issuing debt to refinance its pension debt obligations. Pending any challenges to the summons, staff anticipates receiving the decision within the next sixty (60) to ninety (90) days. Pension Debt Refinancing Update and Underwriter Selection May 18, 2021 Page 2 Request for Proposal (RFP) — Underwriter Services The City advertised Request for Proposal (RFP) No. 21-025 on February 19, 2021 via PlanetBids. In addition, UFI submitted the RFP directly to ten (10) established underwriting firms serving the municipal sector with experience in refinancing pension debt. A summary of the RFPs and offers received is as follows: • 15 Vendors were notified • 11 Vendors downloaded the RFP • 0 Santa Ana vendors notified • 10 Proposals received UFI evaluated all 10 proposals and recommended the City interview seven of the firms. A committee reviewed the proposals and conducted the interviews. The committee included the following: • City staff - Executive Director of Finance and Management Services Agency (FMSA) and Assistant Director of FMSA • Stradling Yocca Carlson Rauth — Validation Counsel • Urban Futures Inc. — Financial Advisor The Committee evaluated proposals based on the following factors: • Experience of firm personnel • Distribution capabilities (i.e. ability to identify investors who will purchase the bonds) • Structuring of transaction ideas / analysis of transaction / related marketing plan for sale of debt • Proposed fees The Committee determined the best approach was to select multiple underwriters, referred to as a "Syndicate", with one underwriter acting as the Senior Manager and two additional underwriters serving as Co -Managers. This approach ensures the City sells bonds at the lowest interest rate, to reduce borrowing costs and increase pension debt refinancing savings. After evaluating proposals and conducting interviews, the Committee recommends the following Underwriting Syndicate: • Bank of America Securities, LLC (BofA) , Senior Manager (Los Angeles, CA) • Stifel Financial Corp. (Stifel), Co -Manager (Los Angeles, CA) • Ramirez & Co, Inc. (Ramirez), - Co -Manager (Los Angeles, CA) BofA maintains a significant international presence with capacity to market and sell to both national and international investors; has experience issuing large pension debt refinancings within the State of California; and has experience leading various Underwriting Syndicates. Stifel specializes in municipal bonds, including pension debt Pension Debt Refinancing Update and Underwriter Selection May 18, 2021 Page 3 refinancing for cities located in Orange County (e.g. Huntington Beach and Orange). Ramirez was the City's underwriter for its two most recent debt issuances and is most familiar with the City's credit profile, and has relevant experience with pension debt refinancing. All three underwriters submitted well -researched, creative debt structures and marketing proposals to the City, demonstrating their ability to serve the City's needs. As an additional benefit, the proposed Syndicate of Underwriters have complementary strengths. The City will contract with its Underwriters via the Bond Purchase Agreement, which outlines the terms and conditions of the potential debt issuance along with the proposed underwriting fee of $1.75 per $1,000 bond. The Underwriting Syndicate has agreed to a fee split as follows: Fee Arrangement* • BofA 47.5% • Stifel 30.0% • Ramirez 22.5% Total 100.0% *Note: Subject to change based upon actual sales by each firm Below are the proposed duties for each member of the Syndicate: • BofA o Numerical and structuring analysis o Marketing plan and investor outreach coordination o Communication among the syndicate o Review of relevant bond documents (i.e. official statement, etc.) o Participate on Market Update and Pricing call with the Financing Team • Stifel o Rating presentation o Review of relevant bond documents (i.e. official statement, etc.) o Participate on market update and pricing call with the financing team • Ramirez o Investor online roadshow o Review of relevant bond documents (i.e. official statement, etc.) o Participate on market update and pricing call with the financing Team Next Steps Assuming the Court makes its determination within sixty (60) to ninety (90) days, the preliminarily timeline for the Pension Debt refinancing follows. 1. Receive updated CalPERS data by July 2021. 2. Develop Bond documents such as the preliminary official statement and bond purchase agreement for City Council Consideration, potentially by September 2021. 3. Deliver credit rating presentation by September 2021. Pension Debt Refinancing Update and Underwriter Selection May 18, 2021 Page 4 4. Issue bonds immediately thereafter. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT There is no fiscal impact associated with this action. Underwriters receive their compensation from the proceeds of the bond sales. The City cannot sell any bonds until the Court issues its final Judgment and the City Council approves the preliminary official statement. EXHIBIT(S) 1. Request for Proposal (RFP) # 21-025 — Underwriting Services for Pension Refinancing Bonds 2. Response to RFP # 21-025 — Bank of America Securities, Inc. 3. Response to RFP # 21-025 — Stifel Financial Corp. 4. Response to RFP # 21-025 — Ramirez & Co., Inc. Submitted By: Kathryn Downs, FMSA Executive Director Approved By: Kristine Ridge, City Manager EXHIBIT 1 REQUEST FOR PROPOSALS (RFP) NO. 21-025 FOR UNDERWRITING SERVICES FOR PENSION REFINANCING BONDS CITY OF SANTA ANA FINANCE & MANAGEMENT SERVICES AGENCY Kathryn Downs Executive Director of Finance & Management Services Agency KEY RFP DATES: The schedule below is tentative and subject to change at the discretion of City, with appropriate notice to prospective Proposers. Issue Date: Deadline for Questions about RFP Proposal Due Date: February 18 2021 February 26, 2021 March 11, 2021, by 5:00 PM (9)CITY OF SANTA ANA TABLE OF CONTENTS I. BACKGROUND........................................................................................................................3 II. PROJECT PURPOSE.............................................................................................................. 3 III. SCOPE OF SERVICES............................................................................................................ 3 IV. PROPOSED 2021 PENSION OBLIGATION BONDS............................................................... 4 V. AGREEMENT.......................................................................................................................... 4 VI. RFP SCHEDULE OF EVENTS................................................................................................ 5 VI I. RESPONSE TO RFP............................................................................................................... 5 VIII. PROPOSER QUESTIONNAIRE............................................................................................ 11 IX. RESOURCES PROVIDED FOR PROPOSER REFERENCE ONLY ...................................... 11 X. SELECTION PROCEDURES & CRITERIA............................................................................ 12 XI. WITHDRAWALS.................................................................................................................... 13 XII. LIMITATIONS........................................................................................................................ 13 XIII. PROTESTS............................................................................................................................13 XIV. GENERAL TERMS AND CONDITIONS................................................................................. 14 XV. AWARD OF AGREEMENT....................................................................................................................18 XVI. IMPLEMENTATION...............................................................................................................................18 ATTACHMENTS (REQUIRED FORMS TO BE SUBMITTED WITH PROPOSAL) A REFERENCES B PROPOSER'S STATEMENT C NON -COLLUSION AFFIDAVIT D NON -LOBBYING CERTIFICATION E NON-DISCRIMINATION CERTIFICATION EXHIBITS (FOR REFERENCE ONLY) A PENSION BOND REFINANCING STAFF REPORT — FEBRUARY 2, 2021 RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 2 of 24 (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 (9)CITY OF SANTA ANA Provide assistance in closing the bond issue. J. Prepare a post -sale analysis, including, but not limited to, information on placement of the bonds, market conditions at the time of sale, orders, designations, allocations and results of comparable sales. In addition, the City expects the Underwriter, as part of their responsibilities to investors under Federal securities laws, to conduct such review as is necessary to attain a reasonable basis for belief in the accuracy and completeness of the key representations in the Official Statement. IV. PROPOSED 2021 PENSION OBLIGATION BONDS A. It is the City's current expectation to issue pension obligation bonds by December 31, 2021. Describe how your firm would structure the proposed 2021 POBs on a traditional fixed rate basis assuming a not to exceed par value of approximately $671 million (90% of the UAL) and $372 million (50% of the UAL). Please provide the coupons on a maturity -by -maturity basis and the overall True Interest Cost (TIC). Identify spreads to Treasuries on a maturity - by -maturity basis. Furthermore, provide comparable pricing information that supports your proposed spreads to Treasuries. Also, please include a Sources and Uses of Funds with a detailed breakout of all cost assumptions. B. Given current market conditions and interest rate environment, please recommend the optimal POB structure, including any structuring ideas that may be appropriate for refinancing the UAL. Please discuss any specific structuring considerations that may pertain to POBs in general including the specific bases to be funded with POB proceeds.. In your discussion of any alternative financing ideas that the City should consider, please be clear as to the risks and/or considerations involved with the potential structure. C. The City has no outstanding POBs or outstanding General Fund bonded indebtedness. The City's last General Fund rating was provided by S&P in February 2016 as AA/Stable. Please discuss your credit strategy, including assumed credit rating for the proposed POBs, and any effect you believe the proposed POBs will have on the City's credit. D. Discuss the investors you would target for the City's POBs. Briefly discuss your firm's marketing strategy for placing the City's POBs, including whether or not you would use a formal investor relations program and/or internet roadshow. Describe any challenges in the marketing of POBs by a California municipality in the current market. E. In what circumstances, if any, would you recommend a private placement of POBs rather than a public offering? What would be the pros and cons of such a strategy? F. Describe a recent engagement your firm was involved in a debt issuance in which there were multiple underwriters engaged. V. AGREEMENT The successful proposer would be required to engage Counsel (i.e. Underwriter's Counsel) in drafting various agreements related to this engagement. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 4 of 24 (9) CITY OF SANTA ANA VI. RFP SCHEDULE OF EVENTS Schedule below is tentative and subject to change at discretion of City, with appropriate notice to prospective Proposers. Issue Date: Deadline for Questions about RFP Proposal Due Date: VII. RESPONSE TO RFP Thursday, February 18 2021 Friday, February 26, 2021 Thursday, March 11, 2021, by 5:00 PM A. SUBMITTAL INSTRUCTIONS — THIRD PARTY ADMINISTRATOR To be considered, each Proposer must submit their proposal electronically via: (1) Online PlanetBids submission; AND (2) Email to the contact listed below The Proposal must be received no later than 5:00 p.m. Pacific, on Thursday, March 11, 2021. Only electronic submissions will be accepted. It is the responsibility of the Proposer to ensure that any proposals submitted have been received prior to the proposal due date and time. Proposals, including all required sections and forms, shall be submitted electronically as a single pdf file via email to the third party RFP administrator (Project Coordinator) listed below. No other form of submittal will be accepted. It is the responsibility of the Proposer to ensure that any proposals submitted has been received prior to this proposal due date and time the Project Coordinator noted below: Michael Busch, Chief Executive Officer Urban Futures, Inc. michaelb(aurbanfuturesinc.com It is the responsibility of the Proposer to ensure that any proposals submitted have been uploaded to PlanetBids prior to the proposal due date and time. Proposals, including all required sections and forms, shall be submitted electronically via the City's Bid Management System, PlanetBids. No other form of submittal will be accepted. It is the responsibility of the Proposer to ensure that any proposals submitted has been uploaded to PlanetBids prior to this proposal due date and time. PlanetBids will not accept late bids and no exceptions shall be made. Proposers will receive an e-bid confirmation number with a time stamp from PlanetBids indicating that their proposal was submitted successfully. The City will only receive and consider those proposals that were transmitted successfully. Submit proposal online at: http://www.planetbids.com/portal/portal.cfm?CompanVID=20137. Proposer shall be solely responsible for informing itself with respect to the proper utilization of the bid management system, for ensuring the capability of their computer system to upload the required documents, and for the stability of their internet service. Failure of the Proposer to successfully submit an electronic proposal shall be at the Proposer's sole risk and no relief will be given for late and/or improperly submitted proposals. Proposers experiencing any technical difficulties with the bid submission process may contact PlanetBids at (818) 992-1771. Questions of an operational nature may be directed to the City's assigned Project Manager. Neither the City, nor PlanetBids, RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 5 of 24 (9)CITY OF SANTA ANA makes any guarantee as to the timely availability of assistance, or assurance that any given problem will be resolved by the bid submission deadline. Proposals shall NOT be mailed or sent via telegraphic, or facsimile means. All notifications, updates and addenda will be posted online on PlanetBids at https://www.planetbids.com/portal/portal.cfm?CompanvlD=20137. Proposers shall be responsible for monitoring the site to obtain information regarding this solicitation. Failure to respond to required updates may result in a determination of a nonresponsive proposal. B. COMMUNICATION / CONTACT WITH CITY STAFF Unless otherwise authorized herein, Proposers who are considering submitting a proposal in response to this RFP, or who submit a proposal in response to this RFP, are only to communicate with the assigned Project Coordinator(s), and no other City staff about this RFP from the date this RFP is issued until a contract is awarded. The City will provide all official communication concerning this RFP in writing via the City's Bid Management System, PlanetBids. General questions regarding this RFP may be directed to the City's assigned Project Coordinator listed below via email. Additional information is provided below in Section C regarding Request for Information or Clarification/Questions. The City will not be responsible for or bound by any oral communication or any other information or contact that occurs outside the official communication process specified herein, unless confirmed in writing by the designated Project Manager. C. REQUEST FOR INFORMATION OR CLARIFICATION / QUESTIONS Questions regarding this RFP shall be submitted via email by 5:00 PM on February 26, 2021. Responses to all questions will be posted on PlanetBids via addendum. All prospective Proposers are advised to visit PlanetBids on a regular basis for project updates. No verbal requests or responses will be accepted. Significant interpretations or clarifications will be addressed via addenda to this RFP. Please direct all questions related to this RFP to the City's Financial Advisor listed below: Michael Busch, CEO Urban Futures, Inc. (UFI) Email: michaelb(c-urbanfuturesinc.com Phone: (714) 923-3541 D. ADDENDA Any changes in RFP from the date of release to date of submittal will result in an addendum or amendment. Notification of such addendum or amendment shall be posted on City's PlanetBids system, https://www.planetbids.com/portal/portal.cfm?CompanvlD=20137. Proposers shall be responsible for monitoring the site to obtain information regarding this solicitation. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 6 of 24 (9)CITY OF SANTA ANA E. UNDERSTANDING PROPOSAL It is the responsibility of each Proposer to inquire about any criteria, condition, term, provision, or requirement of the RFP that the Proposer does not understand. Responses to inquiries, if they significantly change or clarify the RFP requirements or any aspect of the procurement process, will be forwarded by addenda to all Proposers. The City will not be bound by any oral responses to inquiries. By submitting proposals, Proposers assert that they have fully read the RFP and any addenda issued by the City, the proposed Contract and any other Contract Documents, and affirm that the terms and conditions stated therein are fully understood and are acceptable to the Proposer. Each Proposer accepts the terms and conditions of the Contract Documents and indicates their ability and willingness to perform the requested services under such terms and conditions. Any exceptions to the terms and conditions set forth in the Contract Document should be clearly noted in each Proposer's proposal. F. PROPOSAL CONTENTS Proposals are to be prepared in such a way as to provide a straightforward, concise delineation of capabilities to satisfy the requirements of this RFP. Colored displays, promotional materials, etc., are not necessary or desired. Emphasis should be concentrated on conformance to RFP instructions, responsiveness to the RFP requirements, and on completeness and clarity of content. Dividers and clear organization of content and material are encouraged. The proposal shall be limited to 15 one-sided pages using a minimum 11-point font size (excluding a maximum two -page cover letter and requested transaction lists). As an aid to evaluation, the proposal should respond to each question or requirement in consecutive order, as follows: 1. Cover Letter Proposals shall include a letter signed by a principal or authorized representative who can make legally binding commitments for the entity. Include type of business entity. Cover Letter shall not exceed two pages. Cover letter will not be counted against the 15-page limit. Cover letter must be addressed to the following: Kathryn Downs Executive Director of Finance & Management Services Agency City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 2. Agreement Statement Proposal shall include a statement outlining your concurrence or concerns with any and all provisions as contained in this RFP. 3. Firm and Team Experience Proposal shall include a profile of the firm's experience including the following: RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 7 of 24 (9)CITY OF SANTA ANA A general description of the firm, including structure, size, number of employees, relevant financing experience, and any past or contemplated changes in ownership. Additionally, the following shall be included: • Provide a list, in tabular form with a grand total, of all Pension Obligation Bond transactions in which the firm has served as senior manager since January 2010, specifically identifying staff members involved and their roles. • Provide a list, in tabular form with a grand total, of all Pension Obligation Bond transactions in which the firm has served as co- manager since January 2010, specifically identifying staff members involved and their roles. A description of the size of the firm's governmental staff and the firm's experience with governmental agencies of a similar size, nature, and scope. Emphasis should be placed on assignments undertaken within the past three (3) years and on engagements undertaken by the personnel proposed to be assigned to this agreement. iii. Name and contact information of the primary and secondary Project Managers to be assigned to the engagement. iv. Indicate level of commitment of each of the assigned key personnel and how you will ensure the accessibility of key personnel to the City during this engagement. v. Resumes for the professional staff assigned to the engagement. Include a brief biography of each person specifically addressing experience relevant to the City's proposed financing. A discussion of educational background and relevant experience of the Partner, Supervisor(s) and Staff which will be assigned to this engagement as well as their assigned responsibilities under the proposal shall be included. vi. A description of the Proposer's experience in providing similar services to those requested in this RFP. vii. Identify three taxable bond issuer references for which the proposed primary Project Manager and the secondary Project Manager have carried out similar responsibilities to those contemplated under this RFP. Include contact information for each. viii. A list of the local office's most significant engagements in the last five (5) years, indicating whether they are public or private sector, and including scope of work, date, and name and telephone number of the client contact. ix. A statement that the firm is independent of the City and that it is unaware of potential conflicts of interest. x. An affirmative statement verifying the firm and all assigned key professional staff are properly licensed to practice in California. A. A warrant that the firm maintains a prudent amount of errors and omissions insurance that covers negligent acts and is applicable to the work requested in this RFP. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 8 of 24 (9)CITY OF SANTA ANA xii. An acknowledgement by signature that the signer is authorized to contractually bind the firm. xiii. Any pending legal actions and litigations against the firm. Legal actions against the firm in the previous five years shall be included. 4. Pension Obligation Bond Experience Describe the firm's and selected personnel's experience within the last thrity-six (36) months regarding the issuance of Pension Obliagtions Bonds. Please include but not limited to the following items: i. Name of Municipality or District ii. Amount of Debt Issuance iii. Par amount of debt issued iv. umber of underwriters within the engagement - if multiple underwriters, indicate if co or senior 5. Distribution Capabilities i. Proposers shall provide a brief summary of their firm's fixed income marketing and distribution capabilities, specifically taxable municipal bonds. Description of firm's corporate bond sales and trading capabilities shall include, but not be limited to the following: Number of sales and trading personnel ii. League tables/rankings iii. Personnel assigned to sell taxable municipal bonds 6. Structuring Ideas and Marketing Plan for Proposed Debt Issuance Provide a brief summary of your specific structuring ideas including the assumptions of which CalPERS UAL bases to fund the maximize savings based on the two scenarios described above. Describe how Proposer would lead the transaction as a senior manager. Specifically, provide your strategies and approaches to help ensure the transaction is executed efficiently. 7. Cost Proposal Provide an estimate of your total, not to exceed, underwriting costs associated with serving as senior manager to the City on a not -to -exceed approximately $671 million issue of fixed rate POBs. Please note that any payment to the underwriter is contingent on the closing of the bonds. In your response, please specifically include: i. Proposed takedown on a maturity -by -maturity basis. ii. Management Fee, if any. iii. Expenses. In this section, clearly identify expense estimates. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 9 of 24 (9) CITY OF SANTA ANA iv. Underwriter's Counsel. Please identify three firms that you would propose to serve as underwriter's counsel, along with the primary counsel for each firm. The cost for developing the Proposal is the sole responsibility of the Proposer. All Proposals submitted become the property of the City. The proposed fees and rates for this contract will be fixed for the duration of the agreement, including allowable renewal options exercised at the discretion of the City. 8. Certifications (ATTACHMENTS) The following forms, included in this RFP, shall be signed and included as part of the proposal submittal package: • Attachment A: References • Attachment B: Proposer's Statement • Attachment C: Non -Collusion Affidavit • Attachment D: Non -Lobbying Certification • Attachment E: Non -Discrimination Certification 9. References Contractor shall provide three (3) references from public agency customers for which actuarial work similar to services specified in this RFP have been performed, including contact names and telephone numbers, and types of services your firm has provided. Use Attachment A — References. The respondent grants permission for the City to contact any individuals listed as references. City may disqualify a Proposer if. - References fail to substantiate Proposer's description of services and deliverables provided; or • References fail to support that Proposer has a continuing pattern of providing capable, productive, and skilled personnel, or • City is unable to reach the point of contact with reasonable effort. It is the Proposer's responsibility to inform the point of contact(s) of normal City working hours. Information provided by the City is solely for the purpose of conducting an actuarial study and shall not be disclosed to any third party without the City's written permission. 10. Evidence of Financial Capacity Proposer may be requested to submit its most recent audited financial statement, evidencing Proposer's financial capacity to fully perform the required services, including provision of equipment and personnel expenses over a ninety (90) day period. If said financial statement does not reflect full ninety (90) day operational capacity, Proposer may include a letter of credit as evidence of supplemental capacity. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 10 of 24 (9) CITY OF SANTA ANA 11. Insurance The selected Proposer shall provide the required evidence of insurance coverage as set forth in the standard agreement within ten (10) business days after receipt of Notice of Intent to Award. Contractor must maintain, for the duration of its contract, insurance coverages as required by the City. Subcontractors must comply with the City's insurance requirements as stated herein. Primary Contractor shall not allow any Subcontractor to commence work until all insurance required of Subcontractor is obtained. Additionally, Contractor shall provide the following insurance coverage: A warrant that the firm maintains a prudent amount of errors and omissions insurance that covers negligent acts and is applicable to the work requested in this RFP. Work on the contract shall not begin until after the awarded Contractor has submitted acceptable evidence of the required insurance coverages. VIII. PROPOSER QUESTIONNAIRE Proposers shall [rovide responses to the following additional questions. Response to this section will not count against the 15-page limit. A. Within the past 36 months, has your firm and/or any of its principals been the subject of any investigation relating to the municipal securities industry by the SEC, FINRA, NYSE, or any other State or Federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry? B. Within the past 36 months, has your firm and/or any of its principals been involved in any litigation, arbitration, disciplinary or other actions arising from the firm's underwriting, management or handling of municipal securities? C. Does there exist any relationship between your firm and any other non-affiliated firm(s) or individuals involving any compensation arrangement that may be associated with your possible engagement to assist with the City's proposed debt issue? IX. RESOURCES PROVIDED FOR PROPOSER REFERENCE ONLY Proposers are encouraged to visit the following websites for their reference while preparing their responses to this RFP. • Comprehensive Annual Financial Report — CAM (FY 2020-21) https://www.santa- ana.org/sites/default/files/finance/Accounting/2020%20CAFR.online%20versio n%20(00000002). pdf • Citywide Budget (FY 2020-21) https://www.santa-ana.org/sites/default/files/finance/budget/2020- 2021 /FY%2020- 21 %20Adopted%20Budget/Final%20Budget%20Book/FY%2020- 21 %20Adopted%20Budget FINAL.pdf RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 11 of 24 (9)CITY OF SANTA ANA • CalPERS Valuation Reports — as of June 30, 2019 o Safety https://www.calpers.ca.gov/docs/actuarial-reports/2019/santa-ana-city- safety-2019. pdf o Miscellaneous https://www.calpers.ca.gov/docs/actuarial-reports/2019/santa-ana-city- miscel laneous-2019. pdf Pension Bond Refinancing Staff Report (EXHIBIT A) X. SELECTION PROCEDURES & CRITERIA A. The City will establish a proposal review committee (committee), consisting of Finance staff designated by the Executive Director of Finance and Management Services. The review committee will evaluate proposals based on the response to the RFP, which includes adherence to outlined directions and format, and the City evaluation criteria set forth above. B. Proposers will be ranked by the committee based on the following criteria: CATEGORY VALUE Experience of Firm and Personnel Experience on similar financings in California and nationally. 15 Relevant qualifications of key personnel assigned to this financing. Firm Experience with recent issuance of Pension Obligation Bonds 20 Distribution capabilities 25 Structuring of transaction ideas / Analysis of Transaction / related Marketing Plan for 30 sale of debt Proposed Fees - Cost of delivering specified services is consistent with industry standards. 10 - Expected overhead costs for the awarded entity as they apply to management of the contract TOTAL POSSIBLE SCORE 100 C. A final score will be calculated for each submitted proposal and used to rank Proposers. The City is under no obligation to accept any proposal and reserves the right to negotiate with respondents as to fees and terms. The City may reject proposals at its sole discretion. If a proposal fails to satisfy any requirements outlined in this RFP, it may be considered non -responsive and the proposal may be rejected. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 12 of 24 (9)CITY OF SANTA ANA The City shall not be obligated to accept the lowest priced proposal, but will make an award in the best interests of the City of Santa Ana after all factors have been evaluated. D. Those firms considered most qualified to provide the desired services based on an evaluation of the written proposals may be invited for an interview. Only those individuals who will be involved with this project throughout its duration should be present at the interview. E. Finance staff will recommend the top ranked consulting firm to the City Manager or City Council for award of contract. XI. WITHDRAWALS Proposers are responsible for verifying all prices and information before submitting a proposal. Prior to the proposal due date, the Proposer or Proposer's representative may withdraw the proposal by providing written notice of the proposal withdrawal to the City Contact/Project Manager. Verbal or telephonic withdrawals are not permissible. XII. LIMITATIONS This RFP does not commit the City to award a contract, to defray any costs incurred in the preparation of a Proposal pursuant to this RFP, or to procure or contract for work. All Proposals submitted in response to this RFP become the property of the City and public records, and as such may be subject to public review. The City reserves the right to cancel or revise, in part or in its entirety, this RFP including but not limited to: selection schedule, submittal date, and submittal requirements. If the City cancels or revises the RFP, all RFP holders of record will be notified in writing. The City reserves the right to request additional information and/or clarifications from any or all responders to this RFP. XIII. PROTESTS Proposers may file a "protest" to an RFP with the City's assigned Project Manager. In order for a Proposer's protest to be considered valid, the protest must: Be filed in writing within five (5) business days of either the RFP issued date or before 5:00 p.m. of the 5th business day following the posting of RFP Results/Notice of Intent to Award Contract on the City's website; 2. Clearly identify the specific irregularity or accusation; 3. Clearly identify the specific City staff determination or recommendation being protested; 4. Specify, in detail, the grounds of the protest and the facts supporting the protest; and 5. Include all relevant, supporting documentation with the protest at time of filing. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 13 of 24 (9)CITY OF SANTA ANA If the protest does not comply with each of these requirements, it will be rejected as invalid. If the protest is valid, the City's Project Manager, or other designated City staff member, shall review the basis of the protest and all relevant information. The Project Manager will provide a written decision to the protestor within ten (10) business days from receipt of protest. The decision from the Project Manager, or her/her designee, is final and no further appeals will be considered. XIV. GENERAL TERMS AND CONDITIONS By submitting a Proposal, the Proposer acknowledges that it has thoroughly examined and accepts the Terms and Conditions of this RFP as described below: A. AMERICANS WITH DISABILITIES ACT The awarded Contractor hereby certifies that it will comply, as applicable, with the Americans with Disabilities Act of 1990 ("ADA"), 42 USC §§ 12101 et seq., and its implementing regulations, including Subtitle A, Title II of the ADA. Contractor will not discriminate against persons with disabilities nor against persons due to their relationship to or association with a person with a disability. Any contract entered into by the awarded Contractor (or any subcontract thereof), relating to this RFP, shall be subject to the provisions of this paragraph. B. CITY RIGHT TO REJECT The City reserves the right to reject any or all proposals submitted and no representation is made hereby that any agreement will be awarded pursuant to this RFP or otherwise. The City reserves the right to accept or reject the combined or separate components of this proposal in part or in its entirety or to waive any minor inconsistency, informality or technical defect in the proposal. C. CONFLICT OF INTEREST Contractor shall exercise reasonable care and diligence to prevent any actions or conditions that could result in a conflict with the best interests of the City. This obligation shall apply to the Contractor; the Contractor's employees, agents, and Subcontractors associated with accomplishing work and services hereunder. The Contractor's efforts shall include, but not be limited to, establishing precautions to prevent its employees, agents, and Subcontractors from providing or offering gifts, entertainment, payments, loans or other considerations which could be deemed to influence or appear to influence City staff or elected officers from acting in the best interests of the City. Each Proposer must disclose any existing or potential conflict of interest relative to the performance of the contractual services resulting from this RFP. Any such relationship that might be perceived or represented as a conflict should be disclosed. The City reserves the right to disqualify any Proposer on the grounds of actual or apparent conflict of interest. No person, firm, or subsidiary thereof who has been awarded this Contract may be awarded a Contract for the provision of services, the delivery of supplies, or the provision of any other related action which is required, suggested, or otherwise deemed appropriate as an end product of this Contract. Therefore, Contractor is precluded from contracting for any work recommended as a result of this Contract. D. CONTRACTOR'S EXPENSE Pre -Contractual Expenses: The City is not liable for any costs incurred by Proposers prior to entering into a formal contract. Costs of developing a response to this RFP, are entirely RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 14 of 24 (9) CITY OF SANTA ANA the responsibility of the Proposer, and shall not be reimbursed in any manner by the City. Pre -contractual expenses are not to be included in the cost proposal. Pre -contractual expenses include, but are not limited to, preparation of the proposal, submission of the proposal and additional information, attendance at pre -proposal conference, negotiating any matter related to this RFP with City, and/or any other expenses incurred by the Proposer prior to the date of award and execution, if any, of the contract. Other Expenses: The Contractor will be responsible for all costs related to photo copying, telephone communications, fax communications, and parking while on City sites during the performance of work and services under this Contract. E. CONTRACTOR'S PROJECT MANAGER/KEY PERSONNEL Except as formally approved by the City, the key personnel identified in Contractor's proposal shall be the individuals who will actually complete the work. Changes in staffing must be reported in writing and approved by the City. The City shall have the right to require the removal and replacement of the Contractor's Project Manager and key personnel under the awarded contract. The City shall notify the Contractor in writing of such action. The City is not required to provide any reason, rationale, or additional factual information if it elects to request any specific key personnel be removed from performing services under the awarded contract. The City shall review and approve the appointment of the replacement for the Contractor's personnel. Said approval shall not be unreasonably withheld. Standards of Conduct: Contractor's personnel shall be courteous and maintain good working relationships with all stakeholders, state or outside agencies, other team members and staff within the City. Criminal Background Certification: Contractor certifies that all employees working on this contract have had a criminal background check at Contractor's cost and that said employees are clear of any sexual and drug -related convictions. Contractor further certifies that all employees hired by Contractor or Subcontractor shall be free from any felony convictions. City reserves the right to require Contractor to pay fingerprinting fees for personnel assigned to work in sensitive areas. F. COST PROPOSAL The price and amount of the Cost Proposal/Fee Schedule must have been arrived at independently and without consultation, communication, agreement or disclosure with or to any other Subcontractor, Proposer or prospective Proposer. Prices offered by Proposers in their proposals are an irrevocable offer for the term of the contract and any contract extensions. The awarded Contractor agrees to provide the purchased services at the costs, rates, and fees as set forth in their Fee Schedule in response to this RFP. No other costs, rates or fees shall be payable to the awarded Subcontractor for implementation of their proposal. G. DATA RETENTION Contractor shall be responsible for retaining data, records, and documentation for the preparation of required items. These materials shall be made available to and as requested by City. All materials, documents, data or information obtained from the City Data files or any City medium furnished to Contractor in the performance of an awarded contract will at all times remain the property of the City. Such data or information may not be used or copied for RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 15 of 24 (9) CITY OF SANTA ANA direct or indirect use by Contractor after completion or termination of this Contract without the express written consent of the City. All materials, documents, data or information, including copies, must be returned to the City at the end of the contract. All data, documents and other products used, developed, or produced during response preparation of the RFP will become property of the City. All responses to the RFP shall become property of the City. Proposer information identified as proprietary shall be maintained confidential, to the extent allowed under the California Public Records Act. H. DRUG -FREE WORKPLACE The awarded Contractor certifies compliance with Government Code Section 8355 in matters relating to providing a drug -free workplace. Failure to comply with these requirements may result in suspension of payments under the Contract or termination of the contract or both, and the Contractor may be ineligible for award of any future City contracts. EXAMINATION Proposer represents that it has thoroughly examined and become familiar with the services and responsibilities required this RFP and that it is capable of effectively and efficiently performing quality work to achieve the City's objectives. Any attachments referenced herein or any interpretations, clarifications or amendments subsequently posted in relation to this RFP are fully incorporated. Any irregularities or lack of clarity in the RFP should be brought to the designated City Contact/Project Manager's attention as soon as possible so that corrective addenda may be furnished to prospective Proposers. Proposals which appear unrealistic in the terms of technical commitments, lack of technical competence, or are indicative of failure to comprehend the complexity and risk of this contract, may be rejected. EXECUTION OF AGREEMENT Upon successful negotiations, the City and the selected Proposer will enter into an Agreement similar to that as shown in EXHIBIT 3 STANDARD AGREEMENT in the Appendix of this RFP. If a Proposer is unwilling or unable to execute an Agreement within thirty (30) days after being notified of selection under this RFP, the City reserves the right to select the next most qualified Proposer or call for new Proposals, whichever the City deems most appropriate. K. JOINT OFFERS/SUBCONSULTANTS Where two or more Proposers desire to submit a single Proposal in response to this RFP, they should do so on a prime sub -consultant basis. The City intends to contract with a single firm and not with multiple firms doing business as a joint venture. Should the use of sub - consultants be offered, the Proposer shall provide the same assurances of competence for the sub -consultant plus the demonstrated ability to manage and supervise the subcontracted work. Sub -consultants shall not be allowed to further subcontract with others for work under the Agreement. The provisions of the Agreement shall apply to all sub - consultants in the same manner as the Proposer. The City reserves the right to reject, replace and approve any and all Subcontractors. All Subcontractor(s) shall be identified in the response to the RFP and the City reserves the right to reject any proposed Subcontractor(s). Subcontractors shall be the responsibility of the prime Contractor and the City shall assume no liability of such Subcontractors. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 16 of 24 (9) CITY OF SANTA ANA L. INDEPENDENT CONTRACTOR Contractor is considered an independent Contractor and neither Contractor, its employees, nor anyone working under Contractor will be considered an agent or an employee of City. Neither Contractor, its employees, nor anyone working under Contractor, will qualify for workers' compensation or other fringe benefits of any kind through City. M. LITIGATION STATUS Each Proposer must include in its proposal a complete disclosure of any alleged significant prior or ongoing contract failures, any civil or criminal litigation or investigation pending which involves the Proposer or in which the Proposer has been judged guilty or liable. Failure to comply with the terms of this provision will disqualify any proposal. The City reserves the right to reject any proposal based upon the Proposer's prior history with the City or with any other party, which documents, without limitation, unsatisfactory performance, adversarial or contentious demeanor, significant failure(s) to meet contract milestones or other contractual failures. N. NEGOTIATIONS The City reserves the right to negotiate final contract terms with any Proposer selected. The contract between the parties will consist of the RFP together with any modifications thereto, and the awarded Contractor's proposal, together with any modifications and clarifications thereto that are submitted at the request of the City during the evaluation and negotiation process. In the event of any conflict or contradiction between or among these documents, the documents shall control in the following order of precedence: the final executed contract, the RFP, any modifications and clarifications to the awarded Contractor's proposal, and the awarded Contractor's proposal. Specific exceptions to this general rule may be noted in the final executed contract. Negotiations shall be confidential and not subject to disclosure to competing Contractors unless and until an agreement is reached. If contract negotiations cannot be concluded successfully, the City reserves the right to negotiate a contract with another Contractor or withdraw the RFP. O. PROJECT MANAGER The selected Proposer will assume responsibility for all services in its proposal. The selected Proposer shall identify a sole point of contact, Project Manager, with the greatest knowledge in regard to the required service operations and contractual matters, including payment of any and all charges resulting from the Agreement. P. PROPOSAL VALIDITY Services, pricing, and warranties indicated in a Proposer's Proposal must be valid for a period of 90 days at minimum after the submission of the Proposal. Q. PUBLIC AGENCIES Other public agencies, as defined by California Government Code Section 6500, may choose to use the terms of this Contract, subject to Contractor's acceptance. The City is not liable or responsible for any obligations related to a subsequent contract between Contractor and another public agency. R. PUBLIC RECORDS Proposals will become public record after the award of a contract unless the proposal or specific parts of the proposal can be shown to be exempt by law. Each Proposer may clearly RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 17 of 24 (9) CITY OF SANTA ANA label all or part of a proposal as "CONFIDENTIAL" provided that the Proposer thereby agrees to indemnify and defend the City for honoring such a designation. The failure to so label any information that is released by the City shall constitute a complete waiver of any and all claims for damages caused by any release of the information. Proposer information identified as proprietary shall be maintained confidential, to the extent allowed under the California Public Records Act. S. SUBCONTRACTORS Proposals in response to this RFP must identify any Subcontractors, and outline the contractual relationship between the Awarded Subcontractor and each Subcontractor. An official of each proposed Subcontractor must sign, and include as part of the proposal submitted by the Prime Contractor, a statement to the effect that the Subcontractor has read and will agree to abide by the awarded Contractor's obligations. Any Subcontractor proposed after award of contract must be approved by the City before commencement of work. The City will look solely to the awarded Contractor for the performance of all contractual obligations which may result from an award based on this RFP, and the awarded Contractor shall not be relieved for the non-performance of any or all Subcontractors. XV. AWARD OF AGREEMENT Selected Contractor(s) will be notified in writing. Any award is contingent upon the successful negotiation of final contract terms. A. EXECUTION OF AGREEMENT "Proposer" will hereinafter be referred to as "Consultant" or "Contractor" in standard agreement. The term of the agreement will begin after the agreement is fully executed, and all required bonds, insurance documents and contents of the payment information packet have been received and approved. XVI. IMPLEMENTATION A. KICK-OFF MEETING A kick-off meeting will be held after selection of Contractor. Contractor and its team will meet with City of Santa Ana staff to conduct introductions, discuss scope of services, and implementation process. B. NOTICE TO PROCEED Following the kick-off meeting, a formal Notice to Proceed (NTP) may be issued after the agreement is fully executed, and all insurance documents and contents of the Payment Information Packet have been received and approved. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 18 of 24 a CITY OF SANTA ANA ATTACHMENT A REFERENCES List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Reference Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Reference Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Contact Individual: Phone Number: Facsimile Number: Year: Contact Individual: Phone Number: Facsimile Number: Year: Contact Individual: Phone Number: Facsimile Number: Year: THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 19 of 24 (9) CITY OF SANTA ANA ATTACHMENT B PROPOSER'S STATEMENT Proposer understands and agrees that this written RFP (or any part thereof specifically designated and accepted by the City of Santa Ana, hereinafter City) shall constitute the entire agreement between proposer and the City only after it has been accepted by the City Council, endorsed by the Clerk of the Council with her signature and official seal noting hereon the action of approval of the Council, signed by the Executive Director or his duly authorized agent, and signed by the City Attorney, denoting his approval of the form of this document, and its execution, and when it or an exact copy of it has been either delivered to proposer or deposited with the United States Postal Service properly addressed to the proposer with the correct postage affixed thereto. Proposer further agrees that upon delivery (as defined above) of the accepted agreement he/she will furnish City all required bonds and certificate of liability insurance within ten (10) days (excluding Saturdays, Sundays and City's legal holidays), or the funds, check, draft, or proposer's bond substituted in lieu thereof accompanying this proposal shall become the property of the City and shall be considered as payment of damages due to the delay and other causes suffered by City because of the failure to furnish the necessary bonds and because it is distinctly agreed that the proof of damages actually suffered by City is difficult to ascertain; otherwise said funds, check drafts, or proposer's bond substituted in lieu thereof shall be returned to the undersigned. Proposer understands that a proposal is required for the entire work, that the estimated quantities set forth in the RFP schedule are solely for the purpose of comparing proposals, and that final compensation under the contract will be based upon the actual quantities of work satisfactorily completed. All terms contained in the specifications, the certification of nondiscrimination by contractors, and the required insurance certificates are to be incorporated by reference into this agreement and are made specifically as part of this RFP. Firm Signed and Printed Name: Title Date THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 20 of 24 (9) CITY OF SANTA ANA ATTACHMENT C NON -COLLUSION AFFIDAVIT (Title 23 United States Code Section 112 and Public Contract Code Section 7106) To the CITY OF SANTA ANA In accordance with Title 23 United States Code Section 112 and Public Contract Code 7106 the proposer declares that the proposal is not made in the interest of, or on behalf of, any undisclosed person, partnership, company, association, organization, or corporation; that the proposal is genuine and not collusive or sham; that the proposer has not directly or indirectly induced or solicited any other proposer to put in a false or sham proposal, and has not directly or indirectly colluded, conspired, connived or agreed with any proposer or anyone else to put in a sham proposal, or that anyone shall refrain from bidding; that the proposer has not in any manner, directly or indirectly, sought by agreement, communication, or conference with anyone to fix the proposal price of the proposer or any proposer, or to fix any overhead, profit, or cost element of the proposal price, or of that of any other proposer, or to secure any advantage against the public body awarding the contract of anyone interested in the proposed contract; that all statements contained in the proposal are true; and, further, that the proposer has not, directly or indirectly, submitted his or her proposal price or any breakdown thereof, or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any corporation, partnership, company association, organization, bid depository, or to any member or agent thereof to effectuate a collusive or sham proposal. Note: The above noncollusion affidavit is part of the proposal. Signing this proposal on the signature portion thereof shall also constitute signature of this noncollusion affidavit. Proposers are cautioned that making a false certification may subject the certifier to criminal prosecution. Signed State of California, County of Subscribed and sworn to (or affirmed) before me on this day of , 20 , by , proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. Notary Public Signature Notary Public Seal THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 21 of 24 (9) CITY OF SANTA ANA ATTACHMENT D NON -LOBBYING CERTIFICATION The prospective participant certifies, by signing and submitting this bid or proposal, to the best of his or her knowledge and belief, that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure of Lobbying Activities," in conformance with its instructions. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. The prospective participant also agrees by submitting his or her bid or proposal that he or she shall require that the language of this certification be included in all lower tier subcontracts, which exceed $100,000 and that all such subrecipients shall certify and disclose accordingly. Signed: Title: Firm: Date: THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 22 of 24 (2) CITY OF SANTA ANA ATTACHMENT E NON-DISCRIMINATION CERTIFICATION The undersigned consultant or corporate officer, during the performance of this contract, certifies as follows: The Consultant shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Consultant shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without, regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Consultant agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause. 2. The Consultant shall, in all solicitations or advertisements for employees placed by or on behalf of the Consultant, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. 3. The Consultant shall send to each labor union or representative of workers with which he/she has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers' representatives of the Consultant's commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. 4. The Consultant shall comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. 5. The Consultant shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his/her books, records, and accounts by the administering agency and the Secretary of Labor for purposes of investigation, to ascertain compliance with such rules, regulations, and orders. 6. In the event of the Consultant's non-compliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, the contract may be canceled, terminated, or suspended in whole or in part and the Consultant may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Execution Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulations, or order of the Secretary of Labor, or as otherwise provided by law. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 23 of 24 (9) CITY OF SANTA ANA 7. The Consultant shall include the portion of the sentence immediately preceding paragraph (1) and the provisions of paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontract or purchase order as the administering agency may direct as means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event the Consultant becomes involved in, or is threatened with, litigation with a subconsultant or vendor as a result of such direction by the administering agency, the Consultant may request that the United States enter into such litigation to protect the interests of the United States. 8. Pursuant to California Labor Code Section 1735, as added by Chapter 643 Stats. 1939, and as amended, no discrimination shall be made in the employment of persons upon public works because of race, religious creed, color, national origin, ancestry, physical handicaps, mental condition, marital status, or sex of such persons, except as provided in Section 1420, and any consultant of public works violating this Section is subject to all the penalties imposed for a violation of the Chapter. Signed: Title: Firm: Date: THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 24 of 24 RFP No. 21-025 EXHIBIT B Finance and Management Services www.santa-ana.org/finance Item # 21 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report February 2, 2021 TOPIC: Consider Pension Debt Refinancing and Policy AGENDA TITLE: Consider refinancing the city's employee pension debt and adoption of the proposed Unfunded Employee Pension Liability Cost Reduction Policy RECOMMENDED ACTION 1. Determine whether to proceed with refinancing any portion of the pension debt. If City Council wishes to proceed with pension debt refinancing: a. Direct staff to propose a contract for bond counsel services to prepare a resolution for City Council consideration authorizing the sale of pension obligation bonds, which is necessary to begin the court validation process to refinance the pension debt; and b. Adopt the proposed Unfunded Employee Pension Liability Cost Reduction Policy. EXECUTIVE SUMMARY The City's contributions to the employee pension plan continue to grow faster than the City's revenue sources. On April 21, 2020, City Council directed staff to return with a feasibility analysis for refinancing the employee pension liability to save money. Exhibit 1 to this report includes the feasibility analysis prepared by our Financial Advisor Urban Futures Inc. (UFI) in cooperation with staff. Although we considered many different methods for reducing pension debt costs, the most realistic strategy follows. 1. Refinance up to 90% of the pension debt by issuing taxable pension obligation bonds, which could produce annual savings of up to approximately $3.8 million. 2. Use accumulated cash in the Water Enterprise fund to pay its $13.5 million pension debt for water employees, and obtain less expensive tax-exempt debt financing for planned water infrastructure projects. There is a risk to refinancing the pension debt. If the employee pension plan consistently outperforms CaIPERS assumptions over the next 20+ years, the City may pay more for its pension debt, as discussed later in this report. RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 2 If the City Council decides to move forward with pension debt refinancing, the proposed Unfunded Employee Pension Liability Cost Reduction Policy (Exhibit 3) is necessary to establish parameters for refinancing and a plan for funding future pension debt, and obtain the best credit rating possible. DISCUSSION The City provides a defined benefit pension plan to its full-time employees and part-time employees who have worked more than 1,000 hours in a single year. A defined benefit is a promise to pay a future benefit based on a formula incorporating salary and the number of service years. The City contracts with the California Public Employee Retirement System (CaIPERS) to administer the plan. CaIPERS collects contributions from the City and its employees, invests the money, and makes pension payments to retirees. CaIPERS employs actuaries to determine the contributions necessary to meet future obligations. When the market value of plan assets are less than the liability for benefits accrued to date, there is an unfunded pension liability. The unfunded liability is a legal debt of the City, and the City carries the risk of plan performance. The ratio of plan assets to the liability is the "Funded Ratio". Ideally, the plan should have a funded ratio of 100% (assets = liabilities). Annual contributions include a "Normal Cost" component for the current accrual of benefits (expressed as a percentage of pensionable wages), and a payment to reduce the unfunded liability (expressed as a dollar amount). If the City remits the annual unfunded liability payment to CaIPERS by July 31, the City receives an early payment discount of approximately 3.3%. CaIPERS Annual Pension Payments Normal Costs + Benefits earned this year Unfunded benefits earned in prior by employees years by employees+ retirees o off Fixed Payngfl $ Amount $14 Million $48 Million The City has two (2) different employee pension plans: one (1) for sworn public safety officers, and one (1) for all other employees. Within each plan, there are two (2) levels of benefits: one (1) for employees who became CaIPERS members after the California Public Employee Pension Reform Act (PEPRA) effective January 1, 2013, and one (1) for employees hired prior to PEPRA (referred to as "Classic" members). RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 3 Each year, CalPERS provides the City with an updated actuarial valuation report for its plans, including the updated calculation of the unfunded liability and the required contributions for the following year. The City typically receives the annual reports 12-15 months after the fiscal year end. For example, the City received the report for the year ended June 30, 2019 in July 2020, which includes the required contributions for FY21- 22. A snapshot of relevant data follows, and the total unfunded liability at June 30, 2019, for the Miscellaneous and Safety plans combined was $706,905,205. Miscellaneous Safety June 30, 2019: A: Market Value of Assets $645,902,345 $787,086,636 B: Accrued Liability $948,084,339 $1,191,809,847 Unfunded Liability, A-B $302,181,994 $404,723,211 Funded Ratio, A/B 68.1 % 66.0% FY20-21 Normal Cost paid by City 12.072% of pensionable wages 23.581 % of pensionable wages Normal Cost paid by Employees 8.0% Classic 6.5% PEPRA 12.0% Classic 13.0% PEPRA Unfunded Liability Payment $23,390,827 $26,223,726 Discount for Prepayment $778,061 $872,293 Unfunded Liability Funding Source 72% General Fund 18% Restricted Funds 100% General Fund FY21-22 Normal Cost paid by City 11.9% of pensionable wages 22.93% of pensionable wages Normal Cost paid by Employees 8.0% Classic 7.0% PEPRA 12.0% Classic 13.0% PEPRA Unfunded Liability Payment $26,113,041 $30,102,971 Discount for Prepayment $868,611 $1,001,331 CalPERS announced its investment return for the year ended June 30, 2020 was 4.7%, which is less than the CalPERS 7% assumption. Therefore, we expect the unfunded liability to grow, and the required contribution to increase for FY22-23. The following chart summarizes CalPERS assumed rate of return, and actual investment returns over the last 20 years. The average investment return over 20 years has been 5.8%, which is less than the current assumption of 7%. When actual CalPERS investment returns are less than assumed, the required contributions increase. RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 4 30% 20% 10% 0% -10% -20% -30% CaiPERS Returns - Actual vs. Assumption _e tip tip ti-f ti ti ti ti tiY 11�y ti ti ti ti ti ti _0111 ti ti Actual Assumption The following chart summarizes the City's contributions over the last three (3) years, the budget for the current year, and the CalPERS projections for the next six (6) years. CalPERS projections used for this chart do not factor in the 4.7% investment return for the year ended June 30, 2020. Ca! P ERS Contributions in Dollars $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 oll ti� ti� ti° titi titi ti� ti°` tih ti� ti� 0 Misc Normal Cast 0 Safety Normal Cast 0 Misc Liability Payment 0 Safety Liability Payment RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 5 The adopted budget for FY20-21 included an $18.6 million or 5.7% use of General Fund balance to preserve existing service levels. Considering the projected increasing costs for employee pension and the reduction of the Measure X sales tax rate from 1.5% to 1.0% in 2029, the City must find a way to generate additional revenue or reduce costs to rebalance the budget. Refinancing the pension debt is one potential way to reduce costs. The City has already taken the following steps to reduce its employee pension cost. 1. Employees pay the full employee contribution (some cities pay a portion of the employee contribution). 2. Statewide PEPRA established the lesser benefit for new employees. 3. The City pays the required annual contribution to the unfunded liability by July 31 of each year to obtain an approximate 3.3% discount. 4. In 2016, the City established an irrevocable Section 115 Trust with an initial deposit of $0.5 million, to set -aside money for future pension costs. The City has not made any additional deposits to the Trust. Development of Strategy UFI and staff worked together to narrow the field of potential strategies for reducing the City's pension debt. In general, the City can either make additional contributions to reduce the debt faster, or refinance the debt with better terms. In addition to the Memorandum (Exhibit 1), UFI has prepared a presentation (Exhibit 2) to summarize the most feasible strategies as follows. 1. Refinance the pension debt by issuing pension obligation bonds. The bonds are taxable and carry a higher interest cost than tax-exempt bonds. Although the pension debt is a legal debt of the City, a court validation is necessary to proceed without voter approval. The court validation process, as outlined below in "Next Steps", can take up to six months. We will also need to determine the portion of the pension debt to refinance. Refinancing less than 100% will help mitigate the risk of paying more over the long-term, as discussed below. 2. Use Water Enterprise cash to reduce its $13.5 million pension debt for water employees. The Water Enterprise has a plan to use the cash for water capital projects. If the City employs this strategy, then the Water Enterprise will need financing for these projects. The City can obtain separate tax-exempt financing for water capital projects at better terms than taxable pension obligation bonds. Risk of Paying More When the plan outperforms assumptions (e.g. investments earn 9% instead of the assumed 7%), the pension debt decreases. If the City were to refinance 100% of the pension debt (not recommended), the amount of the debt is set; and if CalPERS investments outperform the assumption, the City's pension debt will not decrease. This may be an unlikely scenario, as CalPERS own actuaries have stated they believe the investment portfolio will earn less than the 7% assumption over the long-term. However, the risk exists. With savings achieved from potential bond interest rates ranging from 3%- RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 6 4% vs. CalPERS charging 7% on the debt, CaIPERS investments would have to consistently outperform over the next 20+ years for the City to pay more. The proposed policy document (Exhibit 3) includes an example to illustrate this concept. UFI prepared a Monte Carlo analysis to quantify the risk associated with pension debt refinancing (see page 14 of Exhibit 1, which explains the methodology and the results). Based on current market rates and recent comparable transactions, the results indicate the City has an 87% probability of saving money with a 90% financing, and an 84% probability of saving money with a 50% financing. New Unfunded Pension Liability After Refinancing When actual plan results do not meet the assumptions (e.g. investments earn 5% instead of the assumed 7%), the pension debt increases. If the City refinances 100% of the pension debt balance at June 30, 2021, negative plan results for each successive year will generate new layers of unfunded liability amortized over 20 years. Therefore, the City will pay the debt service for the pension obligation bonds, plus a contribution to CalPERS for each new layer of liability. Savings Clarification For FY20-21, the City's budget for its contribution to the unfunded liability is $48.0 million ($49.6 million required contribution discounted by 3.3% for paying by July 31). By FY26- 27, CalPERS projects the annual contribution will grow to $71.4 million. If the City were to refinance 90% of the pension debt, the annual bond payment might be $40.1 million. It is tempting to say the pension debt refinancing would save $26 million in FY26-27 ($71.4 million projected by CalPERS, less bond debt service of $40.1 million and FY26- 27 contribution of $5.3 million for the remaining 10% pension liability). However, the City has not yet funded a $71.4 million contribution. The City currently funds only $48.0 million. Therefore, it is more accurate to say our annual budget savings is potentially $3.8 million (current budget of $48.0 million, less bond debt service of $40.1 million, and FY21-22 contribution of $4.1 million for the remaining 10% liability). The General Fund would benefit from approximately 86% of the savings or $3.3 million, as the General Fund pays for 100% of the Safety unfunded liability and 72% of the Miscellaneous unfunded liability. Proposed Policy Before refinancing the pension debt, the City needs a policy to guide refinancing parameters and outline methods for funding future pension debt. Credit rating agencies will look for such a policy to ensure the City Council has made an informed decision and has a plan. The proposed policy document (Exhibit 3) includes the following policy statements, fully explained in the document: 1. It shall be the City's policy to use a targeting strategy, and apply any Additional Discretionary Payments to loss bases at the beginning of an amortization cycle to maximize overall savings. RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 7 2. It shall be the City's policy to consider an additional discretionary payment to reduce the unfunded pension liability during each annual budget process, when staff identifies accumulated fund balance in excess of reserve policy requirements. 3. It shall be the City's policy to propose reductions of the City's normal cost contribution during labor negotiations, based upon the plan funding ratio and the City's current and forecasted financial position. 4. It shall be the City's policy to consider paying down the unfunded pension liability when there is at least $20 million of cash available for capital projects, and it is feasible and economically prudent to issue tax-exempt debt for the projects. 5. It shall be the City's policy to consider adding money to the Section 115 Trust account during each annual budget process. 6. It shall be the City's policy to consider issuing pension obligation bonds only if the following criteria exist. a. The City Council must conduct a public meeting to consider the results of an analysis quantifying the risk probability of the City paying more over the life of the bonds. b. To maximize potential savings, the bond interest rate must be at least 30% less than the plan's current discount rate. c. To ensure the City benefits from the possible scenario of actual plan results exceeding Ca/PERS assumptions shortly after issuing debt, the bonds must not exceed 90% of the unfunded liability. d. The bond structure must not extend the life of the debt. e. The City must not use bond proceeds to pay the normal cost of the pension plan. Next steps If the City Council directs staff to move forward with the pension debt refinancing, staff will need to propose a contract for bond counsel services, and the bond counsel will need to write a resolution for the City Council to consider authorizing the sale of pension obligation bonds. After adoption of the resolution, bond counsel can move forward with the court validation process with the Orange County Superior Court, which may take up to six (6) months. During that same time, the City can release a Request for Proposals (RFP) for bond underwriting services to ensure the best pricing and service. Once the City receives its court validation, the bond financing team (staff, bond counsel, financial advisor, and underwriter) will propose a bond indenture, bond purchase agreement, and Preliminary Official Statement for City Council consideration. The City can sell the bonds only after City Council approves these additional documents. A summary of the process follows, and each step requires City Council approval. RFP No. 21-025 EXHIBIT B Consider Pension Debt Refinancing and Policy February 2, 2021 Page 8 Proposed Contract for Bond Counsel Services February 16, 2021 Proposed Resolution necessary to begin the Court Validation Process March 16, 2021 RFP and Proposed Contract for Underwriting Services concurrent with Court Validation Process By September 2021 Proposed Bond Indenture, Bond Purchase Agreement, and City sells Bonds Preliminary November 2021 Official Statement October 2021 If the City obtains its court validation in less than six (6) months, the City could sell its bonds sooner than November 2021. FISCAL IMPACT Based on current market conditions, the City could save $3.8 million annually by refinancing 90% of the pension debt. If the City Council directs staff to proceed with refinancing the pension debt, staff and the City's Financial Advisor will provide updated savings estimates with each future staff report. EXHIBIT(S) 1. Memorandum dated December 10, 2020 from Michael Busch, CEO of Urban Futures Inc. to Kathryn Downs (the Feasibility Analysis from City's Financial Advisor) 2. Proposed Unfunded Employee Pension Liability Cost Reduction Policy Submitted By: Kathryn Downs, Executive Director Finance and Management Services Approved By: Kristine Ridge, City Manager EXHIBIT 1 RFP No. 21-025 EXHIBIT B TJ- T7 T f1w Financial Solutions TO: KATHRYN DOWNS, EXECUTIVE DIRECTOR AND CITY TREASURER FINANCE AND MANAGEMENT SERVICES AGENCY, CITY OF SANTA ANA FROM: MICHAEL BUSCH, CEO DATE: DECEMBER 10, 2020 RE: STRATEGIES FOR ADDRESSING CALPERS PENSION LIABILITY This memorandum has been drafted in conjunction with the development of a customized pension model used to analyze and evaluate solutions to address the City of Santa Ana (the "City") pension liabilities, based on the most recent actuarial reports dated, June 30, 2019. We have analyzed several potential strategies and developed two pension obligation options for consideration and outlined the necessary validation process required prior to the issuance of bonds. The analysis below is based on our eight (8) step process for analyzing CalPERS pension plans their associated liabilities and to draw upon financial strategies to address current and future liabilities. The objective of the study is to provide a summary of pension plan cost drivers and develop a financial plan necessary to fund increasing liabilities. D Afy Issues, Oresources & 4 Options 5 AlignOptions with O. Resources Present Recommended Options &Actions Implement Plan & Execute 8 1 Continual follow-up and monitoring RFP No. 21-025 EXHIBIT B 4 Key Factors Driving Pension Liabilities Prior to legislative changes facilitating changes to CaIPERS retirement plans, the State of California and CaIPERS member agencies, many local agencies were considered "super funded", which means they had over 100% of their respective CalPERS plans funded. However, in 1999 and 2001, SB 400 and AB 616 were passed by the legislature granting member agencies to enhanced existing benefits for safety and miscellaneous plans. The allowance of enhanced benefits allowed for future retirees to capture a higher benefit level based on prior service with a current employer. The retroactive benefit was unfunded and immediately created unfunded liabilities in most, if not all pension plans, upon adoption. The remaining four (4) drivers are based on the following: 1. CalPERS Plan Investment Returns; 2. Cost of Living Adjustments; 3. Demographics (Life Expectancy); and 4. CalPERS Contribution Policies With the adoption of the Public Employees' Pension Reform Act (PEPRA) in January 2013, the ability to provide enhanced benefits was eliminated. However, the remaining four drivers remain in effect and continue to impact the funding status of CalPERS plans throughout the state. In the sections below, we will focus on the impacts of investment returns and CaIPERS policy changes including demographics and contribution policy changes. Pension Plan Reporting Basics CalPERS provides two annual "aggregate" actuarial reports for the City's Miscellaneous and Safety employees, respectively. Each group of employees has two tiers: 1st Tier or Classic, and PEPRA. The actuarial reports group together both tiers into a single report. — they only provide a single unfunded accrued liability (UAL). The plans are funded through two (2) categories: 1) Normal cost; and 2) Unfunded Accrued Liability. Normal Costs - Since Normal Costs are based on a percentage of payroll, they are directly linked to the size of the City's payroll and are reported by tier. A portion of these payments are made by City employees based on negotiated terms. Unfunded Accrued Liability ("UAL") - Similar to most CaIPERS Plans across the state, the City's UAL represents a financial shortfall of the Plan to meet current benefit funding levels. As of the actuarial report dated June 30, 2018, the UAL was $681 million. The City's most recent UAL for June 30, 2019 is $707 million, reflecting an increase in of $25.8 million from the prior year (see chart below). RFP No. 21-025 EXHIBIT B MISCELLANEOUS Accrued Liability (AL) $ 916,997,454 Market Value Assets (MVA) 623,923,788 UAL = AL-MVA $ 293,073,666 $ 388,022,674 $ 681,096,340 69 % 67% 67% -RDV MISCELLANEOUS Accrued Liability (AL) $ 948,084,339 Market Value Assets (MVA) 645,902,345 UAL = AL-MVA $ 302,181,994 $ 404,723,211 $ 706,905,205 69% 66% 67% SAFETY COMBINED $1,162,151,002 $ 2,079,148,456 774,128,3 28 1,398,052,116 SAFETY COMBINED $1,191,809,847 $ 2,139,894,186 787,086,636 1,432,988,981 CAPERS' actuarial reports are drafted with a 2-year delay. In practical terms, the June 30, 2019 report provides information about the FY 21-22 UAL and required UAL payment. As a result, the corresponding UAL balance of $706.9 million (reported on June 30, 2019), is adjusted upward for the upcoming fiscal year (FY21-22) to a projected amount of $709.9 Million. The change in value reflects payments made and interest accrued toward the UAL from June 30, 2019 until June 30, 2021 (FY 2021-22). CaIPERS uses the FY 21-22 figure to calculate pay-off amounts on POBs or pre -payments (ADPs). Consequently, we will use the more current projected $709.9 million figure for the UAL for the remainder of our analysis. PENSION PLAN FUNDING AND FORECASTING Amortization Bases In January 2013, after the adoption of PEPRA pension reform legislation, CalPERS began requiring members to make fixed dollar payments toward their UAL (as opposed to payments based on % of payroll). The City's UAL is comprised of a series of amortization bases. Each amortization base operates like a loan to CaIPERS, with 7.0% interest rate; and has a different repayment term (maturity), ranging from 5 to 20 years. CalPERS shortened the repayment term from 30 to 20 years in 2019. The City's projected $709.9 million UAL is comprised of 46 amortization bases, each with a distinct repayment schedule: • Miscellaneous Plan: 24 Amortization Bases in the totaling $298,799,264 • Safety Plan: 22 Amortization Bases in the totaling $411,056,199 RFP No. 21-025 EXHIBIT B Year Reason Ramp Term Balance Payment 1 2006 Fresh Start NO 17 (1,507,124) (124,360) 2 2007 Benefit Change NO 7 27,869,276 4,635,532 3 2007 Benefit Change NO 8 130,319 19,335 4 2009 Assumption Change NO 10 28,921,692 3,566,035 5 2009 Special(Gain)/Loss NO 20 29,368,098 2,172,502 6 2010 Special (Gain)/Loss NO 21 10,805,290 774,689 7 2011 Assumption Change NO 12 12,883,043 1,374,350 8 2011 Special (Gain)/Loss NO 22 (7,380,480) (513,938) 9 2012 Payment (Gain)/Loss NO 23 5,629,785 381,500 10 2012 (Gain)/Loss NO 23 (264,265) (17,908) 11 2013 (Gain)/Loss 100% 24 100,344,691 6,995,473 12 2014 Assumption Change 100% 15 45,039,235 4,528,967 13 2014 (Gain)/Loss 100% 25 (63,668,260) (4,319,063) 14 2015 (Gain)/Loss 100% 26 32,611,483 2,156,496 15 2016 Assumption Change 80% 17 16,268,114 1,197,052 16 2016 (Gain)/Loss 80% 27 37,941,296 1,984,485 17 2017 Assumption Change 60% 18 13,723,657 747,182 18 2017 (Gain)/Loss 60% 28 (21,124,364) (830,159) 19 2018 Method Change 40% 19 6,357,217 231,819 20 2018 Assumption Change 40% 19 30,754,017 1,121,458 21 2018 (gain)/loss 40% 29 (12,919,487) (343,422) 22 2019 AL Significant Increase NO 20 145,398 13,268 23 2019 Non -Investment (Gain)/ NO 20 3,048,449 278,180 24 2019 Investment (Gain)/Loss 2051 20 3,822,184 83,568 Year Reason Ramp Term Balance Payment 1 2005 Fresh Start NO 16 $ (2,854,990) $ (245,832) 2 2006 Benefit Change NO 6 1,718,764 327,131 3 2009 Assumption Change NO 10 14,943,657 1,842,548 4 2009 Special (gain)/loss NO 20 31,977,596 2,365,540 5 2010 Special (gain)/loss NO 21 (11,794,554) (845,615) 6 2011 Assumption Change NO 12 16,001,458 1,707,020 7 2011 Special (gain)/loss NO 22 (4,374,826) (304,640) 8 2012 Payment (gain)/loss NO 23 8,240,551 558,418 9 2012 (gain)/loss NO 23 74,450,415 5,045,102 10 2013 (gain)/loss 100% 24 140,663,232 9,806,257 11 2014 Life Exp. + 2.0/2.5 yrs. 100% 15 53,834,472 5,413,381 12 2014 (gain)/loss 100% 25 (84,294,374) (5,718,276) 13 2015 (gain)/loss 100% 26 59,710,283 3,948,455 14 2016 7.50%to 7.375% 80% 17 19,877,718 1,462,656 15 2016 (gain)/loss 80% 27 50,404,089 2,636,340 16 2017 7.375%to 7.25% 60% 18 22,905,190 1,247,070 17 2017 (gain)/loss 60% 28 (32,653,354) (1,283,233) 18 2018 Method Change 40% 19 5,325,258 194,188 19 2018 7.25% to 7.00% 40% 19 38,800,765 1,414,886 20 2018 (gain)/loss 40% 29 (1,474,209) (39,187) 21 2019 Non-Investment(Gain)/Lc No 20 5,185,187 473,164 22 2019 Investment (Gain)/Loss 20% 20 4,463,871 97,598 r ,102,971 The annual UAL payment is an aggregate of 46 loan amortization schedules, which is equal to $56.2 million for FY 21-22, as illustrated in the chart above. New Bases CalPERS adds a new Amortization Base to the existing liability each year, including "credits" for positive investment performance above the discount rate of 7.0%. Based on the CalPERS Actuarial Amortization Policy, investment gains and losses, a change in actuarial assumptions or actuarial methods, and changes in plan provisions are amortized over a period of 20 years. Specific to investment gains and losses as recognized in the City's valuation shall be the annual amount determined in accordance with the following schedule: • Year 1: 20% of base payment • Year 2: 40% of base payment • Year 3: 60% of base payment • Year 4: 80% of base payment • Years 5 through 20: base payment New bases are based on a combination of policy changes referred to as a "change in methodology" approved by the CalPERS Board and investment performance. For example, a change of methodology was reported for 2018 when CalPERS added a new Amortization Base to account for the reduction in the Discount Rate from 7.25% to 7.00%. In the following year, CalPERS reported a 6.70% investment return on June 30, 2019. This minimal investment loss (compared to 7.0% benchmark) will be reflected in the up -coming June 30, 2019 actuarial report released in July 2020. RFP No. 21-025 EXHIBIT B Impact of COVID-19 Due to the impact of COVID-19 on the economy and capital markets, we anticipated that CalPERS will not meet its investment target of 7.0% for fiscal year 2019-20. In July 2020, CalPERS reported an investment return of 4.7%. Like the prior year, actual investment performance will be reported as a loss when compared to the 7% discount. We will know the exact figures when CalPERS will release the June 30, 2020 actuarial report in late summer 2021. UAL Payment Schedule The City will be required to pay a fixed dollar UAL payment of $56.2 million in FY 21-22, in addition to the annual normal costs of approximately $16.5 million. If the City elects to make the UAL payment in July 2021 (as opposed to evenly spread payments over FY21-22), which reduces the UAL payment to roughly $54.3 million. The City's UAL payment scheduled has two peak $70,000,000 dates: in FY 2027-28 at $72.9 $60,000,000 million and in FY 2030-31 at $so,000.000 $73 million — a 30% increase sao.000,000 when compared to the FY 21- ".000"00. 22 payment of $56.2 million. $20,000,000 $10,000,000 CALPERS PENSION PLAN $o ADMINISTRATIVE & LEGAL CONSTRAINTS Plan Termination Payment UAL Amortization Payment Schedules Ssa.xm $GI.IM Ssx.Ym55s.>m •safety •mi— - >m�axm =a�xM Off~ e A" 01y 01b 01^ 0 A'O O+O O; O$ a Off, Oe OHO OM a OHO OHO Oa O1~ O� O� O 00 Oa^ '4 'L '4 '� '� 'Y 'Y 'L 'L '4 '4 h '� '� 'L 'L 'L '4 h 'Y 'l� '� 'L 'L 'L 'L With PEPRA, the California Legislature took steps to reduce pension benefits for new hires and required new employees to pay 50% of the annual normal costs. However, PEPRA Legislation also protected the benefits for all "classic" employees (hired before 2013). As a result of PEPRA, the Public Employee Retirement Law (PERL) now includes a provision that states that benefits for "Classic" employees cannot be reduced for service/liability already accrued. We understand this provision could be challenged in court, however, major judicial revisions to CalPERS pension benefits is very unlikely, without a major reversal to or reinterpretation of the California Rule. CalPERS routinely includes a termination payment amount in its actuarial valuations. Based on the most recent CalPERS report, the estimated termination cost is roughly 2 billion. This is the RFP No. 21-025 EXHIBIT B estimated amount the City would need to pay to CalPERS to exit the system. Upon receiving this payment, CaIPERS would assume the full responsibility of paying all retirees and current employees benefits earned to date. The Termination Payment is calculated using a conservative discount rate (US Treasury Bond rate). In most cases the Termination Payment is viewed as cost prohibitive to fund. Alternatives to CaIPERS Notwithstanding the financial and legal constraints, we have included below a brief discussion regarding the City's theoretical options. Defined Contribution Plan (DCJ—The City would reduce its retirement costs if it converted to a defined contribution (DC) plan — effectively transferring future performance and funding risk to employees. Under a DC plan, the City would only be required to make its share of annual contributions; employees would assume the risk forthe outcome/funding level. Under a DC plan, by definition, there are no UAL (unfunded accrued liability) payments — the employee assumes general control over investment decisions and assumes the risk of its outcomes. This option requires termination of the CaIPERS contract, with the termination payment noted above. Therefore, this option is not feasible. Under current interpretation, the California Rule effectively requires employers to provide substantially similar retirement benefits to its employees. Employers outside of the CalPERS system are required to pay into social security, which adds a 6.2% payroll requirement. Split Agency/ Mixed Plan (DCJ — CalPERS does not allow an agency to create a split or mixed plan. CaIPERS prohibits is participants from offering current employees' participation in the CalPERS system and new employee participate in a DC plan. Alternative Defined Benefit Pension Plan — The City could possibly retain greater control over the investment process if it were to transfer its assets ($1.4 Billion) over to another pension plan/investment manager. In which case the liability would transfer over to the new provider. This alternative will require full approval of both CalPERS and the bargaining units. Moreover, due to the California Rule, we would assume that required annual pension contributions would essentially remain the same. To date, no public agency has transferred management of its pension plan from CalPERS to another plan manager. Such a move would require significant legal analysis, and a probable court challenge. Although hypothetically it appears legally and financially feasible — it would likely require a full transfer of assets and liabilities and thus provide limited savings. CALIPERS FUNDING OPTIONS In 2017, UFI created a pension focus group consisting of 25 public agencies with growing CalPERS plans liabilities. After roughly a year of study, we determined many agencies understood the RFP No. 21-025 EXHIBIT B causes of growing pension liabilities, but very few, if any, had a plan to fund increasing UAL payments. This next section is a focus on UAL funding options including the following: 1. Targeting Strategies 2. Use of Reserves & One -Time Monies for Addition Discretionary Payments (ADPs) 3. Leveraged Refunding 4. Tax -Exempt Exchange 5. Pension Obligation Bonds Targeting Strategies Before we commence the discussion regarding funding options, it is important to understanding the impact of using "targeting strategies". When making Additional Discretionary Payments (ADPs), assuming the City has available cash to do so, CalPERS requires each agency to specify the Amortization Bases to apply payments. The primary purpose of developing a customized pension model is to determine, with precision, the financial impact of each funding solution. Making Additional Discretionary Payments (ADPs), the City is principally prepaying a loan. The City has a total of 46 Amortization Bases (totaling $710 million UAL), with terms ranging from 6 years to 29 years. $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 TARGETING STRATEGIES $1 Million UAL: 10-Year vs.30-Year Amortization ■ 10 Year = $1,413,000 Payments ■ 30-Year = $2,761,000 Payments lilt 111111111111111 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 The City should consider applying additional monies toward its UAL based on its financial objectives: • Maximize Total Interest Costs Savings - target long-term Bases (e.g., 30 year). • Maximize Short -Term Cash Flow Savings - target short term Bases (e.g., 5-15 year). All future funding decisions will utilize the concept of targeting strategies to tailor the application of additional payments to meet the City's financial objectives. Use of Reserves & One Time Monies for Additional Discretionary Payments (ADPs) The unfunded liability is comprised of 46 Amortization Bases, which are effectively loan payments to CalPERS @7.0%. The City should always consider the "opportunity cost" of its financial/investment decision in context of this ever-growing pension liability. RFP No. 21-025 EXHIBIT B Evaluating the Opportunity Cost requires you to decide whether to continue to fund/increase reserves or to pay down the UAL. Currently, the City's pension liability is accruing at 7.00% rate, while the City's investments are earning 1.016% as of October 2020. Under these investment parameters, the City should seek to pre -pay its UAL when excess reserves or 1-time monies become available. The City should consider making $13.5 million in Additional Discretionary Payments (ADPs) to Ca1PERS. The Water Enterprise share of the unfunded liability is $13.5 million and is staffed by non -sworn personnel. To maximize overall savings, the ADP should target Miscellaneous Base #16 (amortized over 27 years) = $37.9 million. By making $13.5 million in ADPs (from Water Fund reserves) and selecting Base #16 the City would eliminate $31 million in UAL payments (Net savings = $17.5 Million)and would fully fund the Water Enterprise's current UAL. $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 ADP Base #16 - $13.5 Million Water Fund ■ Original Payments O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N • Pro-Rata reduction in balance & payments • $31 Million Total Savings / $17.5 million Net Savings Leveraged Refunding The City will be presented with opportunity to refund its outstanding bonds periodically. In such instances, the City should consider a "Leveraged Refunding". A leveraged refunding structures the refunding bonds with "up -front" savings in the first few years, then applies these savings to pay for a portion of the City's UAL. When applied to a long-term base, the saving from the bond refunding could be leveraged in 2.0 — 2.5X times greater pension cost savings. 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. RFP No. 21-025 EXHIBIT B Tax -Exempt Exchange $1,400,000 $11 Million Tax -Exempt Bonds $9.0 Million Deferred UAL Savings $1,200,000 $6.8 Million NPV Savings - 63% ■ UAL Payments Misc. Base #6 $1,000,000 0 Debt Service $800,000 $600,000 $400,000 $200,000 $0 'L, 'L� LL� 'Ly 'L'b L� 'L'b 'LO 30 3,' g g5 op, 3`' 3rO 3� 3� g5 AO t,' ,LO ,LO ti0 LO ,LO ,LO ti0 ,LO ,LO ,LO LO ,LO ,LO ti0 LO ,LO ,LO ti4 ,LO ,LO ,LO Tax-exempt exchange can be viewed as an alternative to ADPs from reserves and is best suited as a strategy to manage future pension liabilities. Pension Obligation Bonds (POBs) Given recent and substantial increases in UAL's across the state many local agencies are seeking funding options to effectively reduce annual payments with the goal of retaining reserves and current service levels. The passage of PEPRA and the change to a fixed amortization schedule and dollar payment amounts, Pension Obligation Bonds (POBs) have come back into discussion and study. Combined with all-time historic lows in the taxable municipal bond market, POBs have become more prominent and accepting to municipal bond investors. Since 2017, sixteen POBs exceeding $50 million in issuance size have been issued in California. As noted, most are in Southern California with issuance on average of $187 million (see chart below). RFP No. 21-025 EXHIBIT B Issuance Summary Sale Date Issuer Issue Par ($mm) Ratings (S&P/M/F) Final Maturity Bond Structure Final Repayment UAL Structure All -In TIC Pricing Result 30- TIC year Spread to 11/19/20 Coachella POBs $17.60 AA-/-/- 2035 2045 Level 2.99% 1.58% 141 11/12/20 Gardena POBs 101.50 AA-/-/- 2039 2048 Level 3.33% 1.75% 158 10/27/20 Arcadia POBs 90.00 AAA/-/- 2040 2044 Level 2.70% 1.57% 113 09/17/20 Azusa POBs 70.08 AA-/-/- 2040 2045 Level 3.13% 1.43% 170 08/13/20 Pomona LRBs 219.89 AA -/-/A+ 2046 2046 Proportional 3.52% 1.38% 214 07/24/20 West Covina POBs 204.10 A+/-/- 2044 2044 Proportional 3.68% 1.24% 244 06/09/20 El Monte POBs 117.73 A+/ -/A- 2050 2043 Proportional 3.38% 1.53% 185 06/08/20 Carson POBs 108.02 AA-/-/- 2050 2043 Proportional 3.71% 1.59% 212 06/04/20 Riverside City POBs 432.17 AA/ -/AA- 2045 2045 Proportional 3.69% 1.61% 208 06/02/20 Inglewood POBs 101.62 AA-/-/- (AGM) 2050 2046 Proportional 3.91% 1.48% 243 05/12/20 Ontario POBs 236.59 AA/ -/AA- 2050 2049 Proportional 3.72% 1.38% 234 04/22/20 Riverside Co POBs 720.00 AA/A2/- 2038 2046 Proportional 3.53% 1.22% 231 02/05/20 Pasadena POBs 131.81 AAA/-/- 2045 2043 Proportional 3.06% 2.14% 92 08/22/19 Glendora POBs 64.40 AAA/-/- 2044 2046 Proportional 2.85% 2.11% 74 09/24/19 Hawthorne POBs 121.87 AA-/A3/- 2049 2045 Level 3.61% 2.09% 152 07/25/18 La Verne POBs 54.27 AA+/-/- 2044 2046 Level 4.26% 3.06% 120 05/31/18 Tulare County POBs 251.22 AA-/A1/- 2037 2037 Level 4.23% 3.00% 123 10/30/17 Monrovia POBs 111.55 AA-/-/- 2047 2047 Level 4.05% 2.83% 122 10/31/17 Inglewood POBs 52.80 -/A3/- (AGM) 2047 2047 Level 4.55% 2.88% 167 In addition to POB's issued to date, eleven agencies have initiated the process to issue bonds. Three Orange County cities are in the process of issuing bonds including Orange, Huntington Beach and Placentia. The total UAL for these agencies is over $2 billion (see chart below). Chula Vista Huntington Beach Orange Downey El Cajon Monterey Park Corona Manhattan Beach $350,000,000 67.10% 67.40% 69.60% 70.40% 440,000,000 71.50% 72.60% 64.80% 65.50% 200,000,000 71.20% 71.30% 67.70% 68.00% 200,000,000 68.40% 68.60% 66.50% 66.40% 150,000,000 66.90% 67.40% 61.50% 62.00% 110,000,000 69.80% 70.50% 70.20% 71.30% 272,000,000 65.40% 67.90% 64.50% 63.50% 92,000,000 76.10% 76.10% 71.50% 71.00% Covina 72,000,000 68.00% 68.00% 68.00% 69.00% Commerce 31,000,000 70.00% 71.00% NA NA Whittier 143,000,000 74.00% 75.00% 59.00% 60.00% UDland 120.000.000 68.00% 68.40% 67.00% 68.60% POB Sale in 2021 Q1 POB Sale in 2021 Q1 Validation approved Aug. 2020 POB Sale in 2021 Q1 POB Sale 2020 Q4 POB Sale 2021 Q1 POB Sale in 2021 Q2 POB Sale in 2021 Q1 Validation Initiated in Dec. 2020 Validation Initiated in 2021 Validation Initiated in 2021 Validation Initiated in 2021 As previously stated above, the City's projected $709.9 million UAL is comprised of 46 Amortization Bases with corresponding Amortization Schedules. These bases represent a series of "loans", with a fixed repayment schedule with a 7.0% interest rate. RFP No. 21-025 EXHIBIT B Given this context, Pension Obligation Bonds (POBs) in California may be viewed as a debt "refinancing". POBs must be issued on a taxable basis because the pension benefits private individuals (the City's current and former employees). Nonetheless, POBs present the only financing tool available to significantly impact the City's required UAL payment schedule. Options for City Council Consideration Our study of the City's UAL and financial viability to meet its current and forecasted obligation led us to assume two (2) POB funding options for City consideration; 1) a POB equal to 50% of the City's current UAL; and 2) a POB equal to 90% of the City's current UAL. In preparing the analysis for the 50% UAL option the following was taken into consideration: 1. POBs — 50% UAL a. $358 Million POBs with Hybrid — Level Debt Service b. 25-Year Final Maturity c. Target Longest Safety Bases Only $80,000,000 $70,000,000 $60,000,000 $50,000,000 50% UAL POB 25 Year (Safety Only): Hybrid Level Aggregate $358 Million POB $183 Million Deferred UAL Costs $38 Million Budgetary Savings $144 Million NPV Savings = 41% AA- Scale + 25 bps = 3.16 TIC% Misc. UAL Payments Remaining Safety UAL POB Debt Service Budgetary Cash Flow Savings • • Original UAL Payments $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 ■+.... 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 -$10,000,000 In preparing the analysis for the 90% UAL option the following was taken into consideration: 2. POBs-90% UAL Million a. $642 Million POBs with Hybrid — Level Debt Service b. 25-Year Final Maturity c. Misc. Base #14 & #16 remain outstanding RFP No. 21-025 EXHIBIT B 90% UAL POB Hybrid Level Debt Service $80,000,000 $642 Million POB, $254 Million Deferred UAL Costs $20,000,000 • . $161 Million Budget Savings • $216 Million NPV Savings = 34% AA- Scale + 25 bps = 3.00 T/C% $60,000,000 • POB Debt Service Misc. Base #14 & #16 $50,000,000 Budgetary Savings • ... Original UAL Payments $40,000,000 $30,000,000 $20,000,000 $50,000,000 $0 2022 2023 2024 2025 2026 2022 2028 2029 2030 2031 2032 2033 2034 2035 2036 2032 2038 2039 2040 2041 2042 2043 2044 2045 2046 2042 2048 The chart below is a summary comparison of the two options. Because the average life of the UAL payments for the 50% POB option is 24 years and the 90% option has an average life of 18.5 years the True Interest Cost (TIC) is higher for the smaller POB issuance. However, the 50% option offers a greater percentage of savings. It is important to delineate the difference between true budgetary savings and deferred UAL savings. POBs refinancing the City's future UAL payments at a lower interest rate. The difference between the scheduled UAL payments and the payments on the POBs represent deferred UAL payments, which total $184 million or $253 million in deferred UAL payments / $145 million and $217 million Net Present Value (NPV) for the 50% and 90% POB, respectively. In other words, this amount represents the savings from what the City would be required to pay in the future. Since these savings are predicated on future rising payments, this amount cannot be construed as actual budgetary cash flows savings. We measure budgetary cash flow savings by comparing the POB debt service versus the FY 21- 22 UAL payment amount of $56.2 million. As noted in the table below, the annual debt services on POBs are equal to $51.6 million and $46.2 million for the 50% and 90% POB respectively. The green shaded area in the chart above, illustrates true cash flow or budgetary savings realized from a POB issue, which totals $37 million or $161 million for 50% and 90% POBs. In either case, the savings from a POB is substantial. Par Value Total Debt Service Avg. Annual Payment Budgetary Savings Deferred UAL Savings NPV Savings % Savings TIC% $ 357,800,000 $ 641,865,000 528,044,092 884,946,714 51,696,630 46,171,181 37, 742, 327 160, 909, 483 183,699,037 253,872,795 144,759,624 217,109,100 41% 34% 3.1696 3.019-6 RFP No. 21-025 EXHIBIT B Monte Carlo Risk Analysis These two POB savings scenarios were run through a Monte Carlo Simulation. Monte Carlo simulation is a finance industry tool used to run several scenarios, based on randomly generated interest rate scenarios to determine the potential outcome of a future event. In this case, the model produced random portfolio rates of return over a 25-year period to compare the ending portfolio value under a POB and making regularly scheduled UAL payments, also incorporating POB savings and additional bases, which are discounted back at 7.0% rate. The model generates 10,000 scenarios to determine an expected value or probability of success. $1,200 $1,000 $800 $600 $400 $200 $0 Monte Carlo Simulation Ending Portfolio Balance 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The Monte Carlo model projected an 87% and 84% probability of success under the 90% and 50% POB scenarios. Additionally, both POB scenarios generated greater portfolio growth over the 25- year period when compared to POB savings by 84% and 76% respectfully. Probability of Portfolio Growth Success Exceeding POB Savings 90% POBs 87% 82% 50% POBs 84% 76% We believe the combination of pension reform legislation, CAPERS' requirement for fixed dollar UAL payments, and changes in the POB market, make it compelling to consider the issuance of POBs are part of the City's pension funding strategy. Understanding the Risks Associated with Pension Obligation Bonds The Government Finance Officers Association (GFOA) has provided an advisory against the issuance of POBs, noting 5 key issues or concerns. The GOFA's POB policy general advisory, which RFP No. 21-025 EXHIBIT B was drafted 10 years ago under different market conditions; and, was drafted as a warning and in response to bad practices. It is important to note that are several issues that the GFOA points out to which all agencies should adhere to when issuing POBs (#1- #3). However, because of pension reforms and policy changes by CaIPERS in recent years, as well as adaptation in the POB market, we believe that these concerns have been addressed and warrant reconsideration in California. Each GFOA concern is listed below, along with our response in italics. 1. POBs are complex instruments, which incorporate the use of GICs, swaps, or derivatives. POBs should only be issued as plain vanilla fixed-rate bonds. 2. POBs are structured with "make -whole" calls, which make it more costly or difficult to refund in the future (than traditional tax-exempt debt). POBs are now structured with standard call features like traditional tax-exempt bonds. 3. POBs have been structured to incorporate annual normal costs, or in a manner that defers principal payments or extends principal payments over a longer period than the actuarial amortization period. POBs should not include normal costs (except for annual pre -pay amount), nor be structured with an extended repayment schedule -final maturity. 4. POBs increase a municipality's bonding capacity or turn a soft liability into a hard liability. An agency's Ca1PERS UAL liability is considered "debt" by the courts in California and GASB 68. Moreover, UAL payments are fixed dollar payments, like a traditional loan, which financed at a discount rate of 7.0%. POBs simply "refinance" your Ca1PERS liability at a lower rate. 5. Invested POB proceeds might fail to earn more than the interest rate over the term of the bonds, leading to increased liability for the government. The financial impact of POBs is dependent upon two variables: 1) Borrowing Rate on the Bonds and 2) Ca1PERS Investment Performance. POBs provide savings by refinancing UAL payments at a taxable fixed rate, as opposed to blended rate for a portfolio of assets (50% equities/22% fixed income 112% real estate 18% private equity/ 6% inflation assets /3% liquidity). Invested POBs may lose value if the market declines soon after issuance. It should be noted, if Ca1PERS underperforms the City's UAL will go up regardless if bonds are issued. However, the issuance of bonds may reduce the annual financial impact of losses from investment returns or policy changes made by the CaIPERS Board. RFP No. 21-025 EXHIBIT B To offset market risk prior to the issuance of bonds, UFI recommends the City consider the following: • Taxable Bond Interest Rates o The City should only issue POBs in a favorable interest rate environment • Status of CalPERS investment returns historically and year to date; and based on FY 2018- 19 CalPERS data o The 30-year average investment return for CAPERS is roughly 8.1% o The 5-year and 20-year averages are 5.80% (below the 7% discount assumption) o Significant losses (i.e., 20% decline) by CalPERS in the first 12-24 months would impact savings Validation Proceedings In California, POBs do not require voter approval due to a judicially created exception to the State Constitutional debt limitation. However, to obtain authorization to issue POBs, each agency is required to file a validation action with its respective County Superior Court. The judicial proceedings are largely an administrative matter, which is usually handled by a bond counsel firm. Fees typically range between $25,000 to $35,000, plus court filing fees (additional $3,000 to $5,000). Required Legal Documents - Before the validation action is filed, the City Council must first adopt a resolution: 1) authorizing the City to issue Pension Obligation Bonds (POBs) to refund its CalPERS Unfunded Accrued Liability (UAL); and 2) authorizing judicial validation proceedings related the issuance of such POBs. The authorizing resolution must also establish a not -to -exceed par value and maximum interest rate. As part of its approval, the City Council will approve two key legal documents, in substantially final form: Trust Indenture and Bond Purchase Agreement. The Preliminary Official Statement (POS) will be drafted and approved by the City Council, after the validation is approved. Timeline - The validation proceedings require a 7-step sequential process, which under normal conditions can take approximately 90 days or more. This process can be delayed if a protest is made during validation period by any interested person or association and has been extended in some cases by at much as 2-3 months due to COVID impacts on the courts. Because we do not know the impacts of COVID on the court system at the time of a future validation action we are outline the traditionally process and estimated timeline under pre-COVID conditions below: Action Revised Time 1 City Council passes a resolution authorizing the sale of POBs 2 File Validation Action with County Superior Court 3 Receive Order for Publication of Summons from the Court 2-3 weeks 4 Publish notice in local publication of general circulation 21 days 5 Waiting period to file petition- minimum 10 days 3-4weeks RFP No. 21-025 EXHIBIT B 6 Clerk enters and schedules hearing for default judgement 3-6 weeks 7 Hearing for Default Judgement 8 30-day Appeal Period Bonds can be sold after the 30-day Appeal Period has ended. Staff must return to the City Council to approve the POS and issuance of POBs. RFP No. 21-025 EXHIBIT 2 EXHIBIT B City of Santa Ana Council Policy Mayor's Authorization Subject Council Approval Date: UNFUNDED EMPLOYEE PENSION LIABILITY COST REDUCTION POLICY February 2, 2021 The City's contribution to fund employee pensions has increased at a faster rate than most other costs. As of June 30, 2019, pension plan assets account for only 67% of the accrued liability; and the plan administrator projects the City's contribution will continue to increase in the future. This policy addresses strategies to reduce the City's cost of its employee pension liability. Background The City provides a defined benefit pension plan to its full-time employees. A defined benefit is a promise to pay future benefits, wherein the City makes annual deposits into the plan and carries the risk of plan assets investment performance. If the plan's investment return is less than assumed, the City cost to provide the benefit increases. The City has contracted with the California Public Employee Retirement System (CaIPERS) to manage the employee pension plan. CAPERS collects contributions from the City and its employees, invests the money, and pays monthly benefits to retirees. Ideally, the plan would be 100% funded, which means plan assets are equal to plan liabilities. A plan with a low funded ratio is at risk for paying future promised benefits. In response to the rising cost of public employee pensions after CaIPERS investment losses during the Great Recession of 2009, and to ensure the future solvency of plans under contract with CaIPERS, California enacted the Public Employee Pension Reform Act (PEPRA). All public employees hired after PEPRA became effective in January 2013 receive a lesser benefit than those "Classic" employees hired before PEPRA. Santa Ana Employees earn benefits in one of the following four categories. 1. Classic Safety (sworn public safety employees); 2. PEPRA Safety; 3. Classic Miscellaneous (all other non -sworn City employees); or 4. PEPRA Miscellaneous. The market value of investments in the Santa Ana plan is less than the liability for benefits already earned, and the City has an Unfunded Pension Liability. Each year, the amount of the liability changes based upon actual plan results and CaIPERS changes in assumptions. The liability grows when actual plan results do not meet CaIPERS assumptions, such as retirees living longer than expected; or when CaIPERS changes its assumptions, such as reducing the assumed rate of investment return. Conversely, the liability decreases when actual plan results exceed CaIPERS assumptions, such as investments earning more than the assumed rate of return. CaIPERS also charges "interest" on the unpaid liability each year, based on the plan's discount rate, equivalent to the assumed rate of return. CaIPERS requires the City to make annual contributions to reduce the unfunded liability. This policy addresses strategies to reduce the cost of the unfunded pension liability. There are two basic strategies to reduce the City's cost for the unfunded pension liability: 1. Contribute more than required by CaIPERS (an Additional Discretionary Payment) to reduce the accrual of interest; or UNFUNDED EMPLOYEE PENSION LIABILITY COST REDUCTION POLICY Page 1 RFP No. 21-025 EXHIBIT B 2. Refinance the liability, which is a legal debt of the City, at a lower interest rate. Within these two basic strategies, there are a variety of options and associated risks. Application of Additional Discretionary Payments When the City identifies funding for an Additional Discretionary Payment (ADP), there is a strategy to apply the ADP to the unfunded pension liability. The unfunded liability is comprised of layers or "bases" related to each year of actual plan results. Each base is either a loss or gain. CAPERS amortizes most of the bases over twenty years to calculate the annual required contribution to reduce the liability. Loss bases at the beginning of an amortization cycle are desirable targets for an ADP to maximize overall savings. Conversely, loss bases at the end of an amortization cycle are desirable targets to maximize short-term savings. 1. It shall be the City's policy to use a targeting strategy, and apply any Additional Discretionary Payments to loss bases at the beginning of an amortization cycle to maximize overall savings. Use Accumulated Fund Balance or One -Time Money The City has a General Fund to account for unrestricted revenue; and many other "restricted" funds to account for revenue with spending restrictions imposed by law, other governmental agencies, or legally enforceable agreements. The City allocates its unfunded pension liability to each fund based upon the prior year normal cost charged to the fund through payroll. When the City receives more revenue than expected, or spends less than budgeted, a fund balance accumulates. Much like spending from a savings account, accumulated fund balance is a one-time resource the City can use to pay down a fund's allocation of the unfunded pension liability. The City has a separate "reserve" policy to establish the minimum fund balance to keep on hand for emergencies and operational cash flow. 2. It shall be the City's policy to consider an additional discretionary payment to reduce the unfunded pension liability during each annual budget process, when staff identifies accumulated fund balance in excess of reserve policy requirements. Negotiate with Employees Employees are already required to contribute a portion of their pay to the employee pension plan. Even though the City collects the employee contribution from the employee, the City reports the employee contribution to CalPERS as an employer -paid contribution. This increases the employee income used to calculate the City's contribution and the retiree benefit. The City may negotiate with its labor groups to require larger contribution from employees, or to stop reporting the employee contribution as employer -paid. Both options would reduce the City's normal cost contribution, and may be difficult to negotiate without offering something in exchange. 3. It shall be the City's policy to propose reductions of the City's normal cost contribution during labor negotiations, based upon the plan funding ratio and the City's current and forecasted financial position. Use Cash Planned for Capital Proiects and Issue Tax -Exempt Debt When the City has cash on hand to fund capital projects, the City may consider using the cash to reduce the unfunded pension liability, and instead issue tax-exempt debt to pay for the project. Tax-exempt debt carries a low interest rate, and this strategy effectively swaps a higher -rate debt for a lower -rate debt. UNFUNDED EMPLOYEE PENSION LIABILITY COST REDUCTION POLICY Page 2 RFP No. 21-025 EXHIBIT B The City funds most of its capital projects with restricted money. Therefore, the restricted fund's allocation of the unfunded pension liability, and the cash available for the project, limits the use of this strategy. In addition, frequent debt issues can negatively affect the City's credit rating. 4. It shall be the City's policy to consider paying down the unfunded pension liability when there is at least $20 million of cash available for capital projects, and it is feasible and economically prudent to issue tax-exempt debt for the projects. Irrevocable Section 115 Trust As an alternative to making an ADP to CAPERS, the City can choose to set aside additional money in a Section 115 Trust. Money placed into the trust is irrevocable, meaning it cannot be withdrawn and used for another expenditure of the City. The City has already established a Section 115 Trust with an initial small deposit. There are two primary benefits associated with a Section 115 Trust. The City has more control over the investment, and the City can use the Trust for rate stabilization. If there are future spikes in pension costs, the City could use money from the Section 115 Trust to help pay some of the required CalPERS contributions. However, in order to utilize the Trust, additional money must be set aside in advance. 5. It shall be the City's policy to consider adding money to the Section 115 Trust account during each annual budget process. Pension Obligation Bonds The City may consider issuing Pension Obligation Bonds (POBs) to refinance its unfunded pension liability. In a low interest rate environment, issuing POBs can significantly reduce the City's cost. However, there is risk associated with the refinancing. If actual pension plan results consistently exceed CalPERS assumptions over a long-term period, the City may pay more overall. The following illustrates this concept. Scenario: The City refinances its pension obligation at 3.75%; and CaIPERS assumes a 7% investment return, yet consistently earns a 9% return over a 30-year period. $90 $80 $70 $60 $50 $40 $30 $20 $10 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Baseline Scenario Baseline is the Ca1PERS projection from the June 30, 2019 Actuarial Valuation Report. Dollar amounts are in millions. For the first 11 years in this scenario, the City would save money; but over the entire 30-year period, the City would pay $444 million more. UNFUNDED EMPLOYEE PENSION LIABILITY COST REDUCTION POLICY Page 3 RFP No. 21-025 EXHIBIT B The Government Finance Officers' Association (GFOA) issued an advisory against POBs based upon a variety of reasons such as the potential for invested proceeds to earn less than the interest owed on the bonds, structuring the debt over a longer term than the original amortization period, and the potential for the bonds to consume the agency's legal debt capacity. The following policy points can help mitigate these concerns. 6. It shall be the City's policy to consider issuing POB's only if the following criteria exist. a) The City Council must conduct a public meeting to consider the results of an analysis quantifying the risk probability of the City paying more over the life of the bonds. b) To maximize potential savings, the bond interest rate must be at least 30% less than the plan's current discount rate. c) To ensure the City benefits from the possible scenario of actual plan results exceeding Ca1PER5 assumptions shortly after issuing debt, the bonds must not exceed 90% of the unfunded liability. d) The bond structure must not extend the life of the debt. e) The City must not use bond proceeds to pay the normal cost of the pension plan. UNFUNDED EMPLOYEE PENSION LIABILITY COST REDUCTION POLICY Page 4 RFP No. 21-025 EXHIBIT B sty ORA/Vt' � G Pension Refinancing Options Financial Solutions RFP No. 21-025 EXHIBIT B Tonight's Goal Should we proceed with pension refinancing? If yes: • Direct staff to propose a bond counsel contract • Adopt the proposed Unfunded Employee Pension Liability Cost Reduction Policy Tonight's action will not obligate the City to issue refinancing bonds 9UFI RFP No. 21-025 OR kAj EXHIBIT B � o 3 z "! Why Refinance Pension Debt? City's pension cost grows faster than City revenue • Estimated to grow 40% over the next 7 years • City can refinance pension debt at 3-4%, vs. the 7% charged by CaIPERS • Refinancing can help create more predictable level debt payments IF CaIPERS outperforms assumptions consistently over the next 20+ years, the City could pay more with refinancing 9UFI RFP No. 21-025 ORgn,GeC EXHIBIT B 3 Our Process o z �ii.Sti6Si.�sitiiii Analyze Pension liability • Review Actuarial Reports, CAFR, & Model Bases • Develop Pension Model Evaluate Funding Strategies • Budget & Financing Approaches • Base Selection: Cash Flows vs. Savings Pension Refinancing Analysis • Recession Scenarios • Market Timing Risk: Stress Test + Monte Carlo Simulation Stakeholder Education & Communication • City Council Presentation • Adopt Pension Funding Policy Develop Specific Plan + Implementation • Pension Management Plan 9UFI — RFP No. 21-025 OR kAj EXHIBIT B 0 ComprehensiveApproach Pension Model Budget & CIP Forecasting & Revenue Cliffs 9UFI Funding Strategies Policy Constraints Debt Service & Reserves cession & Contingency Planning Proposed Pension Liability Cost Reduction Policy addresses a comprehensive approach RFP No. 21-025 EXHIBIT B Pension Debt Overview �UFI RFP No.:1-ozs OR EXHIBIT _•;,. Unfunded Accrued Liability (UAL = Pension Debt) MISCELLANEOUS SAFETY COMBINED Accrued Liability (AL) $ Market Value Assets (MVA) UAL = AL-MVA $ 916,9971454 $1,162,151,002 $ 21079,148,456 623,923,788 7741128,328 11398,052,116 293,073,666 69% MISCELLANEOUS Accrued Liability (AL) $ 948,084,339 Market Value Assets (MVA) 645,902,345 UAL = AL-MVA $ 302,181,994 69% VUB $ 388,022,674 67% $ 681,096,340 67% SAFETY COMBINED $1,191,809,847 $ 21139,894,186 787, 086, 63 6 11432,988,981 $ 404,723,211 66% $ 706,905,205 67% RFP No. 21-025 �D��oAvN�ec EXHIBIT B � o 3 z Amortization Bases Layers of Liability/(Asset) based on actual annual experience Year Reason Ramp Term June 30, 2019 1 2006 Fresh Start NO 17 (1,541,128) 2 2007 Benefit Change NO 7 32,701,223 3 2007 Benefit Change NO 8 148,699 4 2009 Assumption Change NO 10 31,696,131 5 2009 Special (Gain)/Loss NO 20 29,579,873 6 2010 Special (Gain)/Loss NO 21 10,838,947 7 2011 Assumption Change NO 12 13,733,629 8 2011 Special (Gain)/Loss NO 22 (7,376,144) 9 2012 Payment (Gain)/Loss NO 23 5,607,564 10 2012 (Gain)/Loss NO 23 (263,221) 11 2013 (Gain)/Loss 100% 24 100,300,176 12 2014 Assumption Change 100% 15 46,677,512 13 2014 (Gain)/Loss 100% 25 (62,621,643) 14 2015 (Gain)/Loss 100% 26 31,205,036 15 2016 Assumption Change 80% 17 15,553,637 16 2016 (Gain)/Loss 80% 27 35,371,912 17 2017 Assumption Change 60% 18 12,655,874 18 2017 (Gain)/Loss 60% 28 (19,195,295) 19 2018 Method Change 40% 19 5,584,776 20 2018 Assumption Change 40% 19 26,831,729 21 2018 (gain)/loss 40% 29 (11,435,367) 22 2019 AL Significant Increase NO 20 126,996 23 2019 Non -Asset (Gain)/Loss NO 20 2,662,634 24 2019 Investment (Gain)/Los 20% 20 3,338,444 9UFI Year Reason Ramp Term June 30, 2019 1 2005 Fresh Start NO 16 $ (2,937,840) 2 2006 Benefit Change NO 6 2,091,015 3 2009 Assumption Change NO 10 16,377,191 4 2009 Special (gain)/loss NO 20 32,208,187 5 2010 Special (gain)/loss NO 21 (11,831,291) 6 2011 Assumption Change NO 12 17,057,934 7 2011 Special (gain)/loss NO 22 (4,372,256) 8 2012 Payment (gain)/loss NO 23 8,208,025 9 2012 (gain)/loss NO 23 74,156,553 10 2013 (gain)/loss 100% 24 140,600,831 11 2014 Life Exp. + 2.0/2.5 yrs. 100% 15 55,792,670 12 2014 (gain)/loss 100% 25 (82,908,692) 13 2015 (gain)/loss 100% 26 57,135,136 14 2016 7.50%to 7.375% 80% 17 19,004,711 15 2016 (gain)/loss 80% 27 46,990,724 16 2017 7.375%to 7.25% 60% 18 21,123,048 17 2017 (gain)/loss 60% 28 (29,671,462) 18 2018 Method Change 40% 19 4,647,516 19 2018 7.25% to 7.00% 40% 19 33,928,210 20 2018 (gain)/loss 40% 29 (1,304,860) 21 2019 Non -Asset (Gain)/Loss No 20 4,528,943 22 2019 Investment (Gain)/Loss 20% 20 3,898,918 Safety0, ,723,211 RFP No. 21-025 ao�µoRak�ec EXHIBIT B = o 3 z Pension Debt By Plan (at June 30, 2019) Total Liability (Misc. Plan): $948 Million Total Liability (Safety): $1.2 Billion Million VUB RFP No. 21-025 OR kAj EXHIBIT B � o Al Iy 3 z • Pension Debt By Plan (at June 30, 2019) $1,400, 000, 000 $1, 200, 000, 000 $1,000, 000, 000 :rr rrr rrr .rr rrr rrr $ 400, 000, 000 $ 200, 000, 000 $0 VUB Misc Plan Liability $948,084,339 Safety Plan Liability $1,191,809,847 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 RFP No. 21-025 EXHIBIT B CaIPERS Estimate of UAL Payments UAL Amortization Payment Schedules $69.5M $714M 72.9M $71 * $73.OM $67.5M I�Mi■ I�Ml1lll1 $67.9MS67.OM ■ Safety ■ Misc. - 7M $48.1M $45.1M $42.8M $41.SM F$27.3M $25.8M $21.6M $4.6M 1111111M $1=.1M $Q �'S ti°` ti4 ti(0 ,tit ti� 0) ,�4b ,�'y �'ti ,�1i ,�to, 14) �( �1 ,� �0) ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio ,tio VUB RFP No. 21-025 EXHIBIT B Toolbox Approach to Pension Liability Management VUB RFP No. 21-025 ORgn,GeC EXHIBIT B � o 3 z 1E!!.PninManagementT I e s o oo bo x 1. Allocate Pension Debt costs to funds with personnel costs 2. Section 115 Trust • Set aside additional money for future CaIPERS payments to stabilize costs over time • More control over the investments 3. Use of Reserves & One -Time Monies to make additional discretionary payments • 1.0% City Investment Return vs 7.0% CaIPERS Discount Rate 4. Tax -Exempt Exchange • Use accumulated cash for capital projects and issue tax-exempt debt at a lower rate than taxable pension refinancing bonds 5. Issue Bonds to Refinance the Debt 9UFI RFP No. 21-025 EXHIBIT B Additional Discretionary Payments (ADPs) VUB aFo.:1-ozs exnIalr e 'f�'', Example of ADP Targeting Strategy We select which layers to pay, which can make a big difference in savings 10-Year Strategy: • Utilized for short term budget /cash flow relief 30-Year Strategy: • Utilized for maximum interest cost savings UB ... $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 TARGETING STRATEGIES $1Million UAL: 10-Year vs. 30-Year Amortization ■ 10 Year = $1,413,000 Payments ■ 30-Year = $2,761,000 Payments 1 2 3 4 5 6 7 8 9 10 1112 13 14 15 16 17 18 19 20 2122 23 24 25 26 27 28 29 30 RFP No. 21-025 EXHIBIT B Targeting Strategy Considerations A specific example Water Fund pension debt for Water employees is $13.5 million. • If we pay Misc. Base #4 with a 10-year amortization, we save $11.3 million • If we pay Misc Base #16 with a 27-year amortization, we save $17.5 million �UFI RFP No. 21-025 OR kAj EXHIBIT B � o �1 Recommended ADP for Base #16 houl $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 VUB ADP Base #16 - $351371,912 ■ Original Payments N MIII* In w N w m O r-I N M O r-I N M III* In w NNINNNINN N M M M M M M M M M M R*R*R* 1*1*1*1* O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N • Allocated $13.5 Million from the Water Enterprise Funds 38% of Base #16 UAL • Pro -Rats reduction in balance & payments $17.5 Million in Interest Costs Savings • Reduction of $31 Million In Total Annual UAL Payments RFP No. 21-025 EXHIBIT B Bond Trends and Options VUB RFP No. 21-025 ORgn,GeC EXHIBIT B � o Al I." o �! i Recent Ref i n a n ci n Activity� Issuer El Cajon Coachella Ukiah Gardena Arcadia Placentia* 7 Torrance* b Azusa ZT1111 10 West Covina* 11 San Bernardino 12 San Bernardino a" El Monte Par Value $ 147,210,000 17/590/000 49,875,000 1011490,000 90, 000, 000 52,950,000 349,515,000 70/075/000 21918901000 20410951000 51945,000 13,905,000 21,000,000 * Lease Revenue Bond Vun - Pricing Date 1/13/2021 12/8/2020 11/30/2020 11/24/2020 10/27/2020 10/26/2020 10/12/2020 9/30/2020 8/20/2020 7/30/2020 7/23/2020 7/23/2020 6/30/2020 Issuer Par Value Pricing Date North Co Fire 20/305/000 6/11/2020 15 Riverside 43211651000 6/11/2020 16 Carson 108,020,000 6/10/2020 17 Montebello 153,425,000 6/10/2020 18 Fort Ord 30,405,000 6/10/2020 19 El Monte 1181725,000 6/9/2020 20 Inglewood 1011620,000 6/2/2020 21 Ontario 23615851000 5/21/2020 22 Larkspur 18/295/000 5/14/2020 23 Riverside Co 71919951000 5/6/2020 24 Pasadena 131,805,000 2/26/2020 25 Orange Co 463,895,000 1/14/2020 2E Orange USD 33,595,000 12/19/2019 TOTAL $ 3,912,375,000 RFP No. 27-025 EXHIBIT B Upcoming Refinand ng Activity Issuer Par Value Pricing Date Downey $ 200,000,000 2/11/2021 San Fernando 45/000/000 2/15/2021 Monterey Park 22010001000 3/1/2021 Orange 290,000,000 3/1/2021 Chula Vista 30010001000 Q12021 b Huntington Beach 35010001000 Q12021 7 El Segundo 15010001000 4/1/2021 8 Manhattan Beach 92/500/000 5/19/2021 9 Corona 272,000,000 Q2 2021 10 Covina 72,000,000 TBD 11 Commerce 31/000/000 TBD Corte Madera 50/000/000 TBD Whittier 14310001000 TBD TOTAL $ 21215,500,000 �ffUFI RFP No. 21-025 EXHIBIT B Refinancing Options for Santa Ana 1. Issue Bonds for 50% of Pension Liability • $350 Million Bonds with Hybrid —Level Debt Service • 25-Year Final Maturity • Target Longest Safety Bases 2. Issue Bonds for 90% of Pension Liability • $642 Million Bonds with Hybrid —Level Debt Service • 25-Year Final Maturity • Misc. Base #14 & #16 remain outstanding 9UFI RFP No. 21-025 OR kAj EXHIBIT B � o 1 Scenario #1-50% Refinancing 50% UAL POB 25 Year (Safety Only) $80,000,000 Par Value I $ 357,790,000 Deferred UAL Savingsl $ 183,002,882 l • • • . • NPV Savingsl $ 144,438,666 l $70,000,000 • ' ' ' NPV % I 41% I . ' 3.17% $60,000,000 . ' ' • . . $50,000,000 � Misc. UAL Payments • � Remaining Safety UAL • � POB Debt Service $40,000,000 • Original UAL Payments $30,000,000 • $20,000,000 $10,000,000 $0 ■■i• - - 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 1 Cff UFI $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 RFP No. 27-025 EXHIBIT B Scenario #2 — 90% Refinancing 90% UAL POB Hybrid Level Debt Service Par Value I $ 641,865,000 UAL Savingsl $ 253,872,795 • • . . • NPV Savingsl $ 217,109,100 . • ' ' • ' NPV A 34% 3.01 POB Debt Service Misc. Base #14 & #16 • Original UAL Payments $30,000,000 • $20,000,000 $10,000,000 • $0 . maw 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 UFI RFP No. 21-025 D�ORAN� EXHIBIT B o 3 z Refinancing Savings Matrix 50% UAL 90% UAL Par Value $ 35718001000 $ 64118651000 Total Debt Service 52810441092 88419461714 Avg. Annual Payment 51,696,630 46,171,181 Budgetary Savings 371742,327 160,90%483 Deferred UAL Savings 183169%037 253,872,795 N PV Savings 14417591624 21711091100 r % Savings 41% 34% TIC% 3.16% 3. 01 % VUB RFP No. 21-025 OR kAj EXHIBIT B � o 3 z Compare Estimated Payments No Refinancing $1,298,053,648 $0 50% Refinancing 90% Refinancing $1,115,050,766 $1,044,180,853 $183,002,882 $253,872,795 Total Estimated Payments = Refinancing Bond Payments + Remaining CalPERS Liability Payments Based on Ca1PERS estimate of future payments and market conditions in December 2020. Final numbers will likely change. VUB RFP No. 21-025 EXHIBIT B Investment Return Risk Analysis �UFI RFP No. 21-025 OR kAj EXHIBIT B � o 3 z " CaIPERS Investment Return CalPERS Could Outperform Their Return Assumption (7%) and Reduce UAL; Or CalPERS Could Underperform Their Return Assumption and Increase UAL 25.0% 20.1%39.5% 20.0% 34.5% 1""15.3% 15.0 % 12.5% 10.5% 10.0% 1 , M 5.0% CaIPERS Annual Investment Performance 21.7% 18.4% 13.3% 13.2% 11.2% 8.6% 4.7% 2.4% 0.0% -5.0% I -10.0% CaIPERS Annual Return -15.0% —CaIPERS Avg. Return =7.79% -20.0% 24.0% -25.0% 9� yA �0 gb y1 �4 99 AO Pti Q'� A3 pb �h ab 01 Ob �9 ,y0 1ti tiM1- ,y9 Sp ,y9 tib tit ,yb ti9 ,y0 1'�9v ti993 ��� S�b, �y9�D 1°j91 199� 1999 1� v�'S 1�,v 1�0 1� bey, ti�b. 1�1 ry�4 v�9, ryo1�, vo�1 ti�1v ti�13 ryola vo�y vo1� 1011 ryo�0 10�9. 2.0% 3.7% 1 19.1% 16.6% ' 12.35111.8% Pension Refinancing can help avoid an increase of the City's pension debt when CAPERS investment returns are less than the 7% assumption. VUB - ORgnG 3 G 0 , $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 VUB RFP No. 21-025 EXHIBIT B Monte Carlo Simulation Monte Carlo Simulation Ending Portfolio Balance Probabilitv of Success Results change with each iteration and Bond Structure ! 87% with 90% Refinancing • 84% with 50% Refinancing 1 2 3 4 5 6 7 8 9 10 1112 13 14 15 16 17 18 19 20 2122 23 24 25 • Monte Carlo Simulation compares ending portfolio balance: Pension Bonds vs CALPERS UAL payments over 25 years. • Calculates results based on running 10,000 different (random) scenarios • CalPERS Return over 25-year period • Expected Return = 7.0% (Standard Deviation = 10.6%) RFP No. 21-025 EXHIBIT B Policy Consideration VUB RFP No. 21-025 OR kAj EXHIBIT B � o � _.E ! 3 z 1�. Proposed PolicyDocument Addresses two basic strategies of contributing more to pay down faster, and/or debt refinancing at a lower rate • Apply ADP's to layers with long amortization, maximizing overall savings • Consider one-time money for ADP's or set -aside in 115 Trust for greater control over investments • Consider tax exempt exchanges only if at least $20 million of cash is available • Consider debt refinancing if: Interest rate is at least 30% less than CaIPERS rate No more than 90% of debt is refinanced Life of debt is not extended Risk analysis is performed 9UFI RFP No. 21-025 OR kAj EXHIBIT B � o 3 z �! 1 KeyDecision Points — CityCounci Tonight's Presentation • Pension Refinancing Strategies • Decision to proceed and adopt Policy P Proceed with Validation Validation • Approve Bond Counsel Contract 4-6 • Adopt Resolution to Proceed Validation Process Month Timeline Concurrent with Validation Process • Approve Underwriter • Develop Specific Dollar Plan Final City Council Decisions • Amount/Structure of POBs • Approve Preliminary Official Statement and other bond documents �ffUFI - 31 RFP No. 21-025 EXHIBIT B Questions? VUB RFP No. 21-025 OR kAj EXHIBIT B � o 3 z "! Tax -Exempt Tax -Exempt Bonds 1. Identify "Pay -Go" Capital Project(s) 2. Issue Tax -Exempt Bonds to finance Budget Exchange 3. Reallocate cash to Pension Debt 4. Pre -Pay Bases with similar term This strategy is limited to the cash we have on hand, and the proposed policy recommends atax-exempt exchange for $20 million or more VUR City of Santa Ana Response to Request for Proposals (RFP) No. 21-025: Underwriting Services for Pension Refinancing Bonds March 11, 2021 BofA Securities, Inc. 333 S. Hope Street, Suite 3820 Los Angeles, CA 90071 BofA SECURITIES March 11, 2021 Kathryn Downs Executive Director of Finance & Management Services Agency City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 Dear Ms. Downs: On behalf of BofA Securities, Inc. ("BofA Securities" or "BofA"), we are pleased to submit our proposal to provide underwriting services for the City of Santa Ana (the "City"). Our team is well qualified to provide the City with comprehensive banking services, marketing and underwriting execution. While we detail our credentials and recommendations herein, we would like to highlight the following qualifications: ■ Leadership with Taxable and POB Financings — BofA has a long and accomplished history in the public finance sector, and most relevant to the City's proposed financing, we are a leading senior -managing underwriter of taxable bonds nationally since 2010. During this timeframe, BofA has served as senior manager on $3.2 billion of pension obligation bonds ("POBs") nationally. Over the past 36 months, we served as lead manager on California POBs for issuers including the cities of Riverside ($432 million), Gardena ($101 million), El Cajon ($147 million) and Downey ($114 million) as well as pension -related financings for the cities of Gainesville, FL ($206 million) and Fort Lauderdale, FL ($167 million). Notably, BofA is the only major Wall Street firm with recent and relevant experience underwriting California POBs over this timeframe. ■ Leadership with Large Financings (Greater than $500 million) — Over the past five years, BofA has held a leading market position in California for transactions sized greater than $500 million — a significant threshold at which underwriters are tasked with the most challenging offerings. We believe our dominant position in this segment of the market is a reflection of our banking and underwriting team's ability to flawlessly execute, market and price large and/or complex financings. ■ Significant Experience Leading Underwriting Syndicates - Given our experience with large transactions, we are a frequent book -running senior manager for transactions with underwriting syndicates and would be able to help lead and mobilize the City's underwriting team to ensure efficient execution of the City's transaction. This week, BofA served as book -running senior manager on the State of California's $1.9 billion March 2021 General Obligation Bonds for which we successfully managed an underwriting syndicate of more than 50 co - managers and selling group members. ■ POB Structuring Expertise — Our team's structuring capabilities and approach to POBs is second to none. For example, BofA has developed a proprietary model that optimizes the selection of amortization bases, taking into account market conditions and the issuer's savings objectives. As the City evaluates how much of its unfunded liability to refinance, BofA can help the City determine the most favorable amortization bases to refund as well as the POB debt structure that meets the City's financing objectives. Furthermore, we have capabilities to run simulation and stress test analyses on a real-time basis, which is important as the City evaluates risks associated with the proposed pension refinancing bonds. ■ Comprehensive Financing Approach — For the proposed POB financing, we have taken a holistic view of the City's finances, debt and credit profile in order to tailor scenarios around the City's objectives. As detailed herein, we provide samples of 50% and 90% UAL financing scenarios with debt service structured to reduce the City's projected budgetary gaps in its 10-Year General Fund Financial Outlook — while not exceeding the current unfunded liability payments in any year. To further enhance savings, we also discuss potential refinements such as an "index eligible" term bond and the use of bond insurance. Depending on the ultimate timing for bringing the POBs to market, we also discuss the possible use of short-term notes (TRANS or BANS) "Bank of America" and "BofA Securities" are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker - dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. References to BofA Securities, Inc. herein refer to the institutional business of Merrill Lynch, Pierce, Fenner & Smith Incorporated prior to May 13, 2019, and as of that date to BofA Securities, Inc. BofA SECURITIES to ensure budgetary savings are available for FY 2022 (and note that our firm is an active participant in both the bank direct purchase as well as the public market offering of these products). ■ Premier National Distribution Network— BofA has the proven ability to access buyers in the retail, institutional and international markets through our extensive distribution system. Our well -recognized institutional sales team is in constant contact with major buyers in all of the key institutional investor categories for taxable obligations. In addition, the firm's retail network, Merrill, is wholly owned by Bank of America, providing an important distribution channel for bonds we underwrite. The Merrill network includes 2,173 financial advisors in 77 wealth management offices in California alone. ■ Ability and Willingness to Commit Capital — BofA is one of the most highly capitalized broker -dealers in the municipal market with $14.1 billion of excess net capital that supports municipal underwriting as of 12/31/2020. Equally important, BofA consistently has demonstrated its willingness to commit capital to support our clients. Since 2015, in 428 transactions totaling $93 billion, BofA took down nearly $12 billion of unsold bonds on our senior managed deals (12.5% on average for the supported transactions). ■ Commitment to Orange County Region — Finally, we have a strong presence in Orange County. Over the past five years, the Bank of America Charitable Foundation provided grants and matching gifts in the region totaling approximately $8.6 million, while our employees have directly contributed approximately 217,000 volunteer hours to local charitable causes. BofA Securities is incorporated in Delaware and is an affiliate of Bank of America Corporation (a C Corporation). The individuals below are authorized representatives who can make legally binding commitments for the entity. We appreciate the opportunity to present our qualifications and recommendations. Please feel free to contact us if you have any questions about our proposal or would like any additional information. Sincerely, i Holly Vocal, Managing Director Jeff Bower, Managing Director Jorge Rodriguez, Managing Director (415) 913-2327 (213) 345-9580 (646) 743-1362 holly.vocal@bofa.com jeffrey.bower@bofa.com j.rodriguez@bofa.com Table of Contents Question Page 2. Agreement Statement.........................................................................................................................1 3. Firm and Team Experience..................................................................................................................1 i. Firm Description...............................................................................................................................1 ii. Governmental Staff and Experience................................................................................................2 iii. Primary and Secondary Contacts....................................................................................................2 iv. Staff Level of Commitment.............................................................................................................3 v. Resumes and Experience.................................................................................................................3 vi. Experience Providing Similar Services............................................................................................3 vii. Taxable References........................................................................................................................4 viii. Significant Engagements...............................................................................................................4 ix. Conflicts of Interest.........................................................................................................................5 x. Licenses............................................................................................................................................5 xi. Errors and Omissions Insurance......................................................................................................5 xii. Authorization to Execute Contracts...............................................................................................5 xiii. Pending Litigation.........................................................................................................................6 4. Pension Obligation Bond Experience..................................................................................................6 5. Distribution Capabilities......................................................................................................................6 6. Structuring Ideas and Marketing Plan for Proposed Debt Issuance....................................................8 7. Cost Proposal.....................................................................................................................................13 8. Certificates.........................................................................................................................................14 9. References.........................................................................................................................................14 10. Financial Capacity..............................................................................................................................14 11. Insurance...........................................................................................................................................14 Vill. Proposers Questionnaire...................................................................................................................14 Appendix A. BofA Senior and Co -Managed California POB Experience B. Resumes C. Conflicts of Interest and Litigation Disclosures D. Certificate of Liability Insurance E. Incumbency Certificate F. Financing Scenarios G. Requested Certificates WE ARE NOT YOUR MUNICIPAL ADVISORS OR FIDUCIARIES. BofA Securities, Inc. ("BofA Securities") is providing the information contained herein for discussion purposes only in anticipation of being engaged to serve as an underwriter. Bank of America, N.A. and its subsidiaries and affiliates ("BANA") are providing the information contained herein for discussion purposes only in connection with a proposed arm's-length commercial banking transaction between you and BANA. BofA Securities and BANA are acting for their own interest and have financial and other interests that differ from yours. BofA Securities and BANA are not acting as a municipal advisor or financial advisor within the meaning of Section 15B of the Securities Exchange Act of 1934, as amended (the "Act"), and BofA Securities and BANA have no fiduciary duty to you or any other person pursuant to Act with respect to the information and material contained in this communication. BofA Securities is seeking to serve as an underwriter on a future transaction and not as a financial advisor or municipal advisor. An underwriter's primary role is to purchase securities with a view to distribution in an arm's-length commercial transaction with you and it has financial and other interests that differ from those of yours. All underwriting services referenced herein are provided by BofA Securities and all commercial banking products referenced herein are provided by BANA. Before acting on the information or material contained herein, you should discuss it with any and all of your own internal and external financial and/or municipal, legal, accounting, tax and other advisors and experts, as applicable, to the extent you deem appropriate before acting on this information or material. Confidential Notice to Recipient "Bank of America" and "BofA Securities" are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Equal Housing Lender. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation ("Investment Banking Affiliates"), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker -dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. These materials have been prepared by one or more subsidiaries of Bank of America Corporation for the client or potential client to whom such materials are directly addressed and delivered (the "Company") in connection with an actual or potential mandate or engagement and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with us. These materials are based on information provided by or on behalf of the Company and/or other potential transaction participants, from public sources or otherwise reviewed by us. We assume no responsibility for independent investigation or verification of such information (including, without limitation, data from third party suppliers) and have relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the managements of the Company and/or other potential transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Company and are being furnished and should be considered only in connection with other information, oral or written, being provided by us in connection herewith. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Bank of America Corporation or any of its affiliates to provide or arrange any financing for any transaction or to purchase any security in connection therewith. These materials are for discussion purposes only and are subject to our review and assessment from a legal, compliance, accounting policy and risk perspective, as appropriate, following our discussion with the Company. We assume no obligation to update or otherwise revise these materials. These materials have not been prepared with a view toward public disclosure under applicable securities laws or otherwise, are intended for the benefit and use of the Company, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without our prior written consent. These materials may not reflect information known to other professionals in other business areas of Bank of America Corporation and its affiliates. Bank of America Corporation and its affiliates (collectively, the "BAC Group") comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and strategic advisory services and other commercial services and products to a wide range of corporations, governments and individuals, domestically and offshore, from which conflicting interests or duties, or a perception thereof, may arise. In the ordinary course of these activities, parts of the BAC Group at any time may invest on a principal basis or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions, for their own accounts or the accounts of customers, in debt, equity or other securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, potential counterparties or any other company that may be involved in a transaction. Products and services that may be referenced in the accompanying materials may be provided through one or more affiliates of Bank of America Corporation. We have adopted policies and guidelines designed to preserve the independence of our research analysts. These policies prohibit employees from offering research coverage, a favorable research rating or a specific price target or offering to change a research rating or price target as consideration for or an inducement to obtain business or other compensation. We are required to obtain, verify and record certain information that identifies the Company, which information includes the name and address of the Company and other information that will allow us to identify the Company in accordance, as applicable, with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) and such other laws, rules and regulations as applicable within and outside the United States. We do not provide legal, compliance, tax or accounting advice. If any person uses or refers to any such tax statement in promoting, marketing or recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the statement expressed herein is being delivered to support the promotion or marketing of the transaction or matter addressed and the recipient should seek advice based on its particular circumstances from an independent tax advisor. Notwithstanding anything that may appear herein or in other materials to the contrary, the Company shall be permitted to disclose the tax treatment and tax structure of a transaction (including any materials, opinions or analyses relating to such tax treatment or tax structure, but without disclosure of identifying information or any nonpublic commercial or financial information (except to the extent any such information relates to the tax structure or tax treatment)) on and after the earliest to occur of the date of (i) public announcement of discussions relating to such transaction, (ii) public announcement of such transaction or (iii) execution of a definitive agreement (with or without conditions) to enter into such transaction; provided, however, that if such transaction is not consummated for any reason, the provisions of this sentence shall cease to apply. ©2021 Bank of America Corporation. All rights reserved. 1/2021 1. Proposal shall include a statement outlining your concurrence or concerns with any and all provisions as contained in this RFP. BofA Securities, Inc. does not object to any of the provisions contained in this RFP. i. A general description of the firm, including structure, size, number of employees, relevantfinancing experience, and any past or contemplated changes in ownership. Additionally, the following shall be included: Provide a list in tabular form with a grand total, of all Pension Obligation Bond transactions in which the firm has served as senior manager since January 2010, specifically identifying staff members involved and their roles. Provide a list in tabular form with a grand total, of all Pension Obligation Bond transactions in which the firm has served as co -manager since January 2010, specifically identifying staff members involved and their roles. Firm Overview. Bank of America Corporation ("Bank of America" or "BAC") is a C Corporation with over 200,000 employees globally and offers a full range of banking, investing, asset management and other financial and risk management products and services. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes — serving individuals, small and middle market businesses, large corporations and institutions (including our municipal clients) around the world. BANKOFAMERICA���/ BofASECURITIES���� MERRILL SS BAN KOFAMERICA ���/ A BANK OF AMERICA COMPANY PRIVATE BANK BofA Securities is the brand name for the institutional businesses conducted through the broker -dealer BofA Securities, Inc. ("BofA Securities" or "BofA"), which houses a suite of investment banking and underwriting services for municipal issuers. Commercial bank services are provided by our affiliate, Bank of America, N.A. ("BANA"). BofA is the successor entity for the institutional business of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill"), which was incorporated in 1958 and was a municipal broker -dealer for approximately 60 years. Through Merrill, BofA continues to operate its retail wealth management business, which has over 17,000 retail financial advisors and client balances of approximately $3 trillion. Municipal Market Leadership and Unique Combination of Expertise. BofA has ranked as the #1 underwriter of municipal bond issues nationally in each of the last nine years. Since 2010, BofA has senior managed over $629 billion in par across 5,464 issues. Our financing experience nationally and within California covers a broad and geographically diverse range of agencies with a multitude of various capital programs. BofA is well suited to serve the City's financing needs as evidenced by the following: ■ Premier Taxable Financing Capabilities. BofA is the leading underwriter of taxable municipal bonds nationally, having brought to market $78 billion in par across 725 issues nationally since 2010. Additionally, BofA coordinates all taxable municipal credits from our municipal syndicate desk in close cooperation with our high-grade corporate salesforce, bringing the global reach of the BofA franchise to the City's benefit. • Pension Financing Expertise. BofA is a leader in pension obligation financings both nationally and SELECT BofA TEAM'S PENSION OBLIGATION CLIENTS within California. Since 2010, BofA has senior- City of Fresno, CA City of Riverside, CA managed $3.4 billion of pension -related financings City of Manhattan Beach, CA Riverside County, CA City of Long Beach, CA Sacramento County, CA nationally — of which $1.0 billion was for California City of Kalamazoo, MI San Bernardino County, CA issuers. Our recent senior -managed POB experience Commonwealth of Puerto Rico Oakland County, MI includes financings for the State of Illinois ($800 Detroit Retirement System Fund San Diego County, CA Fresno County, CA Sonoma County, CA million 2020 Pension GO Bonds) as well as for the Kern County, CA State of Alaska cities of Riverside ($432 million 2020 POBs), Azusa Los Angeles County, CA State of Connecticut G ($70 million 2020 POBs), Gardena $101 million ) ( Merced County, CA Monmouth County, NJ State of Kansas State of New Jersey 2020 POBs), El Cajon ($147 million 2021 POBs), and City of Pasadena, CA State of Wisconsin Downey ($114 million 2021 POBs). In addition, we currently are serving as senior manager on pending POB financings for the cities of Manhattan Beach and El Cajon (second tranche). 141� �1 Page 1 BofA SECURITIES ���� Since 2010, BofA has served as a co -manager on $1.5 billion of pension obligation financings. Recently, we were a co -manager for the County of Riverside's $720 million 2020 POBs and the City of Torrance's $350 million 2020 pension financing (which utilized a Lease Revenue Bond structure). We also are co -manager on the City of Huntington Beach's pending $363 million POB offering that is expected to price next week. Furthermore, throughout the careers of each banking team member, we have worked on a broad range of municipal pension bond financings in California and elsewhere as summarized on the prior page. Our extensive and recent experience provides us with valuable insights into investors' and rating agencies' thoughts regarding pension financings, which will enable us to best serve the City — especially with respect to timing, credit and structuring strategies. In Appendix A we include all of BofA's senior managed and co - managed experience with California pension -related financings dating back to 2010. 13 gKDFA Cityof Downey, CA Y: City of El Cajon, CA Y 1 City of Gardena, CA Y City of Azusa, CA Y City of Riverside. CA Muskegon county, MI Kansas Development Eina ri c e Authority City of Pasadena, CA 111 1 111 1 •1 111 E E 111 111 1 111 11 :1 111 .1 111 Taxable Pension Taxable Pension Taxable Pension Taxable Pension Taxab le Pension 0Aat!-Bonds, Limited Tax GO Pension Revenue Bonds (State of Taxah le Pension Obligation Bonds, Obligation Bonds, Obligation Bonds, Obligation Bonds, 2020 SeriesA Oh ligation Bonds, Kansas—KPERS). Ob ligation Ref Bonds, Series 2021 Series 2021A Series 2020 Series 2020 Series 2018 Series 2015H(Taxahle) Series 2015 BofA SECURITIES _�/ BOfA SECURITIES _�/ BofA SECURITIES_�� BOfA SECURITIES_�� BRfA SECURITIES '// B e rA SECURITIES`5/ Il SECU RI TI ES "// BefASE[u RITES February 2021 January 2021 November 2020 July 2020 June 2020 ❑ecemher2018 August2015 A ri I2015 ii. A description of the size of the firm's governmental staff and the firm's experience with governmental agencies of a similar size, nature, and scope. Emphasis should be placed on assignments undertaken within the past three (3) years and on engagements undertaken by the personnel proposed to be assigned to this agreement. Municipal Banking and Markets Group. BofA Securities' Municipal Banking and Markets group ("MBAM") is a fully integrated division that includes public finance investment banking, sales, trading, underwriting as well as commercial bank products and services offered through BANA. This single, coordinated business unit with approximately 370 personnel provides our municipal clients with a central platform for their capital raising, credit and treasury needs. This integrated platform facilitates streamlined coverage for the City led by public finance bankers who coordinate the delivery of both capital markets and bank/on-balance sheet products. We believe this is a distinguishing factor and one that separates BofA from its peers. Large, High Profile California Taxable General Fund Financing Experience. BofA, and the personnel assigned to the City's coverage team, boasts a strong history with structuring taxable general fund financings for a multitude of local agencies, being the top -ranked underwriter of national taxable lease revenue bond ("LRB") and certificates of participation ("COP") financings since 2010 with $3.3 billion in senior managed par. Notably, in the COVID-19 era, BofA led important LRB financings for the City of San Jose ($147 million 2020E LRBs), the City of Los Angeles ($165.6 million 2020B LRBs), and the City of San Diego ($60.7 million 2020 LRBs). These offerings were senior managed Holly Vocal and Jeff Bower, the primary and secondary contacts assigned to the City. Furthermore, we are a leading underwriter of pension obligation financings as detailed further in Question 4. iii. Name and contact information of the primary and secondary Project Managers to be assigned to the engagement. Primary Contact. Holly Vocal, a Managing Director in our San Francisco office, with Project more than 17 years of public finance experience will serve as the primary contact for Contact Information the City's offering. As lead banker on recent POB financings for the cities of Azusa, Holly Vocal Gardena and Downey, in addition to large taxable general fund financings for the Managing Director City of San Jose, Holly is well versed on the key credit considerations for California (415) 913-2327 general fund obligations as well as the specifics of structuring and marketing hollv.vocal@bofa.com California POBs. Secondary Contact. Jeff Bower, a Managing Director in our Los Angeles office will Jeffrey Bower leverage his 30+years of public finance experience to serve as co -lead banker for the Managing Director City and provide senior oversight and direction to the team. Jeff's POB financing (213) 345-9580 experience includes transactions for the cities of Long Beach, Gardena and ieffrev.Bower@bofa.com Manhattan Beach as well as the counties of Sacramento, San Bernardino, San Diego and Sonoma. Page 2 BofA SECURITIES 1 iv. Indicate level of commitment of each of the assigned key personnel and how you will ensure the accessibility of key personnel to the City. Please reference our response to Question V below, which outlines BofA's key personnel. V. Resumes for the professional staff assigned to the engagement. Include a brief biography of each person specifically addressing experience relevant to the City's proposed financing. A discussion of educational background and relevant experience of the Partner, Supervisor(s) and Staff which will be assigned to this engagement as well as their assigned responsibilities under the proposal shall be included. BofA has assembled a dedicated POB Team to assist California issuers with refinancing their Ca1PERS UALs. This "one team" approach allows us to seamlessly convey the latest structuring, rating and investor insights to clients in this rapidly changing market segment. Holly Vocal and Jeffrey Bower, as primary and secondary contacts, will ensure that the full resources of BofA and the team are dedicated to the City. Further, and as shown in the table below, each member has significant senior managed experience with California POBs. Role Team Members Office Location Experience California POBs % of Work Holly Vocal, Managing Director San Francisco 17 yrs Senior Managed: 5 40.0% Jeffrey Bower, Managing Director Los Angeles 32 yrs Senior Managed: 7 5.0% Core Public Jorge Rodriguez, Managing Director New York 17 yrs Senior Managed: 6 10.0% Finance Team Doug Baron, Director Los Angeles 13 yrs Senior Managed: 3 10.0% Geoffrey Sauers, Vice President Los Angeles 8 yrs Senior Managed: 5 15.0% Katy Liu, Associate Los Angeles 5 yrs Senior Managed: 5 15.0% Underwriting Catherine Crews, Managing Director New York 16 yrs Senior Managed: 7 5.0% Brendan Troy, Managing Director New York 22 yrs Senior Managed: 2 As Needed Rating Strategies Brad Gewehr, Senior Vice President New York 36 yrs Senior Managed: 8 As Needed Jorge Rodriguez, Managing Director, is BofA's national pension financing specialist with expertise with actuarial and strategic asset allocation matters. Jorge is able to bring his financial modeling and scenario analysis experience to bear in assisting the City and its Municipal Advisor with structuring decisions. Doug Baron, Director, will serve as a project banker. Doug offers a wealth of experience working in California public finance, having previously served as Manager of Public Finance and Investments at the County of Los Angeles and having managed more than $1 billion of pension bonds while at the County. Geoffrey Sauers, Vice President, and Katy Liu, Associate, will assist with the execution efforts. Geoffrey and Katy have led the execution efforts for over $10 billion in municipal offerings, including POBs for Azusa, Downey, Gardena, Huntington Beach, Manhattan Beach and El Cajon. Credit Specialist: Complementing our team is a veteran credit strategist who provides expertise in structuring pension obligation financings and working with the rating agencies as well as investors on credit -related issues.considerations. Brad Gewehr, a Senior Vice President in New York has worked over the past 20 years with various issuers and their finance teams to develop optimal pension obligation structures to increase funding ratios while maintaining affordability. With his extensive knowledge of actuarial and accounting principles, he has helped ensure that pension liabilities and expenses are properly presented to rating agencies and investors. Most recently, Brad worked on pension or OPEB financings for the cities of Riverside, Gardena, Azusa and El Cajon as well as for Gainesville (FL), the State of Illinois and the Kansas Development Finance Authority. Underwriting: Catherine Crews, Managing Director, will serve as the lead underwriter for the City's POB financing. Catherine has 16 years of underwriting experience with a particular focus on California issuers and has served as the lead underwriter for over $2.0 billion of POB financings in the last five years. Brendan Troy, Managing Director, will provide additional underwriting support. Brendan offers the City 22 years of experience for numerous credits nationally as well as extensive experience with California general fund issuers. Resumes for our team are provided under Appendix B. vi. A description of the Proposer's experience in providing similar services to those requested in this RFP. The City's RFP outlined a scope of services expected of its senior manager. In the following table, we detail BofA's value-added approach and how we've provided similar services on recent POB transactions. Notably, we've helped prepare customized plans of finance based on our clients' unique savings and policy objectives. We provide some highlights of these various funding approaches below. BofA Senior -Managed POB Experience — Tailored Pension Funding Approaches City of Riverside City of Azusa City of El Cajon City of Downey $432 Million 2020 POBs $70 Million 2020 POBs $147 Million 2021 POBs $114 Million 2020 POBs Page 3 BofA SECURITIES ���� Funded with POBs 92% UAL Funded Ratio Structured payments to achieve specific savings targets in first ten FYs and no dis-savings relative to existing UAL ■ Prepared 50+ simulation scenarios to optimize funding level and base selection and assess reinvestment risk ■ Attended and presented at City Council meetings ■ Prepared roadshow and held one-on-one investor calls ■ Led underwriting syndicate ■ Prepared post -closing presentation Funded with POBs and Addt'I Discretionary Payments from utilities 100% UAL Funded Ratio Structured 20-year level payments ■ Helped analyze ADP funding amounts and various POB debt structures ■ Crafted rating presentation ■ Attended and presented at City Council meetings ■ Prepared investor roadshow; set priority of orders for retail ■ Prepared post -closing presentation To be funded in two POB tranches Vt tranche funded 75% Funded Ratio and 2nd tranche to fund 25% Targeted longer term bases for initial tranche to mitigate against interest rate risk ■ Helped evaluate funding levels and timing considerations ■ Helped develop and refine inaugural form of disclosure document ■ Crafted rating presentation and helped secure inaugural GF rating ■ Set priority of orders for retail ■ Prepared post -closing presentation Funded with POBs 85% UAL Funded Ratio Structured payments to achieve near -term savings in first two FYs and no dis-savings relative to existing UAL ■ Prepared 10+ simulation scenarios ■ Led discussions with CalPERS on the City's behalf ■ Optimized UAL base selection ■ Prepared investor roadshow ■ Set priority of orders for retail ■ Led underwriting syndicate vii. Identify three taxable bond issuer references for which the proposed primary Project Manager and the secondary Project Manager have carried out similar responsibilities to those contemplated under this RFP. Include contact information for each. BoWs strength in the municipal market is not only evident in the firm's strong rankings, but also in the strength of our relationships with our issuer clients. Provided below are three references for municipal clients for whom BofA recently senior managed California taxable POB offerings. Raymond Beeman City of Gardena Chief Fiscal Officer (310) 217-9502 rbeeman@cityofgardena.org $101.490 million 2020 Taxable POBs Primary: Jeffrey Bower Secondary: Holly Vocal Talika Johnson F City of Azusa \� Director Admin. Services (626) 812-5202 tjohnson@azusaca.gov $70.000 million 2020 Taxable POBs Primary: Holly Vocal Secondary: Jeffrey Bower Anil Gandhy City of Downey Director of Finance (562) 904-7265 agandhy@downeyca.org $113.585 million 2021 Taxable POBs Primary: Holly Vocal Secondary: Jeffrey Bower viii. A list of the local office's most significant engagements in the last five (5) years, indicating whether they are public or private sector, and including scope of work, date, and name and telephone number of the client contact. Frequent Engagement on Large, High Profile Financings. Over the last five years, BofA has maintained a market leading position in California, especially for California Negotiated Rankings California Average Par Senior Managed transactions sized Transactions Greater Than $500 MM Comparison of Active POB Underwriters greater than $500 Rn(RSE[VRITIE9 ��/ $12,996 $150 $137 $121 million — a threshold we citl 7 $2,888 $100 view as significant in that it differentiates which 1PMorgan 4 $2,501 $50 $27 $27 underwriters are tasked Morgan Stanley 3 $1,473 $_ with the most BofA Ramirez Stifel Raymond Ramirez 2 $1,370 James challenging offerings. As Source: Thomson Reuters. 11112016 to 311012021 Source: Thomson Reuters. 11112016 to 311012021 441 ���� l Page BofA SECURITIES shown in the above graphs, BofA significantly outpaces competitors. Additionally, compared to the other underwriters active in the California POB space, our average senior -managed issue size in California is up to Sx larger than our competitors. We believe our dominant position in this segment of the market is a reflection of our banking staff's ability to flawlessly execute complex transactions and our underwriting desk's ability to achieve market appropriate pricing in all market conditions. Significant Experience Leading Underwriting Syndicates. Given our experience with large transactions, we are a frequent book -running senior manager of underwriting syndicates for large transactions and would be able to help lead and mobilize the City's underwriting team to help ensure efficient execution of the City's transaction. For example, BofA is book -running senior manager on the State of California's $1.9 billion March 2021 General Obligation Bonds which priced this week, and for which we successfully managed an underwriting syndicate of more than 50 co -managers and selling group members. California Senior Managed Financings Greater than $500 Million (Negotiated) 10/29/20 Los Angeles Comm College Dt 04/23/20 Los Angeles USD 04/16/20 California 02/05/20 California State Univ Trustees 09/19/19 Bay Area Toll Authority (BATA) 08/14/19 San Francisco City & Co Airport Comm 03/06/19 California 03/06/19 California 06/05/18 California Municipal Fin Auth 05/23/18 Regents of the Univ of California 05/22/18 Regents of the Univ of California 05/16/18 San Francisco City & Co Airport Comm 03/06/18 California 02/21/18 Los Angeles USD 08/01/17 Bay Area Toll Authority (BATA) 04/26/17 Los Angeles Dept Wtr & Pwr (LADWP) 04/20/17 California 1,793.805 829.000 1,439.115 BofA is a full service underwriter with 586.020 the ability to meet extensive scope of 869.195 work requirements. For each of the 1,040.480 transactions listed to the left, BofA's 500.040 scope of work included a mixture of the 1,791.810 following assignments: 1,181.525 ■ Financing Schedules 736.215 ■ Distribution Lists 945.810 ■ Financial Modeling 758.470 ■ Rating Agency Strategy and 1,968.930 Presentation Development 1,202.445 ■ Investor Roadshows (Physical and 1,402.175 Electronic) 530.270 • International Investor Marketing 648.070 • Domestic Institutional and 11/17/16 Los Angeles Co Metro Trans Auth 522.120 Individual Investor Marketing 08/30/16 California 2,653.000 Digital and Print Bond Offering 05/11/16 Alameda Corridor Transport Auth 591.140 Advertisements 04/28/16 California Statewide CDA (CSCDA) 947.620 04/08/16 California State Univ Trustees 1,133.105 Please note, BofA does not provide client contact information due to privacy concerns. If the City wishes to contact one of these issuers directly, BofA is happy to arrange such outreach accordingly. ix. A statement that the firm is independent of the City and that it is unaware of potential conflicts of interest. To the best of our knowledge at this time, we are not aware of any actual or potential conflicts of interest that could negatively impact the provision of our services as contemplated herein. If selected to be your underwriter, however, in accordance with our MSRB Rule G-17 obligations as an underwriter, we will conduct our MSRB Rule G-17 review and provide you with disclosures at that time. Please see Appendix C for additional disclosures. X. An affirmative statement verifying the firm and all assigned key professional staff are properly licensed to practice in California. To the best of our knowledge and belief, BofA Securities, Inc. and all assigned key professional staff are properly licenses to practice in California. xi. A warrant that the firm maintains a prudent amount of errors and omissions insurance that covers negligent acts and is applicable to the work requested in this RFP. Please reference Appendix D for a Certificate of Liability Insurance which details BofA's Errors and Omissions insurance coverage. xii. An acknowledgement by signature that the signer is authorized to contractually bind the firm. Holly Vocal, Managing Director, is authorized to contractually bind BofA. Please reference Appendix E for an incumbency certificate. 1 Page 5 BofA SECURITIES ���� xiii. Any pending legal actions and litigations against the firm. Legal actions against the firm in the previous five years shall be included. Please reference Appendix C for our response. Describe the firm's and selected personnel's experience within the last thrity-six (36) months regarding the issuance of Pension Obligations Bonds. Please include but not limited to the following items: (i) Name of Municipality or District, (ii) Amount of Debt Issuance, (iii) Par amount of debt issued, (iv) number of underwriters within the engagement - if multiple underwriters, indicate if co or senior. Leadership in Pension Obligation Bonds. BofA is the leading underwriter of POBs nationally based on par amount. Over the last 36 months, BoWs assigned personnel have worked on 9 POBs as senior manager totaling $1.5 billion in par. This includes a $432.1 million POB offering for the City of Riverside, which is the largest California city POB financing over this timeframe. The assigned team also has worked on 5 co - managed engagements totaling over $2.4 billion in par. In the following tables, we detail of our team's senior- and co - managed pension obligation financing experience over the past 36 months. National Senior Managed Pension National POB Rankings RofA SECURITIES -� Barclays Raymond James Stifel Hilltop Source: Thomson Reuters. 3tion Bond Financing $1,581 2 $1,129 3 $1,120 9 $980 9 $593 $113.585 Downey, City of 02/09/21 BofA Securities Jeff/Holly/Jorge/Brad/Geoff/Catherine 147.210 El Cajon, City of 01/13/21 BofA Securities Jeff/Holly/Jorge/Brad/Geoff/Catherine 101.490 Gardena, City of 11/10/20 BofA Securities One Jeff/Holly/Jorge/Brad/Geoff/Catherine 70.075 Azusa, City of 09/17/20 BofA Securities Jeff/Holly/Jorge/Brad/Geoff/Catherine 206.080 Gainesville, City of (FL) 09/11/20 BofA Securities One Jorge/Brad/Catherine 167.155 Fort Lauderdale, City of (FL) 06/25/20 BofA Securities Jorge/Brad/Catherine 432.165 Riverside, City of 06/04/20 BofA Securities One Jeff/Jorge/Brad/Catherine 300.000 Illinois, State of 03/26/19 BofA Securities One Jorge/Brad/Catherine 43.150 Muskegon, Cnty of (MI) 12/11/18 BofA Securities Jorge/Brad/Catherine National Co -Managed Pension Obligation Bond Financ $349.515 Torrance, City of 10/14/20 One Two Jeff/Holly/Jorge/Brad/Geoff/Catherine 174.665 Arlington, City of (TX) 08/27/20 One Seven Jorge/Brad/Catherine 1,065.165 Pennsylvania State University 05/05/20 One Five Jorge/Brad/Catherine 719.995 Riverside, Cnty of 04/22/20 One Three Jeff/Holly/Jorge/Brad/Catherine 131.805 Pasadena, City of 02/05/20 One One Jeff/Holly/Jorge/Brad/Catherine Proposers shall provide a brief summary of their firm's fixed income marketing and distribution capabilities, specifically taxable municipal bonds. Description of firm's corporate bond sales and trading capabilities shall include, but not be limited to the following: (i) number of sales and trading personnel, (ii) league tables/rankings and (iii) personnel assigned to sell taxable municipal bonds. BofA's Distribution Network. Our approach to marketing and selling the City's POBs is to leverage our domestic and global distribution networks, as detailed below, to reach a broad universe of individual retail and institutional investors — both domestically and internationally. NETWORKBofA'S DISTRIBUTION Institutional NationalOrange County 381 institutional sales reps 683 retail offices 77 retail offices(') 7 retail officeS(2) 23 offices nationwide 17,442 retail financial advisors 2,173 retail financial advisors 290 retail financial advisors (1) Source: Bank of America. Global Wealth and Investment Management (GWIM) is the wealth and investment management division of Bank of America Corporation. As of June 30, 2019 GWIM entities had client balances of $2.8 trillion. Client Balances consists of assets under management (AUM) of GWIM entities, client brokerage assets, assets in custody of GWIM entities, loan balances and deposits of GWIM clients held at Bank of America, N.A. and affiliated banks. (2) Includes both Merrill and U.S. Trust Offices. ■ Institutional Platform: Our institutional distribution network consists of 23 institutional sales offices across the nation with 381 sales professionals — including 24 dedicated municipal sales specialists — offering 419 1 Page 6 BofA SECURITIES ���� investment products and services to institutional accounts globally. Our sales desk has also been instrumental to our #1 league table ranking over the last nine consecutive years. ■ Fully Integrated Taxable Distribution: Unlike many firms that abdicate the marketing and pricing of taxable municipal bonds to their high-grade corporate desk, the BofA municipal desk partners with our corporate desk to access a broader investor base and leads the marketing and underwriting itself on behalf of our municipal clients, culminating in seamless integration with traditional taxable buyers. As a leading underwriter of high-grade corporate bonds, syndicated loans and private placements, we are well positioned to market the City's bonds to investors in the corporate/taxable space. ■ Power of Global Connections: Finally, BofA is one of a select few of truly global firms. With operations in each of the major metropolises around the globe, our underwriting desk is fully equipped to tap into the insights offered from our foreign sales and trading desks should international buyers become interested in the City's sale. The potential large size of the City's offering makes it a candidate for marketing to international investors. Unlike some competitors, BofA has the ability to receive orders directly off its municipal underwriting desk from foreign investors. Further, BofA's global footprint ensures that we have pre-existing relationships with law firms in foreign jurisdictions that can quickly approve of the various international "blue sky" disclosures required for the City to pursue an international marketing campaign. ■ Retail Platform: BofA has one of the industry's largest and most extensive retail distribution networks, comprised of 683 domestic branch offices supported by 17,442 retail financial advisors. With over 7 million individual investors and nearly $3 trillion in retail assets under management, municipal securities represent the #2 product sold by BofA to retail investors. Through our vast distribution network and taxable underwriting experience, BofA has delivered substantial orders on POB financings. For example, BofA garnered orders from 76 unique investors on the City of Riverside's $432 million POBs, including orders from municipalities, insurance companies, bond funds, money managers, and individual retail. Key Investor Targets. In marketing the City's proposed bonds, BofA would canvas a broad universe of investors with particular focus on the following: ■ International Investors: BofA is seeing increasing international interest in taxable municipal financings. The City's offering may be attractive to international investors given the large issue size and strong ratings. ■ Municipalities: We would target municipalities who will be active mostly in the first five years of the curve. Depending on market conditions, BofA may recommend that priority be given to municipalities. ■ Life, Property and Casualty Insurers: These investors can purchase sizable amounts and typically prefer long- dated structures. They will be key targets for the proposed sale and likely would participate through the final maturity of the City's POBs. ■ Top Holders of 'AA' Rated POBs: Top holders of other highly rated taxable California POBs nationally would be an additional target for the City's sale. Notably, top holders of California taxable 'AA' rated POBs who do not hold any of the City's general fund obligations include BlackRock, Wellington, Goldman Sachs, 40186 Advisors and Hartford among others. ■ Existing and Top LRB/COP Holders: Targeting existing holders of the City's outstanding bonds will build the base of an order book, as these investors already are knowledgeable of the credit and may look to substantiate their holdings. We also would target top California taxable LRB/COP holders who are familiar with California general fund credits. Institutional Marketing Plan. Given the taxable nature and large par amount of the City's proposed financing, we expect institutional investors to build a strong base of investor demand for the City's bonds. Below are strategies we would employ to market to institutional accounts: ® International Disclosure: To expand the investor base, the City's POS may include an "international wrapper". International language in the POS would allow the City to distribute bonds internationally at minimal cost. Ignite Early Conversations with EMMA Notice: We recommend that the City post a "Notice of Potential Bond Sale" on EMMA once a plan of finance has been ironed out. At that point, our underwriters can direct key investor targets we have identified, to the public EMMA notice and facilitate preliminary conversations. 1Wiil_19 1 Page 7 BofA SECURITIES ���� Internet Roadshow: Given the size of the offering, we recommend the use of a slides -only online investor i, presentation to provide an overview of the City's credit and the POBs. Internal Sales Call: Our banking team will orchestrate a call internally with our sales team prior to pricing to address details of the transaction, as well as highlight key credit metrics relevant to the City's general fund and the nature of the POBs. One -On -One Investor Calls: Finally, we have seen increased interest from investors for one-on-one calls with issuers relating to sensitive credit types, such as POBs. BofA's credit strategies team, in connection with BofA's sales team, could help assist in arranging these calls, as investors express interest. Retail Marketing Plan. To maximize local retail participation within the City, Orange County and the State, we would employ the following strategies: Establish Local Retail Priority: We could provide first priority for orders placed during the order period to be filled for: 1 City of Orange and potentially Orange Count residents as well as Money Managers identified �— () Y g p Y g Y Y g (� by zip codes), (2) California Retail, and (3) National Retail investors. Dedicated California Retail Liaison: Grace Gaoaen, our lead California -based retail marketing specialist, will oversee our in -State and local retail marketing to ensure we solicit individual retail orders from our Merrill and Bank of America Private Bank retail financial advisors in advance of the bond sale. Print and Electronic Advertisements: To drive further attention to the City's website or landing page, the City could also place print and/or electronic advertisements in local publications. Proposed6. Structuring Ideas and Marketing Plan for Provide a brief summary of your specific structuring ideas including the assumptions of which Ca1PERS UAL bases to fund the maximize savings based on the two scenarios described above. Describe how Proposer would lead the transaction as a senior manager. Specifically, provide your strategies and approaches to help ensure the transaction is executed efficiently. Proposed Work Approach. BofA is fully committed to designing a plan of finance as well as a credit and marketing approach that meets the City's goals. As the City's senior manager, BofA will work with the City and its municipal advisor during next phases of the City's financing process (per the City's February 2nd presentation), as detailed below, to help ensure that the transaction is executed efficiently. 0 Prepare various bond structuring options (e.g. unfunded actuarial liability ("UAL") funding level, selection of amortization bases, payment structure and term) and sensitivity analysis based on various reinvestment scenarios utilizing BofA's proprietary modeling and optimization capabilities 0 Develop a finance plan that directly addresses the City's objectives and can be tailored further based on City staff and Council feedback, sensitivity analyses and market conditions 0 Ongoing participation in financing team and City Council calls/meetings; help address City Council questions 4evelop a Specific Plan and Implementation 0 Comprehensive review of bond and disclosure documentation 0 Ongoing market and financing updates 0 Prepare rating agency materials/presentations and rating negotiations with direct involvement of BofA's in-house rating/credit specialists 0 Implement a marketing plan that leverages our extensive investor relationships with taxable bonds and experience with POBs to reach a broad investor audience 0 Manage underwriting syndicate, solicitation of price views and development of consensus scales 0 Leverage our large capital position and capabilities as the #1-ranked senior managing municipal underwriter nationally with the objective to price the City's bonds at the most competitive pricing levels available in the market 0 Underwrite bonds to support the City's pricing at market levels Structuring Approach. The City and its municipal advisor have spent an extensive amount of time analyzing the City's pension liability and evaluating potential funding strategies. As the City works toward refining its analysis and educating stakeholders, BofA can be instrumental in working with the City and its municipal advisor to evaluate potential financing options (e.g. UAL amortization base selections, UAL funding levels and payment 1Wiil_19 1 Page 8 BofA SECURITIES ���� structures) and analyze risks through our in-depth analytical and modeling capabilities. We would help the City tailor the POB financing plan to best achieve each of the City's financial objectives and policy goals. Towards that end, we offer the following structuring considerations: • Selection of UAL Amortization Bases — "Safety First" — As the City considers the optimal selection of UAL amortization bases, we recommend prioritizing prepayment of the Safety Plan UAL. Based on our POB experience, the City may gain greater General Fund benefit from prepaying the Safety Plan's UAL amortization bases than from the Miscellaneous Plan's UAL amortization bases (where some of the responsibility may reside outside the General Fund). As such, we have prioritized prepayment of the Safety Plan UAL bases to maximize the benefit to the City's general fund in our sample UAL funding scenarios. We discuss further below our approach to optimally selecting amortization bases. • Structuring Payments to Meet Savings Priorities — We would tailor the debt payment structure of the POBs to meet the City's savings objectives, particularly in light of its 10-year General Fund Outlook and existing UAL payment schedule. Accordingly, in our sample scenarios our priorities included: (1) at least a minimum level of annual savings in each of the next 5 years to reduce the projected gap between revenues and expenditures (as presented in the most recent budget's 10-year General Fund Outlook), (2) long-term budgetary savings relative to FY22 scheduled payments, and (3) no obligation increases in any future year relative to the current annual UAL payment schedule as well as no extension of final maturity. • Optimal Funding Level — The City presented two potential book -end UAL funding scenarios to City Council at its February 2nd meeting. We believe that the 50% UAL funding level will help the City mitigate risks associated with CalPERS investment returns and potential over -funding, while the larger funding scenario at 90% potentially would provide greater savings. We will help the City explore alternative funding percentages and payment structures to find the optimal funding level based on the City's desire for savings, its risk appetite and market conditions at the time of sale. • Taking Advantage of FY22 UAL Prepayment Option / Potential Short -Term Notes - The RFP states that the City expects to price its POBs by the end of the current fiscal year. Based on the documents provided, the City may be in a position to close prior to August 15t, and therefore take advantage of the annual UAL prepayment discount provided by CalPERS. This prepayment option would apply to the FY22 UAL payment. The rest of the UAL balance can be partially refunded by selecting amortization bases that yield the desired results and having those prepayments apply to payments beginning in FY23. If the transaction is not able to close by August 15`, BofA would be pleased to work with the City and its municipal advisor to explore structuring a short-term direct purchase note with a bank. Bank of America, N.A. ("BANA") has previously worked with the cities of Los Angeles, Oakland and San Jose to directly purchase similar notes, allowing those cities to take advantage of the annual prepayment discount. While this approach would be subject to credit/risk approval by BANA, and if approved would facilitate additional savings related to the FY22 UAL payment and provide flexibility for the City to price the long-term financing at a later date. Direct purchase notes can generally be executed relatively quickly, as BANA would not require a disclosure document nor direct ratings to close a short-term note. Other Bond Structuring Features. • Index Eligibility— Maturities issued with a par amount of $300 million or more qualify to become components of bond indices. These indices are important performance benchmarks for institutional investors, who seek to maintain investment returns in -line (or above) such benchmarks — helping to create a unique pocket of demand. We estimate an index -eligible maturity will reduce funding costs by approximately 0.10% if subject to a 10-year par call and 0.20-0.25% if subject to a make -whole call. • Dual Call Optionality— BofA recommends that the City utilize a "dual -call" structure with the bonds subject to a make -whole call prior to 10 years and a par call thereafter. While there is a strong preference in the taxable market for non -callable structures (or make -whole call), we see tremendous value in the City retaining call and restructuring flexibility. • Bond Insurance — S&P's latest review of the City's credit in June 2020 assigned an Issuer Credit Rating of "AA" to the City, which is equal to the ratings of Build America Mutual and Assured Guaranty — the leading bond �iins■uree�r1s in the municipal market. While, we do not see value in bond insurance at this time, we would reach 1Wiil_19 1 Page 9 BofA SECURITIES ���� out to the insurers to solicit credit approvals and insurance bids. The decision to use bond insurance will be made closer to the time of pricing and be subject to investor demand. Sample Scenarios. For illustrative purposes we ran two scenarios: (1) 50% UAL funding, and (2) 90% UAL funding — both assuming market yields as of March 9, 2021. Appendix F includes our comprehensive model outputs for each scenario, but we want to highlight that Scenario 2 (90% UAL Payment) produces a lower TIC than Scenario 1 (50% UAL Payment) due to the inclusion of an index eligible term bond and slightly lower average life. Further, BofA does not see a material difference in "probability of success" metrics (discussed below) between either scenario. Miscellaneous UAL Funded • No Prepayment Safety UAL Funded • Full Prepayment of FY22 UAL by 8/1/21 • Prepayment of Selected Bases on Closing Date to reduce amortization payments beginning FY23 Bond Structure • Taxable Callable Fixed Rate Bonds • Principal due 6/1; Interest due 6/1 and 12/1 • Par Call Date: 6/1/2031 • Serials 2022-2036 • Term Bond 2037-2044 • FY22-26 annual savings target of $10 million Par Amount $359,405,000 Full Prepayment of FY22 UAL by 8/1/21 Prepayment of Selected Bases on Closing Date to reduce amortization payments beginning FY23 • Full Prepayment of FY22 UAL by 8/1/21 • Full Prepayment on Closing Date of UAL balance as of 6/30/2022 for current amortization bases • Taxable Callable Fixed Rate Bonds • Principal due 6/1; Interest due 6/1 and 12/1 • Par Call Date: 6/1/2031 • Serials 2022-2035 Index Eligible Term Bond 2036-2044 • FY22-26 annual savings target of $20 million $649,230,000 All -in TIC 3.028% 2.883% Average Life 14.8 years 13.2 years Cumulative Savings $184,523,000 $316,816,000 Financing PV Savings (% of Par) $152,826,000 (42.5% of Par Amount) $264,693,000 (40.8% of Par Amount) Actuarial PV Savings (% of Par) $122,178,000 (34.0% of Par Amount) $210,434,000 (32.4% of Par Amount) Scenario 1(50% UAL Payment) Sources & Uses ($000s) Miscellaneous Safety Total Sources: 80,000 ParAmount - 359,405.000 359,405.000 70,000 Premium/(Discount) - - - Other Sources 60,000 Total Sources 359,405.000 359,405.000 50,000 Uses: 40,000 FY22 Prepayment - 29,101.640 29,101.640 POB Deposit - 328,682.392 328,682.392 30,000 Underwriter's Discount - 808.661 808.661 20,000 Costs of Issuance - 808.661 808.661 Additional Proceeds 3.646 3.646 10,000 Total Uses 359,405.000 359,405.000 Average life 14.8years 14.8 years TIC 3.009% 3.009% All -in TIC 3.028% 3.028% Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2006 (1,483.984) - (1,483.984) Benefit Change 2007 25,025.094 - 25,025.094 Benefit Change 2007 119.441 - 119.441 Assumption Change 2009 27,257.475 - 27,257.475 Special (Gain)/Loss 2009 29,176.611 - 29,176.611 Special (Gain)/Loss 2010 10,760.315 - 10,760.315 Assumption Change 2011 12,363.217 - 12,363.217 Special(Gain)/Loss 2011 (7,365.492) - (7,365.492) Payment(Gain)/Loss 2012 5,629.243 - 5,629.243 (Gain)/Loss 2012 (264.240) - (264.240) (Gain)/Loss 2013 100,132.646 - 100,132.646 Assumption Change 2014 43,507.182 - 43,507.182 (Gain)/Loss 2014 (63,657.365) - (63,657.365) (Gain)/Loss 2015 32,663.590 - 32,663.590 Assumption Change 2016 16,169.642 - 16,168.642 (Gain)/Loss 2016 38,544.420 - 38,544.420 Assumption Change 2017 13,911.421 - 13,911.421 (Gain)/Loss 2017 (21,744.346) - (21,744.346) Method Change 2018 6,562.427 - 6,562.427 Assumption Change 2018 31,746.753 - 31,746.753 (Gain)/Loss 2018 (13,468.613) - (13,468.613) Al Significant Increase* 2019 141.851 - 141.851 Non-investment(Gain)/Loss 2019 2,974.088 - 2,974.088 Investment(Gain)/Loss 2019 4,001293 - 4,003.293 Total 292,703.672 - 292,703.672 1 SANTA ANA g o e e a a a o Debt Service a Unrefunded UAL Current UAL FY22 UAL Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2005 (2,800.549) - (2,800.549) Benefit Change 2006 1,500.690 - 1,500.690 Assumption Change 2009 14,083.767 - 14,083.767 Special (Gain)/Loss 2009 31,769.094 (31,769.094) - Special(Gain)/Loss 2010 (11,745.462) - (11,745.462) Assumption Change 2011 15,355.805 - 15,355.805 Special(Gain)/Loss 2011 (4,365A42) - (4,365.942) Payment(Gain)/Loss 2012 8,239.758 (8,239.758) - (Gain)/Loss 2012 74,443.250 (74,443.250) - (Gain)/Loss 2013 140,365.987 (140,365.987) - Assumption Change 2014 52,003.240 - 52,003.240 (Gain)/Loss 2014 (84,279.949) - (84,279.949) (Gain)/Loss 2015 59,805.689 (28,078.909) 31,726.780 Assumption Change 2016 19,756.175 - 19,756.175 (Gain)/Loss 2016 51,205.324 (12,516.578) 38,688.746 Assumption Change 2017 23,218.574 - 23,218.574 (Gain)/Loss 2017 (33,611.702) - (33,611.702) Method Change 2018 5,497.157 (5,497.157) Assumption Change 2018 40,053.249 (40,053.249) - (Gain)/Loss 2018 (1,536.868) - (1,536.868) Non-investment(Gain)/Loss 2019 5,058.705 (5,058.705) - Investment(Gain)/Loss 2019 4,675.386 (4,675.386) - Total 408,691.378 (350,698.072) Page 10 BofA SECURITIES Scenario 2 (90% UAL Payment) Miscellaneous Safety Total Sources, 80,000 ParAmount 234,905.000 414,000.000 648,905.000 70,000 Premium/(Discount) - - - Other Sources 60,000 Total Sources 234,905.000 414,000.000 648,905.000 50,000 Uses, 40,000 FY22 Prepayment 25,244.430 29,101.640 54,346.070 POB Deposit 208,599,536 383,035,067 591,634.604 30,000 Underwriter's Discount 528.536 931.500 1,460,036 20,000 Costs of Issuance 528.536 931.500 1,460.036 Additional Proceeds 3.961 0.293 4.253 10,000 Total Uses 234,905.000 414,000.000 648,905.000 - Average Life 12.7 years 13.5 years 13.2 years TIC 2.843% 2.872% 2.862% All -in TIC 2.864% 2.893% 2.883% UALSelection Amortization Base Miscellaneous Year Balances — 6/30/22 Balances UAL Refunded UALRemaining Fresh Start 2006 (1,483.984) - (1,483.984) Benefit Change 2007 25,025.094 - 25,025.094 Benefit Change 2007 119.441 - 119.441 Assumption Change 2009 27,257.475 - 27,257.475 Special (Gain)/Loss 2009 29,176.611 (29,176.611) - Special (Gain)/Loss 2010 10,760.315 (10,760.315) - Assumption Change 2011 12,363.217 - 12,363.217 Special (Gain)/Loss 2011 (7,365.492) - (7,365.492) Payment (Gain)/Loss 2012 5,629.243 (5,629.243) - (Gain)/Loss 2012 (264.2401 - (264.240) (Gain)/Loss 2013 100,132.646 (100,132.646) - Assumption Change 2014 43,507.182 - 43,507.182 (Gain)/Loss 2014 (63,657.365) - (63,657.365) (Gain)/Loss 2015 32,663.590 (32,663.590) - Assumption Change 2016 16,168.642 - 16,168.642 (Gain)/Loss 2016 38,544.420 - 38,544.420 Assumption Change 2017 13,911.421 - 13,911.421 (Gain)/Loss 2017 (21,744.346) - (21,744.346) Method Change 2018 6,562.427 (6,562.427) - Assumption Change 2018 31,746.753 (31,746.753) - (Gain)/Loss 2018 (13,468.613) - (13,468.6131 Al Significant Increase* 2019 141.851 (141.851) - Non-Investment(Gain)/Loss 2019 2,974.088 (1,755.142) 1,218.946 Investment(Gain)/Loss 2019 4,003.293 (4,003.293) - Total 292,703.672 (222,571.872) 70,131.800 amp N N N ON N ... on M noroneo-0 VVa aVCOroyymOON O ON OONNOONO O ON o Debt Service Unrefunded UAL —Current UAL —FY22 UAL Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2005 (2,800.549) - (2,800.549) Benefit Change 2006 1,500,690 (1,500.690) Assumption Change 2009 14,083.767 (14,083.767) - Special (Gain)/Loss 2009 31,769.094 (31,769.094) - Special(Gain)/Loss 2010 (11,745.462) - (11,745.462) Assumption Change 2011 15,355.805 (15,355,805) - Special(Gain)/Loss 2011 (4,365.942) - (4,365.942) Payment(Gain)/Loss 2012 8,239.758 (8,239.758) - (Gain)/Loss 2012 74,443.250 (74,443.250) - (Gain)/Loss 2013 140,365.987 (2,025.514) 138,340.472 Assumption Change 2014 52,003.240 (52,003,240) - (Gain)/Loss 2014 (84,279.949) - (84,279.949) (Gain)/Loss 2015 59,805.689 (59,805.689) - Assumption Change 2016 19,756.175 (19,756.175) - (Gain)/Loss 2016 51,205.324 (51,205.324) - Assumption Change 2017 23,218,574 (23,218,574) - (Gain)/Loss 2017 (33,611.702) - (33,611.702) Method Change 2018 5,497.157 (5,497.157) - Assumption Change 2018 40,053.249 (40,053.249) - (Gain)/Loss 2018 (1,536.868) - (1,536.868) Non -Investment (Gain)/Loss 2019 5,058,705 (5,058.705) - Investment(Gain)/Loss 2019 4,675,386 (4,675.386) - Total 408,691.378 (408,691.378) 0.000 For every scenario generated by our propriety POB model, BofA also applies stochastic simulations to gain a deeper understanding of the potential performance of a structure, while also incorporating the impact of investment return volatility. The probability of success for the two financing scenarios above are presented in the table below — importantly, this model is able to help the City assess how changes in the CalPERS discount rate would impact the performance metrics of a POB (e.g., the City could test an "expected annual return" of 6.0% versus 7.0%). In an additional step to help our POB clients understand the risks/potential benefits associated with POBs, our model stress tests the POB structure given various investment returns following issuance. The table below shows the expected PV savings under four sample investment return assumptions — one of which is a negative 20% investment return "shock" in the first year following the POB issuance. As summarized below, each of Scenario 1 (50%) and Scenario 2 (90%) still would provide a PV benefit if in the event of that first year loss if there were 7% returns in subsequent years. To the extent the City would like to stress test or change investment return parameters, BofA would be able to quickly incorporate such feedback and generate tangible insights as we have done for the cities of Riverside, El Cajon, Gardena and Downey. BofA Stochastic Simulation Analysis and Stress Testing Expected Annual Return 7.0% 7.0% Annual Volatility 12.0% 12.0% Probability of Success (Simulation) 85.80% 86.10% Stress Tests PV Benefit % of Par PV Benefit % of Par Base: 7%Annual Returns $122,178,000 34.0% $210,434,000 32.4% Test 1: -20%Year 1, 7%Annual Returns $33,614,000 9.4% $50,403,000 7.8% Test 2: 6%Annual Returns $78,680,000 21.9% $136,635,000 21.1% Test3: 5%Annual Returns $44,866,000 12.5% $79,500,000 12.3% Page 11 BofA SECURITIES Additional Considerations. ■ Fiscal Year 2020 UAL Amortization Bases - In July 2020, CalPERS reported an investment return of 4.7%. This actuarial investment loss will be reflected as an additional UAL amortization base in the upcoming actuarial report. If the POB is issued after the release of the report, the City of Santa Ana may consider whether this base serves as one of the repayment bases for its financing plan. ■ Future Reduction in Actuarial Discount Rate — CalPERS Funding Risk Mitigation Policy allows for reductions in discount rates any year the actual investment return exceeds the discount rate by at least 2%. Should the current investment performance for fiscal year 2021 continue, it is possible we will see CalPERS activate the discount rate reduction which will increase the plans' UAL. • "Fresh Start" Option on Unrefunded UAL —The City may want to consider exploring the option of discussing with CalPERS a potential Fresh Start reamortization on the combined balance of the unrefunded UALs. This could be useful in sculpting debt service and savings objectives in the short-term for the 90% UAL prepayment scenario. To illustrate the potential benefits and considerations of this option, we provide an alternate 90% UAL funding scenario (Scenario 2 — Fresh Start) which provides an optimized structure under our assumptions and embeds a Fresh Start for the unrefunded Miscellaneous Plan UAL bases. Preliminary Credit Assessment. We suggest that the City obtain two credit ratings for a transaction larger than $350 million. There are several merits in pursuing two ratings, including: ■ Given the potentially large size of the financing (up to $600+ million depending on portion of UAL refinanced), two ratings will help broaden the City's investor base and attract certain investors that prefer (or are required by their bylaws) to purchase bonds with at least two ratings; ■ Our desk estimates that the current pricing advantage of having a pair of 'AA' category ratings as opposed to a sole 'AA' rating is approximately 10 basis points; and ■ Having two rating agency opinions will help investors validate the strong credit quality of the bonds, which may be particularly important in an uncertain market environment. Of the three rating agencies, we recommend that the City pursue ratings from S&P and Fitch. We do note that this could result in "split" ratings, as S&P consistently has rated California pension obligations at the same level as that issuer's GO or issuer credit rating ("ICR"), whereas Moody's and Fitch apply a notching differential between GO and POB ratings. Based on consultation with our underwriting desk, we believe that the City's bonds will be priced more favorably with two ratings, even if they are split, than with a single, higher rating, given the expected larger size of the proposed POBs. ■ S&P: S&P's rating is most widely used among California POB issuers and is well -received by market participants. The City's ICR of 'AA' was recently affirmed in June 2020. We would expect S&P to affirm that rating once again in connection with this transaction. The rating discussion likely will center on (1) how the City has adapted to the budget impacts of the pandemic, with a focus on fund balances and reserves projected for fiscal year-end 2021, and (2) how POBs serve the City's strategy for managing its pension liabilities. We estimate a POB rating of 'AA' from S&P as this would reflect no notching differential from the 'AA' ICR rating. We note that the City was in a strong financial position at the outset of the pandemic, and despite the budgeted use of reserves during fiscal 2021, expected to retain a healthy available Doperating fund balance at the close of the fiscal year. ■ Fitch: Although there is not an internal scorecard tool for Fitch, they traditionally evaluate GO credits in -line with S&P. However, we expect a one notch rating differential between their GO rating and POB rating. As such, we expect a Fitch issuer default rating ("IDR") of 'AA', which would translate to a POB rating of 'AA-'. Although the rating agencies have adopted a generally neutral view of funding pensions with bond proceeds, we believe that a well -structured financing can be credit -positive, helping the City to moderate the impact of pension contributions on its budget without creating or exacerbating out -year financial challenges. Rating agencies have come to view debt and pensions (especially for CaIPERS participants) as near -equivalent liabilities and as non -discretionary, fixed -cost payments. In fact, although bonded debt ratios will increase through the issuance of POBs, these will be offset by reductions in both overall fixed costs and CalPERS pension liabilities. 4)tPage 12 BofA SECURITIES � Recent California POB ratings support the view that a restructuring would not trigger adverse rating agency reactions. S&P has rated nearly all of the POBs issued by California municipalities over the past two years. Of the more than 25 POBs rated by S&P from the start none of the municipalities incurred a rating downgrade in conjunction with their POB issuance. We also would observe that moderating the near -to -mid-term total UAL -associated payments (including POB debt service) is prudent, given CalPERS' transition to a more front -loaded, level -dollar amortization of the incremental UAL that may arise over time. A payment curve restructured with POBs provides more headroom to accommodate potential contribution increases, while mitigating budget stress that would have occurred under the original payment schedule. As previously discussed, the BofA team has extensive experience modeling pension risk and is fully prepared to assist the City as it navigates this process. Preliminary Interest Rate Scale. The following table includes the requested interest rate scale assuming market conditions as of March 9, 2021 and two ratings in the 'AA' category. We present spreads to Treasuries assuming a 10-year optional par call and a make whole call. As previously mentioned, we expect index eligibility to be worth up to an additional 10 basis points for a 2044 term bond sized to at least $300 million. To help support our preliminary spreads, we include the pricing results for the City of Orange's POBs that sold on March 3, 2021. ORANGECITY OF SANTA ANA PRELIMINARY SCALE CITY OF - Assumed Underlying Ratings: - .. ..Ratings:.. in-vo.,, r..0 MnLn_iAn i- r-ii in- ve.,, r..0 Maturity 2022 Ref. UST 2Y UST (3/9/2021) 0.170% Coupon/ ^ Yield 0.42% Spread (bp) 25 Coupon/ Yield 0.42% Spread (bp) 25 2023 3Y 0.350% 0.65% 30 0.65% 30 2024 5Y 0.830% 1.18% 35 1.18% 35 2025 5Y 0.830% 1.13% 30 1.13% 30 2026 7Y 1.230% 1.73% 50 1.73% 50 2027 7Y 1.230% 1.68% 45 1.68% 45 2028 10Y 1.550% 2.20% 65 2.20% 65 2029 10Y 1.550% 2.15% 60 2.15% 60 2030 l0Y 1.550% 2.25% 70 2.25% 70 2031 10Y 1.550% 2.35% 80 2.35% 80 2032 10Y 1.550% 2.45% 90 2.45% 90 2033 10Y 1.550% 2.55% 100 2.50% 95 2034 l0Y 1.550% 2.65% 110 2.55% 100 2035 10Y 1.550% 2.75% 120 2.65% 110 2036 10Y 1.550% 2.85% 130 2.70% 115 2044T 30Y r Represents term bond 2.260% 3.16% 90 3.06% 80 Maturity Ref. UST (6/1) UST (3/3/2021) Coupon/ Spread Yield (bp) 2022 2Y 0.130% 0.291% 16 2023 2Y 0.130% 0.391% 26 2024 3Y 0.260% 0.587% 33 2025 5Y 0.670% 0.974% 30 2026 5Y 0.670% 1.224% 55 2027 7Y 1.080% 1.587% 51 2028 7Y 1.080% 1.787% 71 2029 10Y 1.420% 2.070% 65 2030 10Y 1.420% 2.220% 80 2031 10Y 1.420% 2.270% 85 2032 10Y 1.420% 2.450% 103 2033 10Y 1.420% 2.550% 113 2034 10Y 1.420% 2.650% 123 2035 10Y 1.420% 2.750% 133 2036 10Y 1.420% 2.820% 140 2040 T 30Y 2.210% 3.015% 80 2044T 30Y 2.210% 3.115% 90 r Represents term bond Private Placement Option. As discussed above, depending upon how quickly the City can come to market, we believe a short-term note through a bank direct purchase to pre -pay the City's FY 2022 UAL may be appropriate and help increase savings for the City. BANA has purchased short-term notes to prepay UALs for the City of San Jose, Oakland and Los Angeles. With respect to long-term financings, banks typically prefer transactions that have shorter tenors (less than 15 years) and are moderately sized. Multiple Underwriter Engagement. Pleaser reference our responses under Section 3. Question viii and Section 4. Pension Obligation Bond Experience which details our experience serving as book -running senior manager on large, high profile transactions with numerous syndicate members. Provide an estimate of your total, not to exceed, underwriting costs associated with serving as senior manager to the City on a not -to -exceed approximately $671 million issue of fixed rate POBs. Proposed Gross Spread. Serving as senior managing underwriter is a high priority for BofA. Our proposed fees and expenses are detailed in the following table based on an estimated $671 million financing. We propose an average takedown of $1.75 per bond across all maturities and estimate the all -in gross spread, including expenses, to be approximately $1.89 per bond. We are not proposing any management fee for our services. �9' , Page 13 BofA SECURITIES ���� Component $/Bond $ Amount Component $/Bond $ Amount Average Takedown $1.750 $1,174,250.00 Underwriter's Counsel $0.037 $25,000.00 Management Fee - - i-Deal Expenses Z 0.100 67,178.92 Expenses 0.141 94,578.92 Out of Pocket s 0.001 500.00 Total Gross Spread $1.891 $1,268,828.92 DTC Service Fees 0.001 800.00 (1) Assumes paramount of $671 million. C U S I P Charge 0.002 1,100.00 (2) Assumes 2 syndicate members; includes use of i-Deal Gameday order monitor. Total Expenses $0.141 $94,578.92 (3) We would request expense reimbursement for rating agency presentation, investor meetings and/or pricing at locations other than in the City. Underwriters' Counsel. BofA Kevin Hale Craig Scully Arto Becker would recommend the Orrick Herrington & Sutcliffe Katten Muchin Rosenman Hawkins Delafield & Wood individuals listed to the (213) 612-2356 (212) 940-8557 (213) 236-9070 right. Each carries decades' khale@orrick.com craig.scully@katten.com abecker@hawkins.com worth of public finance experience and has a strong working relationship with our proposed banking team having served as underwriters' counsel on previous taxable POB sales that we have senior managed. Please reference Appendix G for executed copies of the requested certificates. Contractor shall provide three (3) references from public agency customers for which actuarial work similar to services specified in this RFP have been performed, including contact names and telephone numbers, and types of services your firm has provided. Use Attachment A — References. Below are three additional references for which our team has senior managed taxable California financings. S.ANJOSF Nikolai Sklaroff SAID Lakshmi Kommi Clay Schoen Deputy Debt Director DIEGO Debt Director Director of Finance (408) 535-7832 (619) 236-6928 (619) 441-1668 nikolai.sklaroff@sanjoseca.gov Ikommi@sandiego.gov cschoen@cityofelcajon.us $355.620 million $60.745 million $147.210 million Lease Revenue Bonds, Lease Revenue Bonds, Pension Obligation Bonds, Series 2020A (Taxable) Series 2020A (Taxable) Series 2021A (Taxable) Primary: Holly Vocal Primary: Jeffrey Bower Primary: Jeffrey Bower Secondary: Jeffrey Bower Secondary: Holly Vocal Secondary: Geoffrey Sauers Capacity10. Financial Proposer may be requested to submit its most recent audited financial statement, evidencing Proposer's financial capacity to fully perform the required services, including provision of equipment and personnel expenses over a ninety (90) day period. Bank of America's audited financial statements may be found at:.http://investor.bankofamerica.com/ 11. Insurance The selected Proposer shall provide the required evidence of insurance coverage as set forth in the standard agreement within ten (10) business days after receipt of Notice of Intent to Award. Contractor must maintain, for the duration of its contract, insurance coverages as required by the City. We have provided evidence of sufficient insurance coverage under Appendix D. ProposerQuestionnaire Within the past 36 months, has your firm and/or any of its principals been the subject of any investigation relating to the municipal securities industry by the SEC, FINRA, NYSE, or any other State or Federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry? Please reference our response to Question 3 xiii above. Within the past 36 months, has your firm and/or any of its principals been involved in any litigation, arbitration, disciplinary or other actions arising from the firm's underwriting, management or handling of municipal securities? Please reference our response to Question 3 xiii above. Does there exist any relationship between your firm and any other non-affiliated firm(s) or individuals involving any compensation arrangement that may be associated with your possible engagement to assist with the City's proposed debt issue? Please reference our response to Question 3 ix above. 1 Page 14 BofA SECURITIES ���� BofA Senior and Co -Managed California POB Experience BofA SECURITIES ���� BoWs Senior Managed POB Financing Experience (2010 — Present) 3die Fdr AM&IFIL Issuer Issue Description Series Team Members D. 08/24/2010 $289.3 Sonoma Co -California Pension Obligation Bonds Series 2010 A Jeff/Brad 07/09/2013 61.9 Milwaukee City -Wisconsin GO Promissory Notes Series 2013 T6 Brad/Jorge/Catherine 10/18/2013 400.0 Dallas Police & Fire Pension Sys General Obligation Bonds Series 2013 Brad/Jorge/Catherine 07/01/2014 100.0 San Jose Citv-California TRANs Series 2014 Brad/Jorge/Catherine 12/04/2014 165.0 Long Island Power Authority Electric System General Rev Bonds Series 2014 B Brad/Jorge/Catherine 01/08/2015 91.0 Kalamazoo City -Michigan Limited Tax GO Bonds Series 2015 Brad/Jorge/Catherine 04/23/2015 119.5 Pasadena City Pension Obligation Ref Bonds Series 2015 A & B Catherine/Brendan 08/12/2015 1,005.2 Kansas Development Fin Auth Revenue Bonds Series 2015 H Brad/Jorge/Catherine 11/30/2017 67.4 Jackson Co -Michigan GO Ltd Tax Pension Oblig Bonds Series 2017 Brad/Jorge/Catherine 12/11/2018 43.2 Muskegon Co -Michigan Limited Tax GO Pension Oblig Bond Series 2018 Brad/Jorge/Catherine 03/26/2019 300.0 Illinois General Obligation Bonds Ser of April 2019A Brad/Jorge/Catherine 06/04/2020 432.2 Riverside City -California Pension Obligation Bonds 2020 Series A Jeff/Jorge/Brad/Catherine 06/25/2020 167.2 Fort Lauderdale City -Florida Special Obligation Ref Bonds Series 2020 Brad/Jorge/Catherine 09/11/2020 206.1 Gainesville City -Florida Special Obligation Revenue Bonds Series 2020 Brad/Jorge/Catherine 09/17/2020 70.1 Azusa City -California Pension Obligation Bonds Series 2020 Jeff/Holly/Jorge/Brad/Geoff/Catherine 11/10/2020 101.5 Gardena City -California Pension Obligation Bonds Series 2020 Jeff/Holly/Jorge/Brad/Geoff/Catherine 01/13/2021 147.2 El Cajon City -California Pension Obligation Bonds Series 2021 Jeff/Holly/Jorge/Brad/Geoff/Catherine 02/10/2021 113.6 Downey City -California Pension Obligation Bonds Series 2021 Jeff/Holly/Jorge/Brad/Geoff/Catherine 05/19/2021 100.0 Manhattan Beach -California * Pension Obligation Bonds Series 2021 Jeff/Jorge/Brad/Geoff/Catherine Total Par $3,980.4 BoWs Co -Managed POB Financing Experience (2010 — Present) 09/20/2012 337.8 Fort Lauderdale City -Florida Special Obligation Bonds Series 2012 Brad/Jorge/Catherine 12/12/2012 299.8 Philadelphia Auth for Indus Dev City Agreement Rev Bonds Series 2012 Brad/Jorge/Catherine 06/05/2013 209.5 Portsmouth City -Virginia GO & Refunding Bonds Series 2013 B Brad/Jorge/Catherine 11/20/2015 25.0 Hialeah City -Florida Special Obligation Revenue Bonds Series 2015 A Brad/Jorge/Catherine 12/20/2017 1,005.1 Houston City -Texas Pension Obligation Bonds Series 2017 Brad/Jorge/Catherine 02/05/2020 131.8 Pasadena City -California Pension Obligation Ref Bonds Series 2020 A & B Doug/Catherine/Brendan 04/22/2020 720.0 Riverside Co -California Pension Obligation Bonds Series 2020 Jeff/Holly/Doug/Catherine 05/05/2020 1,065.2 Pennsylvania State University Revenue Bonds Series D of 2020 Brad/Jorge/Catherine 08/27/2020 174.7 Arlington City -Texas GO Pension Bonds Series 2020 Brad/Jorge/Catherine BofA SECURITIES ���� 10/14/2020 349.5 Torrance Joint Powers Fin Auth Lease Revenue Bonds** Series 2020 Jeff/Holly/Jorge/Brad/Geoff/Catherine 03/18/2020 363.6 Huntington Beach -California* Pension Obligation Bonds Series 2021 Jeff/Holly/Jorge/Brad/Geoff/Catherine Total Par $4,681.9 *Represents BofA mandates that are pending sale "Structured as lease revenue bonds to address UAL/pension financing needs Source: SDC BofA SECURITIES ���� Resumes 4 BofA SECURITIES ���� Contact Background Holly Vocal Role: Primary Contact Managing Director Experience: Ms. Vocal has 17 years of experience in public finance and 555 California Street, Suite specializes in state and local government bond issuers. Ms. Vocal has 1160 been the principal banker over 150 financings totaling over $12 billion in San Francisco, CA 94104 par. She works on all aspects of project generation and public finance (415) 913-2327 including capital planning, bond structuring and credit analysis. Ms. Vocal holly.vocal@bofa.com has specialized knowledge in developing comprehensive financing plans to address the needs of issuers, culminating with the structuring and issuance of bonds. Ms. Vocal has worked with large California issuers such as the State of California itself as well as California local agency clients. Recently, Ms Vocal served as lead or co -lead banker on pension financings for the cities of Azusa and Downey. Background: B.A. — University of California, Berkeley Jeff Bower Role: Secondary Contact Managing Director Experience: Mr. Bower rejoined BofA in mid-2008 from 333 S. Hope Street, Suite UBS/PaineWebber where he had worked for the prior 11 years. During 3820 his public finance career he has senior managed over $35 billion for Los Angeles, CA 90071 issuers in California, Hawaii, Arizona, Nevada and Washington. Mr. Bower (213) 345-9580 has extensive California taxable, tax-exempt and pension obligation bond jeffrey.bower@bofa.com financing experience with issuers including the counties of Los Angeles, Riverside, Sacramento, San Bernardino and San Diego, as well as the cities of Anaheim, Los Angeles, Fresno, Long Beach, Manhattan Beach and San Jose. Background: B.A. — Dartmouth College; M.B.A. — University of California, Los Angeles Jorge Rodriguez Role: Pension Specialist Managing Director Experience: Dr. Rodriguez has over 17 years of experience in public finance One Bryant Park, 12th and securitization. He leads BofA's Municipal Banking and Markets Floor quantitative efforts in the areas of pension funding, pension benefit modeling, New York, NY 10036 unemployment insurance financing, tobacco securitizations and cash flow risk (646) 743-1362 management. In the past year, Dr. Rodriguez has been involved in the j.rodriguez@bofa.com structuring of over $1 billion in pension obligation bonds. Recently, Dr. Rodriguez has served as lead banker for the Government of Puerto Rico's liability management transactions under Title III and Title VI of PROMESA. Dr. Rodriguez managed the first Title III Plan of Adjustment exchange for the Puerto Rico Sales Tax Financing Corporation (COFINA) creating the analytical tools necessary to successfully exchange $17.6 billion of outstanding bonds into the new $12 billion COFINA securitization structure and execute one of the most complex municipal transactions in history involving over 7,000 investors, including retail, traditional municipal, hedge funds and monoline insurance providers. Background: Ph.D. — MIT Sloan School of Management; B.S. — Massachusetts Institute of Technology BofA SECURITIES ��IV- Contact Background Credit Strategies Brad Gewehr Role: Credit Strategist & Investor Relations Senior Vice President Experience: Mr. Gewehr provides municipal credit expertise to our West One Bryant Park, 12th Floor Coast clients. Prior to joining BofA, he was with UBS where he was the New York, NY 10036 head of their municipal credit strategies group. He has over 34 year of (646) 743-1336 experience in public finance and has assisted numerous municipal issuers bradIey.gewehr@bofa.com on credit analyses and strategies. Importantly, Mr. Gewehr spent many years at Moody's as a Managing Director where he supervised a staff of analysts responsible for assigning and maintaining ratings on municipal tax -backed, utility revenue, and lease credits in 26 states. Background: B.A. —Amherst College; M.B.A. — New York University Banking Support Geoffrey Sauers Role: Senior Execution Banker Vice President Related Experience: Mr. Sauers has 8 years of public finance experience 333 S. Hope Street, Suite and joined BofA in April 2011. Since joining BofA, Mr. Sauers has assisted 3820 on a variety of debt financings such as general obligation bonds, revenue Los Angeles, CA 90071 bonds, and COP/LRB transactions. Mr. Sauers has lead analytical and (213) 345-9581 execution support for numerous local government financings including the geoffrey.sauers@bofa.com City and County of Los Angeles, City and County of Honolulu, City of Azusa, City of Huntington Beach and Missoula County. Background: B.A. — University of Southern California Katy Liu Role: Support Banker Associate Experience: Ms. Liu joined BofA's Western Region group in the summer 333 S. Hope Street, Suite of 2016 upon university graduation, after having served as a summer 3820 intern in 2015. Ms. Liu's public finance experience includes recent Los Angeles, CA 90071 transactions for Bay Area Toll Authority, Bay Area Rapid Transit District, (213) 345-9583 the Department of Water and Power of the City and County of Los katy.liu@bofa.com Angeles, among other West Coast financings. Background: B.S. — University of Southern California Underwriting Catherine Crews Role: Lead Underwriter Managing Director Experience: Ms. Crews Buell is a member of the underwriting desk and has One Bryant Park, 9th Floor approximately 16 years of experience in in the municipal business. She has New York, NY 10036 underwritten over $50 billion in senior managed deals covering a wide 212-449-5081 range of credit types and structures. Prior to joining the underwriting desk catherine.crews@bofa.com in 2005, Ms. Crews Buell was a financial analyst in the Health Care and Higher Education Group, where she provided quantitative and analytical analysis. Background: B.A. - Bucknell University Brendan Troy Role: Co -Lead Underwriter Managing Director Experience: Mr. Troy has 22 years of experience in the underwriting of One Bryant Park, 9th Floor both fixed rate and variable rate securities, and he is currently one of �( W)6 BofA SECURITIES ��IV- New York, NY 10036 BofA's lead fixed rate underwriters. His underwriting experience includes 212-449-5081 financings for numerous municipal issuers throughout the country. Mr. brendan.troy@bofa.com Troy has an extensive portfolio of appropriation -backed underwritings including Cupertino Unified School District, the State Public Works Board of the State of California, the State of Hawaii, the State of Connecticut, among others. Education: B.A. - Vanderbilt University; M.B.A. - New York University BofA SECURITIES ��Iv- Conflicts of Interest and Litigation Disclosures BofA SECURITIES ���� Conflicts of Interest. Bank of America Corporation and/or its affiliates ("BAC Group") comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and strategic advisory services and other commercial services and products to a wide range of corporations, governments, and individuals domestically and offshore, from which conflicting interests or duties, or a perception thereof, may arise. In the ordinary course of these activities, parts of the BAC Group at any time may invest on a principal basis or manage funds that invest, make or hold long or short positions, financial positions or trade or otherwise effect transactions, for their own accounts or the accounts of customers, in securities or financial instruments (including derivatives, bank loans or other obligations) of the City or any other party that may be involved in the transaction. The BAC Group may be involved in providing financial services in the ordinary course of its business to the City and certain of these financial services may be as part of or related to this transaction (for example, Bank of America, N.A. may be engaged to provide a credit or liquidity facility, or an interest rate risk management solution). Litigation and Regulatory Inquires. On May 11, 2019, BofA Securities, Inc. ("BofA Securities") agreed with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") to assume the assets and liabilities of the Global Banking and Markets business previously conducted by MLPF&S, including the regulatory and legal matters below. In the ordinary course of business, BofA Securities is subject to regulatory examinations, information gathering requests, inquiries, and investigations ("Regulatory Inquiries") by various federal or state securities regulatory agencies and attorneys general, other local, state, and federal agencies, law enforcement, and self -regulatory organizations (collectively, "Regulators"); and is on occasion a defendant in or party to pending threatened legal actions and proceedings. In connection with formal and informal Regulatory Inquiries, BofA Securities receives numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their regulated activities, and in some cases regulatory action has been taken against BofA Securities. BofA Securities believes that it has cooperated fully with the Regulators in all such inquiries to date and intends to continue to cooperate fully with the Regulators in all such inquiries involving BofA Securities in the future. Bank of America Corporation (the "Corporation"), BofA Securities' ultimate parent, makes all required disclosures in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, which are updated in Reports on Form 8-K, all of which are filed with the U.S. Securities and Exchange Commission ("SEC') ("Regulatory Filings"). BofA Securities makes all required disclosures in its Form BD and ADV filings ("Form BD and ADV Filings") with the Financial Industry Regulatory Authority ("FINRA"). Those Regulatory Filings and Form BD and ADV Filings include disclosures of Regulatory Inquiries as required by federal law and applicable regulations. The Regulatory Filings are publicly available on the SEC's website at www.sec.gov. The Form BD Filings are publicly available on the FINRA BrokerCheck system at http://brokercheck.finra.org/. The Form ADV filings are publicly available on the SEC's Investment Adviser Search website at: http://www.adviserinfo.sec.gov/IAPD/default.aspx The Corporation cannot confirm or deny the existence of any other, non-public Regulatory Inquiry conducted by any Regulator unless required to do so by law. Note the following public matters involving BofA Securities' public finance business over the past five (5) years: Municipalities Continuing Disclosure Cooperation Initiative. On June 18, 2015, MLPF&S entered into a settlement with the SEC in connection with the SEC's Municipalities Continuing Disclosure Cooperation ("MCDC") Initiative pursuant to an order and standardized settlement terms. MLPF&S, along with 71 other municipal underwriting firms, which did not admit or deny the findings, agreed to (i) cease and desist from �' 1 BofA SECURITIES ��IV- committing or causing any violations and any future violations of Section 17(a)(2) of the Securities Act of 1933, (ii) pay a $500,000 civil penalty, (iii) retain an independent consultant to review its policies and procedures on due diligence for municipal securities underwriting and (iv) comply with certain undertakings in connection with the retention of such consultant. Municipal Bond Underwriting False Claims Act Lawsuits. Since January 2016, the Corporation has been served, along with a number of other banks, with lawsuits brought by Roger Hayes and Talbot Heppenstall (the "Relators") in Illinois, California, New Jersey and New York under those state's respective False Claims Acts. In each case, the Relators allege that the defendants falsely represented to state and municipal officials that they would obtain the lowest yields/highest prices for new negotiated municipal bond offerings in order to secure underwriting engagements for those offerings. The Illinois lawsuit was dismissed by the trial court without prejudice in September 2017. The California lawsuit was dismissed by the trial court with prejudice in March 2019. The New Jersey lawsuit was dismissed by the trial court without prejudice in early May 2019. The Relators voluntarily discontinued the New York lawsuit in June 2019. To date, the Attorney Generals of each of the states have declined to join in the lawsuits. VRDO False Claims Act Lawsuits. Since November 2017, the Corporation has been served, along with a number of other banks, with lawsuits brought by Edelweiss Fund, LLC ("Edelweiss") in Illinois, California, Massachusetts and New York under those state's respective False Claims Acts. In February 2019, the Massachusetts state court permitted the substitution of Bjorn Johan Rosenberg for Edelweiss as the relator in the case. In each case, Edelweiss and Rosenberg purport to assert claims that the defendants engaged in a coordinated "robo-setting" scheme under which they allegedly set the rates for Variable Rate Demand Obligations ("VRDOs") mechanically in order to keep the rates artificially high and thereby reduce the chances of having to remarket the bonds. The Massachusetts lawsuit was dismissed by the trial court in July 2019. To date, the Attorney Generals of each of these states have declined to join in the lawsuits. VRDO Antitrust Actions. On February 20, 2019, the City of Philadelphia filed a putative antitrust class action complaint in the U.S. District Court for the Southern District of New York alleging that several of the Corporation's affiliates and affiliates of six other large banks, acting in their capacity as remarketing agents for VRDOs, conspired between 2008 and 2016 to artificially inflate interest rates on VRDOs to the detriment of their municipal issuer customers. The complaint asserts causes of action (i) under Section 1 of the Sherman Antitrust Act and Sections 4 and 16 of the Clayton Antitrust Act, (ii) for breach of contract, and (iii) for unjust enrichment. On March 25, 2019, the Mayor and City Council of Baltimore, Maryland filed a similar class action antitrust complaint in the U.S. District Court for the Southern District of New York against several Bank of America affiliates and affiliates of other banks. The trial judge has ordered the cases to be consolidated. Puerto Rico Lawsuits. On May 2, 2019, the Financial Oversight and Management Board for Puerto Rico ("FOMB"), as a representative of the Commonwealth and other debtor entities in the Puerto Rico bankruptcy, filed an adversary complaint in U.S. District Court for the District of Puerto Rico against Bank of America and numerous other financial institutions that served as underwriters on 17 bond issuances by the Commonwealth of Puerto Rico and its instrumentalities in the years leading up to the bankruptcy. The FOMB asserts claims against the underwriters for: (i) aiding and abetting breaches of fiduciary duty on the theory that the bonds deepened the Commonwealth's insolvency and violated Puerto Rico's constitutional debt limits, (ii) rescission of transfer under Puerto Rico and Federal Bankruptcy laws on the theory that the underwriters received fees in connection with the bonds without delivering any value to the Commonwealth because the bonds only increased the Commonwealth's insolvency, (iii) unjust enrichment based on the fees the underwriters received in connection with the bonds, and (iv) breach of the underwriting agreements by insufficiently disclosing in the offering documents the compensation the underwriters received and potential conflicts of interest. The complaint also alleges that certain underwriters entered into interest rate swap agreements with the Commonwealth and asserts claims �BofA SECURITIES IV- �1 related to those swap agreements for (i) aiding and abetting breaches of fiduciary duty on the theory that the swap counterparties encouraged the Commonwealth to pass legislation allowing the swaps and then encouraged the Commonwealth to enter into the swaps in connection with bonds they underwrote, and (ii) unjust enrichment based on termination fees the swap counterparties received. In addition, MBIA Insurance Corporation and National Public Finance Guarantee Corporation have brought lawsuits in a local court in Puerto Rico against Merrill Lynch and certain affiliates and 8 other underwriters for one or more bonds issued from 2001 to 2007 by the Commonwealth of Puerto Rico and its agencies. The plaintiffs allege that they were induced to insure the bonds based upon defendants assurances that they had reasonably investigated the statements in the Official Statements and that the underwriters had a reasonable basis for believing that the statements were true and complete. The complaint is based on 2 equitable doctrines of Puerto Rican law: Doctrina de Actos Propious (i.e., "doctrine of own acts," which protects a third party who relies in good faith on the veracity of manifestations or actions of another); and Unilateral Declaration of Will (i.e., the creation of an obligation through a unilateral act in the form of a concrete promise on which others are intended to rely). BofA Securities' registered officers and employees make required disclosures in their Form U-4, which are filed with FINRA pursuant to a directive from the SEC. These Form U-4 filings are publicly available on the FINRA BrokerCheck system at http://brokercheck.finra.org. BofA SECURITIES ��IV- Certificate of Liability Insurance BofA SECURITIES ���� R onlearcarrYrl CERTIFICATE OF LIABILITY INSURANCE - THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, E7fTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW_ THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(Sj, AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: 1 the oertiRcate holder is an ADDITIONAL INSURED, the policylies) must have ADDITIONAL INSURED provisions or be endorsed. It SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement- A statement on this certificate does not confer ri" to the czrtifcate holder in lieu of such endorsements)_ PRODUCER UWR.11i UskINC. CONTACT K8'ME: PHONE FCC No. 1166AVEh JE G=--TALMERICAA EaLAA PES' YOdS..VY i m0 6 INSURER(%) AFFORDING COVERAGE NAICi MSUPER A - JUG SpecialN hsuranu Gurpa7y MM Ch 101925400-150VfE620-21 NSUREa BAN4 OF AMERID4 CCRPCR0.T10N NEURI R B- WOUPER o - AND ANY AND ALL 5USSIDA21E5 NEUPERD- MAL CODE NCI-02&1 15-01 1;3) NORTH COLLEGE 5fAEET NSUPERE: OH&RWTTF NC 20255 NSUPER F : COVERAGES CERTIFICATE NUMBER_ ATL-OMBDSW'21 REVISION NUMBER: 20 THIS IS TD CERTIFY THAT THE POLICIES OF INSURANCE USTED BELOW HAVE BEEN ISSUED TD THE INSURED NAMED A60VE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQU.REMENT. TERM OR CONDFICN OF ANY CONTRACT OR OTHER DOCUMENT WTH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS. EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMIT, SHCJL'N MAY HAVE BEEN REDUCED BY PAID CLAIMS. 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Kolbe n.lore �Peo.ar� m FNCE CFUOVERMN E C:FRTIFIC:ATF Hni f1FFT C_ANf:FI I ATION BANK OFAVERICA4 CORPORATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFDRE AND ANYANO ALL a 51EAFOE5 THE EXPIRATION DATE THEREOF- W0710E WILL BE DELIVERED IN kWL DDI E NC1fi211-1&M ACCORDANCE WITH THE POLICY PROVISIONS. 15D NORTH COLLEGE STREET CFWiLOTTE, NC 25255 AUTHORLZEDREPRESENTATTYE GI N" USA FIL Hilda Redonoo @ 19 38-2016 ACORD CORPORATION- All rights. reserved- ACORD 25 12616IB3j The ACORD name and logo are registered marks of ACORD AGENCYCUSTOMERID: CM101925409 LOC f- Charlotte ACCWta ADDITIONAL REMARKS SCHEDULE Page 2 of 2 AGEIICY SAM=_c N&URED MOR51-1 LIS&Fir BAW OFAIOERIOt CORPOHATrN AND ANY AND J41 SLEINDVOES MM1L COCE IIC1-0211--1601 POLKY NUMBER 150 NORTH COLLEGE TFRIEET ChnRLOTIE NC 2%3? 5 CMRIBR NAIC CODE EFFBCT74E GATE: THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM. FORM NUMBER: 25 FORM TrrLE: Certificate of Liability Insurance EmrsS 0.66on :..ilege elFn—dI nScns. Not:Lhh n, Faredwih Side&1C050.EPL.F&ciaiy Side B.Fn.wW InsbhSm gold, end Nerolk °n'n!'-Cuelvlr riFn IFese lslrrs does rak neWde nvnhnerf Eanldng!!&!) --x e. ACORD 101 R2008AI1 j D 20011 ACORD CORPORATION_ All rights reserved_ The ACORD name and logo are registered marks of ACDRD Incumbency Certificate BofA SECURITIES ���� BofA SECURITIES, INC. CERTIFICATE OF ASSISTANT SECRETARY RELATING TO INCUMBENCY AND CORPORATE RESOLUTIONS I, Colleen O. Johnson, an Assistant Secretary of BofA Securities, Inc., a Delaware corporation (the "Corporation"), do hereby certify that: 1. I am a duly appointed, qualified and acting Assistant Secretary of the Corporation. 2. Attached hereto as Exhibit A is a true and correct copy of Resolutions Relating to Officers, adopted by the Board of Directors of the Corporation on September 1, 2015 relating to (i) Officer Titles and Roles Defined by Regulation, (ii) Officer Authority, and (iii) Dual Officers (the "Resolutions"), all to the extent set forth therein, and that such Resolutions are in full force and effect and have not been amended or rescinded as of the date hereof. 3. The individual listed below has been duly appointed and qualified to the office indicated below and currently holds such office: Name Title Holly Vocal Managing Director IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of the Corporation this 5th day of March, 2021. Colleen O. John§on Assistant Secretary EXHIBIT A RESOLUTIONS OF THE BOARD OF DIRECTORS OF BofA SECURITIES, INC. (the "Corporation') September 1, 2015 OFFICER TITLES AND ROLES DEFINED BY REGULATION RESOLVED, that except for such titles as have been or hereafter are approved by the Director(s) or the Chief Executive Officer ("CEO") from time to time, the organizational titles used within the Corporation shall be those titles authorized by the Personnel Group of Bank of America Corporation (the "Personnel Group") and the Personnel Group is hereby authorized to take such action on behalf of the Corporation as is necessary to assign such titles to any officer of the Corporation whose records do not reflect any such title, which may be determined by the Personnel Group in consultation with the Secretary of the Corporation; and it is FURTHER RESOLVED, that in addition to the Director(s) and the CEO of the Corporation, the Chief Operations Officer, the Chief Financial Officer, the Chief Compliance Officer(s), and the Chief Legal Officer shall have the authority to appoint officers with any of the titles authorized by the Personnel Group or to change the titles then held by existing officers of the Corporation; and it is FURTHER RESOLVED, that any Stockholder of the Corporation, the Director(s) and the CEO of the Corporation shall be deemed Control Persons (as such term applies to Form BD filed pursuant to Rule 15bl-1 of the Securities Exchange Act of 1934, as amended) of the Corporation; and it is FURTHER RESOLVED, that the "principal executive officers" of the Corporation, pursuant to New York Stock Exchange ("NYSE") Rule 311(b)(5) ("Rule 311(b)(5)"), shall be deemed to be the CEO , the Chief Operations Officer, the Chief Financial Officer, and the Chief Compliance Officer(s) (as a non -supervisor except as explicitly specified by the Director(s)) and any other officer that shall be appointed by the Director(s) to exercise senior principal executive responsibility over such respective area of the Corporation's business as shall be specified by the Director(s) in connection with any such appointment. OFFICER AUTHORITY RESOLVED, that any officer of the Corporation holding the title of CEO, Managing Director, or Senior Vice President shall have authority on behalf of the Corporation to approve, execute, acknowledge, attest, file, deliver and accept any and all instruments or documents relating to the business or activities of the Corporation which he or she deems in good faith to be necessary or desirable in connection with the conduct of any and all activities in which the Corporation may be lawfully engaged, including, but not limited to, all agreements, indentures, mortgages, deeds, conveyances, transfers, contracts, checks, notes, drafts, loan documents, letters of credit, guarantees, master agreements, swap agreements, security and pledge agreements, guarantees of signatures, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, powers of attorney, and other instruments or documents; and it is FURTHER RESOLVED, that the authority granted in the immediately preceding resolution includes, without limitation, the authority to approve, enter into and perform all transactions and contracts relating to the purchasing, underwriting, dealing and trading or investing in, or otherwise acquiring (including purchasing on margin and borrowing funds through or from Affiliates or third parties and securing payment thereof with property of the Corporation), possessing, selling (including short sales), placing as agent, remarketing, acting as auction agent, effecting transactions pursuant to repurchase and reverse repurchase agreements, transferring, lending, borrowing, exchanging or otherwise disposing of, and generally executing any transaction involving or consisting of (but not limited to): (A) equity or secured or unsecured debt representing an interest in such equity forward or optional commitment basis; securities and instruments of every kind or debt, whether on a current, mandatory (B) foreign currencies and foreign currency -denominated securities, deposits and money market instruments including without limitation currency swaps, cross -currency interest rate swaps, Eurocurrency deposits and redeposits, certificates of deposit, notes and floating rate notes and bonds; (C) futures and options (exchange listed or over-the-counter) on securities, securities indices, financial instruments and foreign currencies; (D) commodities and all contracts related to the trading, delivery or storage thereof, (E) (i) a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross - currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, currently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made; and (F) any combination of the foregoing, including any synthetic exposure thereto pursuant to contract or otherwise; and it is FURTHER RESOLVED, that the authority granted in the two immediately preceding resolutions includes, without limitation, the authority to approve, enter into and perform any and all contracts, agreements and other instruments relating to, and provide investment, financial and strategic advice and other financial services in connection with, various transactions, arrangements or financial matters, including without limitation (a) any merger, acquisition, sale, combination, reorganization and recapitalization of public and private companies as well as the purchase and sale, or other acquisition or disposition, of all or a portion of the business, assets or securities of such companies and (b) acting as an arranger, originator and/or agent of syndicated and other credit agreements, loan facilities and other similar financing arrangements. FURTHER RESOLVED, that the authority granted in the three immediately preceding resolutions includes the authority, without limitation, to (i) establish banking or securities accounts and other related arrangements for borrowing or investment of funds, cashiering, collateralizing, transferring funds, settling and clearing transactions and all related matters; (ii) give written (including telecopies, facsimilies, telegraphic and electronic) or oral instructions, to pay in cash or by check and/or draft drawn upon the funds of the Corporation such sums as may be necessary, and to bind and obligate the Corporation to and for the carrying out of any transaction, contract, agreement, arrangement or commitment which shall be entered into by any such officers for and on behalf of the Corporation in furtherance of any of the foregoing; (iii) deliver, or accept delivery of, securities or other documents; (iv) authorize or order the transfer or delivery of securities or other documents and enter into and bind the Corporation to the terms of any and all agreements with appropriate clearing organizations; (v) affix the seal of the Corporation to any documents, instruments or agreements or otherwise; (vi) endorse in the name of the Corporation or otherwise any securities or other instruments in order to pass title thereto; (vii) direct the sale or exercise of all rights with respect to any securities or other instruments; (viii) sign releases, powers of attorney, proxies and execute other documents in connection with any aforementioned transaction, contract, agreement, arrangement or commitment and to agree to any terms or conditions in connection therewith; (ix) accept delivery of any securities, commodities, documents or other items; and (x) do and take any and all action necessary or considered in good faith desirable in connection with any aforementioned or similar transaction, contract, agreement, arrangement or commitment; and it is FURTHER RESOLVED, that any officer of the Corporation holding the title of CEO, Managing Director, or Senior Vice President shall also have the authority to designate specific officers of the Corporation pursuant to one or more written documents (each a "Certificate of Designation") for the purpose of delegating any or all of the authority conferred in the three immediately preceding resolutions to any officer of the Corporation. To be effective, any such Certificate of Designation must be made in writing, must be signed by the CEO, Managing Director, or Senior Vice President making such delegation, and must be filed with the Secretary of the Corporation. Any such delegation shall be effective for the lesser of (a) any term set forth in the Certificate of Designation or (b) the date such Certificate of Designation is repealed by the designor, his or her successor or the Director(s). In addition, any such Certificate of Designation shall automatically terminate upon the designated officer's resignation or termination; and it is FURTHER RESOLVED, that the authority granted in the preceding resolutions includes the authority to ratify and confirm any action previously taken for or on behalf of the Corporation that, if taken currently, would be within the scope of the foregoing resolutions; and it is FURTHER RESOLVED, that any officer named in a resolution of the Director(s) assigning such officer one or more titles commonly used for offices of a corporation formed under the General Corporation Law of the State of Delaware, or any individual who is listed on the Corporation's personnel records in a position equal to any of the aforementioned officer positions, may exercise any and all powers and duties pertaining by law, regulation or practice to such office and shall also perform such other duties as may be conferred or assigned from time to time by the Director(s); and it is FURTHER RESOLVED, that all delegations of authority that are filed with the Secretary of the Corporation after the effective date of these resolutions are hereby approved, ratified, and confirmed pursuant to the foregoing resolutions. DUAL OFFICERS RESOLVED, that any officer of an Affiliate who, in the opinion of such officer's supervising Managing Director or Senior Vice President and a Managing Director or Senior Vice President of the Corporation, should be a dual officer of the Corporation in order to carry out the responsibilities associated with such officer's job function, and who has been approved by and therefore appears on the approved list of the Compliance Department of the Corporation (the "Compliance Department") as a dual officer of the Corporation and such Affiliate in accordance with FINRA Rule 3270, is deemed to be an appointed officer of the Corporation, with the same or comparable title as such officer holds in such Affiliate; and it is FURTHER RESOLVED, that, each officer of an Affiliate who is approved and appointed by the Compliance Department as a dual officer of the Corporation pursuant to the immediately foregoing resolution shall have such authority as shall be specified by the Managing Director or Senior Vice President of the Corporation who approved such appointment; provided, unless specifically limited thereby, any such appointment shall be deemed a Certificate of Designation and convey such signatory authority on such officer as may be conferred by a Certificate of Designation; and it is FURTHER RESOLVED, that notwithstanding an individual's appointment as a dual officer of the Corporation, such individual shall remain an employee solely of the Affiliate upon which such individual's payroll is drawn, except as otherwise specifically provided by written agreement; and it is FURTHER RESOLVED that a person's appointment as a dual officer of the Corporation shall be revoked upon the earlier of (i) the termination of such person's employment by the Corporation or the Affiliate of which such person was an officer at the time of such appointment or (ii) the transfer out or other change in job responsibilities of such person either at the Corporation or at such Affiliate that based on the determination of the Compliance Department requires the removal of such person from the approved list of dual officers; and it is FURTHER RESOLVED, that as approved from time to time by the Compliance Department, any officer of the Corporation who, in the opinion of such officer's supervising Managing Director or Senior Vice President and a Managing Director or Senior Vice President of an Affiliate, needs to be an officer of such Affiliate in order to carry out the responsibilities associated with such officer's job function is authorized to serve as a dual officer of such Affiliate; and it is FURTHER RESOLVED, that all dual officers whose appointments were or are hereafter approved by and therefore currently or hereafter appear on the approved list of the Compliance Department as dual officers of the Corporation and an Affiliate are hereby ratified and confirmed and shall continue in effect as though they had been made or approved pursuant to the foregoing resolutions; and it is FURTHER RESOLVED, that any change in a dual officer's title (such as a promotion or realignment of corporate titles) as duly authorized by an Affiliate following his or her appointment as a dual officer shall not in any way impact his or her dual officer status except that said dual officer shall thereafter be deemed to have the same or comparable title at the Corporation as that granted by such Affiliate; and it is FURTHER RESOLVED, that any action previously taken, that if taken after the approval of the foregoing resolutions would be within the scope of the foregoing resolutions, is hereby approved, ratified and confirmed in all respects as the authorized act and deed of the Corporation; and it is FURTHER RESOLVED, that each of the Chief Compliance Officer(s) the Chief Legal Officer, and the Secretary of the Corporation is hereby authorized to take any and all actions, including execution, delivery, acknowledgment, filing, recording and sealing of any and all documents, certificates, notices, statements or other instruments, including the delegation of the authority granted to each pursuant to the Agreement or by resolutions of the Director(s) then in effect to such officers of the Corporation or an Affiliate as each so determines (as evidenced by a Certificate of Designation, power of attorney or otherwise), and the making of any expenditures deemed necessary or advisable in order to effectuate or carry out fully the purpose or intent of the foregoing resolutions. Financing Scenarios BofA SECURITIES ���� City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Section Page Summary of Results 2 Sources & Uses 3 Bond Pricing 4 Annual Debt Service 5 Debt Service by Financing 6 Total Annual Payments - Post Financing 7 Total Annual Obligation by Plan - Post Financing 8 Total Savings Analysis 9 Savings - Miscellaneous Plan 10 Savings - Safety Plan 11 Savings - General Fund Allocation 12 Adjusted Budgetary Savings 13 Simulation Analysis 14 Stress Test - Future UALs Attributable to POBs 15 UAL Selection Miscellaneous 16 UAL Selection Safety 17 Disclaimer 18 BofA Securities - Preliminary Analysis 3/10/2021 Page 1 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Long -Term UAL Funded by POB % UAL Funded Balance 6/30/22 Deposit Total Par Amount 359,405.000 Total UAL Funded 350,698.072 50.00% 701,395.050 328,682.392 Miscellaneous - 0.00% 292,703.672 - Safety 350,698.072 85.81% 408,691.378 328,682.392 Summary Statistics Total Miscellaneous Safety Average Life 14.8 years 14.8 years TIC 3.009% 3.009% All -in TIC 3.028% 3.028% Financial PV Savings (% of Par) 42.52% 0.00% 42.52% Financial PV Savings 152,825.543 (0.000) 152,825.543 Cumulative Savings 184,522.630 (0.000) 184,522.630 Budgetary Savings (vs FY22 UAL) 38,562.276 Savings (FY22-26) 57,232.147 - 57,232.147 Maximum Annual Debt Service 33,847.220 - 33,847.220 Maximum Annual Total Obligation 54,919.732 33,650.418 33,847.220 Actuarial PV Savings (% of Par) 33.99% 0.00% 33.99% Actuarial PV Savings 122,177.961 (0.000) 122,177.961 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 01L Otis OVA Otih OHO 0�1 Otis Oti0 O''O O�ti O''L O''li O''A O�h O''�o 0�1 O''4� O''Ci Otp OA, Opti Ot' i O 00� Obi Ob1 Ob'b Obi Oho ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti Debt Service Unrefunded UAL -Current UAL FY22 UAL Deposit Date 7/15/2021 Deposit Discount Factor 0.937223 Miscellaneous Safety Total POB Proceeds 328,682.392 - 328,682.392 Discounting (Actuarial Rate) 22,015.680 - 22,015.680 UAL Payment 350,698.072 - 350,698.072 BofA Securities - Preliminary Analysis 3/10/2021 Page 2 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Miscellaneous Safety Total Sources: Par Amount 359,405.000 359,405.000 Premium / (Discount) - (0.000) (0.000) Other Sources - - Total Sources - 359,405.000 359,405.000 Uses: FY22 UAL Prepayment 29,101.640 29,101.640 POB Deposit 328,682.392 328,682.392 Capitalized Interest - - - Underwriter's Discount - 808.661 808.661 Costs of Issuance - 808.661 808.661 Additional Proceeds - 3.646 3.646 Total Uses - 359,405.000 359,405.000 Average Life 14.8 years 14.8 years TIC 3.009% 3.009% All -in TIC 3.028% 3.028% Bond Structure Dated Date 7/15/2021 First Payment 6/1/2022 First Maturity 6/1/2022 Final Maturity 6/1/2044 Capitalized Interest Until Bond Components Structure Par Amount Coupon Price Final Maturity Avg. Life Serials 176,600.000 2.545% 100.000 6/1/2036 10.5 years Term Bond 1 182,805.000 3.260% 100.000 6/1/2044 19.1 years Term Bond 2 - 100.000 1/0/1900 Total 359,405.000 3.013% 100.000 6/1/2044 14.8 years BofA Securities - Preliminary Analysis 3/10/2021 Page 3 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Maturity Component Principal Coupon 6/1/2022 Serials 11,385.000 0.420% 6/1/2023 Serials 4,260.000 0.470% 6/1/2024 Serials 5,870.000 0.700% 6/1/2025 Serials 4,960.000 1.130% 6/1/2026 Serials 3,845.000 1.330% 6/1/2027 Serials 2,780.000 1.680% 6/1/2028 Serials 2,065.000 1.880% 6/1/2029 Serials 6,540.000 2.150% 6/1/2030 Serials 5,660.000 2.250% 6/1/2031 Serials 14,515.000 2.350% 6/1/2032 Serials 19,255.000 2.450% 6/1/2033 Serials 20,235.000 2.550% 6/1/2034 Serials 23,210.000 2.650% 6/1/2035 Serials 24,905.000 2.750% 6/1/2036 Serials 27,115.000 2.850% 6/1/2037 Term Bond 1 26,340.000 3.260% 6/1/2038 Term Bond 1 25,995.000 3.260% 6/1/2039 Term Bond 1 25,155.000 3.260% 6/1/2040 Term Bond 1 24,770.000 3.260% 6/1/2041 Term Bond 1 24,980.000 3.260% 6/1/2042 Term Bond 1 18,120.000 3.260% 6/1/2043 Term Bond 1 19,310.000 3.260% 6/1/2044 Term Bond 1 18,135.000 3.260% 6/1/2045 Term Bond 1 - 3.260% 6/1/2046 Term Bond 1 3.260% 6/1/2047 Term Bond 1 3.360% 6/1/2048 Term Bond 1 3.360% 6/1/2049 Term Bond 1 3.360% 6/1/2050 Term Bond 1 3.360% 6/1/2051 Term Bond 1 3.360% Total 359,405.000 Yield 0.420% 0.470% 0.700% 1.130% 1.330% 1.680% 1.880% 2.150% 2.250% 2.350% 2.450% 2.550% 2.650% 2.750% 2.850% 3.260% 3.260% 3.260% 3.260% 3.260% 3.260% 3.260% 3.260% 3.260% 3.260% 3.360% 3.360% 3.360% 3.360% 3.360% Price 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 BofA Securities - Preliminary Analysis 3/10/2021 Page 4 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Principal Interest Debt Service 2022 11,385.000 8,716.875 20,101.875 2023 4,260.000 9,882.800 14,142.800 2024 5,870.000 9,862.778 15,732.778 2025 4,960.000 9,821.688 14,781.688 2026 3,845.000 9,765.640 13,610.640 2027 2,780.000 9,714.501 12,494.502 2028 2,065.000 9,667.797 11,732.798 2029 6,540.000 9,628.975 16,168.976 2030 5,660.000 9,488.365 15,148.366 2031 14,515.000 9,361.015 23,876.016 2032 19,255.000 9,019.913 28,274.913 2033 20,235.000 8,548.165 28,783.166 2034 23,210.000 8,032.173 31,242.173 2035 24,905.000 7,417.108 32,322.108 2036 27,115.000 6,732.220 33,847.220 2037 26,340.000 5,959.443 32,299.443 2038 25,995.000 5,100.759 31,095.759 2039 25,155.000 4,253.322 29,408.322 2040 24,770.000 3,433.269 28,203.269 2041 24,980.000 2,625.767 27,605.767 2042 18,120.000 1,811.419 19,931.419 2043 19,310.000 1,220.707 20,530.707 2044 18,135.000 591.201 18,726.201 2045 - - - 2046 2047 - - 2048 2049 - - 2050 2051 - - Total 359,405.000 160,655.903 520,060.903 BofA Securities - Preliminary Analysis 3/10/2021 Page 5 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Miscellaneous Safety Total 2022 20,101.875 20,101.875 2023 14,142.800 14,142.800 2024 15,732.778 15,732.778 2025 14,781.688 14,781.688 2026 13,610.640 13,610.640 2027 12,494.502 12,494.502 2028 11,732.798 11,732.798 2029 16,168.976 16,168.976 2030 15,148.366 15,148.366 2031 23,876.016 23,876.016 2032 28,274.913 28,274.913 2033 28,783.166 28,783.166 2034 31,242.173 31,242.173 2035 32,322.108 32,322.108 2036 33,847.220 33,847.220 2037 32,299.443 32,299.443 2038 31,095.759 31,095.759 2039 29,408.322 29,408.322 2040 28,203.269 28,203.269 2041 27,605.767 27,605.767 2042 19,931.419 19,931.419 2043 20,530.707 20,530.707 2044 18,726.201 18,726.201 2045 - - 2046 2047 - 2048 2049 - 2050 2051 - Total - 520,060.903 - - 520,060.903 BofA Securities - Preliminary Analysis 3/10/2021 Page 6 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Debt Service Miscellaneous Safety Total 2022 20,101.875 26,113.042 - 46,214.917 2023 14,142.800 28,212.056 8,714.823 51,069.679 2024 15,732.778 29,562.724 8,921.068 54,216.570 2025 14,781.688 30,992.098 9,145.142 54,918.929 2026 13,610.640 31,910.742 9,396.634 54,918.015 2027 12,494.502 32,768.782 9,655.041 54,918.324 2028 11,732.798 33,650.418 9,535.597 54,918.812 2029 16,168.976 28,951.341 9,797.826 54,918.142 2030 15,148.366 29,703.976 10,067.266 54,919.608 2031 23,876.016 30,501.330 542.386 54,919.732 2032 28,274.913 26,643.217 0.000 54,918.130 2033 28,783.166 26,135.643 - 54,918.809 2034 31,242.173 23,677.362 54,919.535 2035 32,322.108 22,594.351 54,916.459 2036 33,847.220 21,070.280 54,917.500 2037 32,299.443 18,429.389 50,728.832 2038 31,095.759 17,025.951 48,121.710 2039 29,408.322 15,729.153 45,137.475 2040 28,203.269 14,633.708 42,836.977 2041 27,605.767 13,883.678 41,489.445 2042 19,931.419 7,392.007 27,323.426 2043 20,530.707 5,279.598 25,810.305 2044 18,726.201 2,837.096 21,563.297 2045 - 0.000 0.000 2046 - - 2047 - 2048 2049 - 2050 2051 - Total 520,060.903 517,697.940 75,775.783 - 1,113,534.626 BofA Securities - Preliminary Analysis 3/10/2021 Page 7 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Miscellaneous Safety Total 2022 26,113.042 20,101.875 46,214.917 2023 28,212.056 22,857.623 51,069.679 2024 29,562.724 24,653.846 54,216.570 2025 30,992.098 23,926.830 54,918.929 2026 31,910.742 23,007.274 54,918.015 2027 32,768.782 22,149.543 54,918.324 2028 33,650.418 21,268.395 54,918.812 2029 28,951.341 25,966.802 54,918.142 2030 29,703.976 25,215.632 54,919.608 2031 30,501.330 24,418.402 54,919.732 2032 26,643.217 28,274.913 54,918.130 2033 26,135.643 28,783.166 54,918.809 2034 23,677.362 31,242.173 54,919.535 2035 22,594.351 32,322.108 54,916.459 2036 21,070.280 33,847.220 54,917.500 2037 18,429.389 32,299.443 50,728.832 2038 17,025.951 31,095.759 48,121.710 2039 15,729.153 29,408.322 45,137.475 2040 14,633.708 28,203.269 42,836.977 2041 13,883.678 27,605.767 41,489.445 2042 7,392.007 19,931.419 27,323.426 2043 5,279.598 20,530.707 25,810.305 2044 2,837.096 18,726.201 21,563.297 2045 0.000 - 0.000 2046 - - 2047 - 2048 2049 - 2050 2051 - Total 517,697.940 595,836.686 - - 1,113,534.626 BofA Securities - Preliminary Analysis 3/10/2021 Page 8 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 Prior UAL Unrefunded UAL Debt Service Savings PV Savings 56,216.012 (26,113.042) (20,101.875) 10,001.095 10,110.171 61,071.833 (36,926.879) (14,142.800) 10,002.154 9,670.156 64,221.346 (38,483.792) (15,732.778) 10,004.776 9,404.792 67,531.864 (40,137.241) (14,781.688) 12,612.936 11,466.428 69,529.201 (41,307.375) (13,610.640) 14,611.186 12,862.063 71,395.317 (42,423.823) (12,494.502) 16,476.993 14,053.155 72,927.794 (43,186.015) (11,732.798) 18,008.981 14,891.146 69,282.413 (38,749.167) (16,168.976) 14,364.270 11,582.039 71,117.721 (39,771.242) (15,148.366) 16,198.113 12,652.154 73,027.521 (31,043.716) (23,876.016) 18,107.789 13,797.028 67,895.667 (26,643.217) (28,274.913) 12,977.537 9,684.153 67,036.958 (26,135.643) (28,783.166) 12,118.149 8,795.445 61,813.905 (23,677.362) (31,242.173) 6,894.370 4,966.756 59,692.424 (22,594.351) (32,322.108) 4,775.965 3,418.210 56,436.917 (21,070.280) (33,847.220) 1,519.417 1,223.982 50,733.458 (18,429.389) (32,299.443) 4.627 227.478 48,123.557 (17,025.951) (31,095.759) 1.847 213.829 45,140.358 (15,729.153) (29,408.322) 2.883 199.435 42,838.845 (14,633.708) (28,203.269) 1.868 187.857 41,490.921 (13,883.678) (27,605.767) 1.477 181.297 27,326.929 (7,392.007) (19,931.419) 3.503 128.680 25,812.261 (5,279.598) (20,530.707) 1.956 130.288 21,568.340 (2,837.096) (18,726.201) 5.043 118.965 4,558.752 (0.000) 4,558.752 2,252.231 1,158.317 1,158.317 555.318 104.981 - 104.981 48.840 Cash On Hand 3.646 3.646 Total 1,298,053.610 (593,473.723) (520,060.903) 184,522.630 152,825.543 BofA Securities - Preliminary Analysis 3/10/2021 Page 9 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 26,113.042 (26,113.042) 2023 28,212.056 (28,212.056) - 2024 29,562.724 (29,562.724) 2025 30,992.098 (30,992.098) - 2026 31,910.742 (31,910.742) 2027 32,768.782 (32,768.782) - 2028 33,650.418 (33,650.418) 2029 28,951.341 (28,951.341) - 2030 29,703.976 (29,703.976) 2031 30,501.330 (30,501.330) - 2032 26,643.217 (26,643.217) 2033 26,135.643 (26,135.643) - 2034 23,677.362 (23,677.362) 2035 22,594.351 (22,594.351) - 2036 21,070.280 (21,070.280) 2037 18,429.389 (18,429.389) - 2038 17,025.951 (17,025.951) 2039 15,729.153 (15,729.153) - 2040 14,633.708 (14,633.708) 2041 13,883.678 (13,883.678) - 2042 7,392.007 (7,392.007) 2043 5,279.598 (5,279.598) - 2044 2,837.096 (2,837.096) 2045 - (0.000) (0.000) (0.000) 2046 2047 - - 2048 2049 - - 2050 2051 - - Cash On Hand - - Total 517,697.940 (517,697.940) - (0.000) (0.000) BofA Securities - Preliminary Analysis 3/10/2021 Page 10 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 30,102.970 (20,101.875) 10,001.095 10,228.354 2023 32,859.777 (8,714.823) (14,142.800) 10,002.154 9,262.533 2024 34,658.621 (8,921.068) (15,732.778) 10,004.776 8,698.245 2025 36,539.766 (9,145.142) (14,781.688) 12,612.936 10,169.264 2026 37,618.460 (9,396.634) (13,610.640) 14,611.186 10,958.434 2027 38,626.535 (9,655.041) (12,494.502) 16,476.993 11,510.435 2028 39,277.376 (9,535.597) (11,732.798) 18,008.981 11,734.926 2029 40,331.072 (9,797.826) (16,168.976) 14,364.270 8,839.896 2030 41,413.745 (10,067.266) (15,148.366) 16,198.113 9,281.639 2031 42,526.191 (542.386) (23,876.016) 18,107.789 9,809.426 2032 41,252.450 (0.000) (28,274.913) 12,977.537 6,705.450 2033 40,901.314 (28,783.166) 12,118.149 5,878.395 2034 38,136.543 (31,242.173) 6,894.370 3,279.448 2035 37,098.073 (32,322.108) 4,775.965 2,229.297 2036 35,366.637 (33,847.220) 1,519.417 881.809 2037 32,304.070 (32,299.443) 4.627 279.624 2038 31,097.606 (31,095.759) 1.847 254.231 2039 29,411.205 (29,408.322) 2.883 227.983 2040 28,205.137 (28,203.269) 1.868 208.544 2041 27,607.244 (27,605.767) 1.477 192.682 2042 19,934.922 (19,931.419) 3.503 130.985 2043 20,532.663 (20,530.707) 1.956 128.232 2044 18,731.244 (18,726.201) 5.043 112.658 2045 4,558.752 - 4,558.752 931.800 2046 1,158.317 1,158.317 221.279 2047 104.981 - 104.981 18.744 2048 - - - 2049 - - 2050 2051 - Cash On Hand 3.646 3.646 Total 780,355.670 (75,775.783) (520,060.903) 184,522.630 122,177.961 BofA Securities - Preliminary Analysis 3/10/2021 Page 11 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year Savings - Misc. GF Allocation Savings - Safety GF Allocation Savings to GF 2022 100.000% 10,001.095 100.000% 10,001.095 2023 100.000% 10,002.154 100.000% 10,002.154 2024 100.000% 10,004.776 100.000% 10,004.776 2025 100.000% 12,612.936 100.000% 12,612.936 2026 100.000% 14,611.186 100.000% 14,611.186 2027 100.000% 16,476.993 100.000% 16,476.993 2028 100.000% 18,008.981 100.000% 18,008.981 2029 100.000% 14,364.270 100.000% 14,364.270 2030 100.000% 16,198.113 100.000% 16,198.113 2031 100.000% 18,107.789 100.000% 18,107.789 2032 100.000% 12,977.537 100.000% 12,977.537 2033 100.000% 12,118.149 100.000% 12,118.149 2034 100.000% 6,894.370 100.000% 6,894.370 2035 100.000% 4,775.965 100.000% 4,775.965 2036 100.000% 1,519.417 100.000% 1,519.417 2037 100.000% 4.627 100.000% 4.627 2038 100.000% 1.847 100.000% 1.847 2039 100.000% 2.883 100.000% 2.883 2040 100.000% 1.868 100.000% 1.868 2041 100.000% 1.477 100.000% 1.477 2042 100.000% 3.503 100.000% 3.503 2043 100.000% 1.956 100.000% 1.956 2044 100.000% 5.043 100.000% 5.043 2045 (0.000) 100.000% 4,558.752 100.000% 4,558.752 2046 100.000% 1,158.317 100.000% 1,158.317 2047 100.000% 104.981 100.000% 104.981 2048 100.000% - 100.000% - 2049 100.000% 100.000% 2050 100.000% 100.000% 2051 100.000% 100.000% To be Updated with City's feedback Cash On Hand - 100.000% 3.646 100.000% 3.646 Total (0.000) 100.000% 184,522.630 100.000% 184,522.630 BofA Securities - Preliminary Analysis 3/10/2021 Page 12 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 FY22 UAL 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 CFY UAL 56,216.012 61,071.833 64,221.346 67,531.864 69,529.201 71,395.317 72,927.794 69,282.413 71,117.721 73,027.521 67,895.667 67,036.958 61,813.905 59,692.424 56,436.917 50,733.458 48,123.557 45,140.358 42,838.845 41,490.921 27,326.929 25,812.261 21,568.340 4,558.752 1,158.317 104.981 Budget Benchmark 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 50,733.458 48,123.557 45,140.358 42,838.845 41,490.921 27,326.929 25,812.261 21,568.340 4,558.752 1,158.317 104.981 Total Obligation 46,214.917 51,069.679 54,216.570 54,918.929 54,918.015 54,918.324 54,918.812 54,918.142 54,919.608 54,919.732 54,918.130 54,918.809 54,919.535 54,916.459 54,917.500 50,728.832 48,121.710 45,137.475 42,836.977 41,489.445 27,323.426 25,810.305 21,563.297 0.000 Savings 10,001.095 5,146.333 1,999.442 1,297.084 1,297.997 1,297.688 1,297.200 1,297.870 1,296.405 1,296.281 1,297.882 1,297.203 1,296.477 1,299.553 1,298.512 4.627 1.847 2.883 1.868 1.477 3.503 1.956 5.043 4,558.752 1,158.317 104.981 Total 1,686,480.368 1,298,053.610 1,152,096.902 1,113,534.626 38,562.276 BofA Securities - Preliminary Analysis 3/10/2021 Page 13 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Assumptions Expected Annual Return Annual Volatility Results Probability of Success Average Present Value Benefit Percentiles P5 P25 P50 P75 P95 750.0 600.0 450.0 LL W w 300.0 m a 150.0 (150.0) 7.000% 12.000% 85.80% 121,331.263 Discounted at Actuarial Discount Rate (34,036.600) (5% of outcomes less than) 26,532.388 (25% of outcomes less than) 88,342.078 (Median) 171,858.573 (25% of outcomes greater than) 387,844.617 (5% of outcomes greater than) SIMULATIONS (ORDERED BY PV BENEFIT) ,)tress iestacenarios Base Case Stress Test 1 Stress Test 2 Stress Test 3 -20% in First Year, 7% Annual Returns 6% Annual Returns 5% Annual Returns 7% After PV Benefit 122,177.961 122,177.961 122,177.961 122,177.961 PV Future UALs due to Act Losses - (88,563.780) (43,497.983) (77,312.069) Net PV Benefit 122,177.961 33,614.181 78,679.978 44,865.893 Net PV Benefit (% of Par Amount) 34.0% 9.4% 21.9% 12.5% BofA Securities - Preliminary Analysis 3/10/2021 Page 14 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Stress Test 1 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 N M V In ID n 00 0) O ci N M V In lD n 00 Ol O c-I N M * Ln l0 n 00 Dl O N N N N N N N N M M M M M M M M M M V ZT ZT V a a V V ZT V ul O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N � Debt Service � Unrefunded UAL � Stress Test 1 UAL -Current UAL Stress Test 2 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 N M V Ln w n 00 M O N M V Ln ID n 00 M O N M V Ln w n 00 Ol O N N N N N N N N M M M co M M M M M M V V V V V Z1, V V V V In O O o 0 o O O o o O O O o O O O o o O O o o O O o O o O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N Debt Service Unrefunded UAL Stress Test 2 UAL -Current UAL Stress Test 3 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 i r- I N M v in ID n oo m o N m v in ID n oo m o N M v in a n oo m o N N N N N N N N M M M M M M M M M M Z V a a V ZT V ZT V ZT ul O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N � Debt Service � Unrefunded UAL � Stress Test 3 UAL -Current UAL BofA Securities - Preliminary Analysis 3/10/2021 Page 15 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2006 (1,483.984) (1,483.984) Benefit Change 2007 25,025.094 25,025.094 Benefit Change 2007 119.441 119.441 Assumption Change 2009 27,257.475 27,257.475 Special (Gain)/Loss 2009 29,176.611 29,176.611 Special (Gain)/Loss 2010 10,760.315 - 10,760.315 Assumption Change 2011 12,363.217 - 12,363.217 Special (Gain)/Loss 2011 (7,365.492) - (7,365.492) Payment (Gain)/Loss 2012 5,629.243 - 5,629.243 (Gain)/Loss 2012 (264.240) - (264.240) (Gain)/Loss 2013 100,132.646 - 100,132.646 Assumption Change 2014 43,507.182 - 43,507.182 (Gain)/Loss 2014 (63,657.365) - (63,657.365) (Gain)/Loss 2015 32,663.590 - 32,663.590 Assumption Change 2016 16,168.642 - 16,168.642 (Gain)/Loss 2016 38,544.420 - 38,544.420 Assumption Change 2017 13,911.421 - 13,911.421 (Gain)/Loss 2017 (21,744.346) - (21,744.346) Method Change 2018 6,562.427 - 6,562.427 Assumption Change 2018 31,746.753 - 31,746.753 (Gain)/Loss 2018 (13,468.613) - (13,468.613) Al Significant Increase* 2019 141.851 - 141.851 Non -Investment (Gain)/Loss 2019 2,974.088 - 2,974.088 Investment (Gain)/Loss 2019 4,003.293 - 4,003.293 Total 292,703.672 - 292,703.672 BofA Securities - Preliminary Analysis 3/10/2021 Page 16 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case Amounts in $000s Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2005 (2,800.549) (2,800.549) Benefit Change 2006 1,500.690 1,500.690 Assumption Change 2009 14,083.767 - 14,083.767 Special (Gain)/Loss 2009 31,769.094 (31,769.094) - Special (Gain)/Loss 2010 (11,745.462) - (11,745.462) Assumption Change 2011 15,355.805 - 15,355.805 Special (Gain)/Loss 2011 (4,365.942) (4,365.942) Payment (Gain)/Loss 2012 8,239.758 (8,239.758) - (Gain)/Loss 2012 74,443.250 (74,443.250) - (Gain)/Loss 2013 140,365.987 (140,365.987) - Assumption Change 2014 52,003.240 - 52,003.240 (Gain)/Loss 2014 (84,279.949) - (84,279.949) (Gain)/Loss 2015 59,805.689 (28,078.909) 31,726.780 Assumption Change 2016 19,756.175 - 19,756.175 (Gain)/Loss 2016 51,205.324 (12,516.578) 38,688.746 Assumption Change 2017 23,218.574 - 23,218.574 (Gain)/Loss 2017 (33,611.702) - (33,611.702) Method Change 2018 5,497.157 (5,497.157) - Assumption Change 2018 40,053.249 (40,053.249) - (Gain)/Loss 2018 (1,536.868) (1,536.868) Non -Investment (Gain)/Loss 2019 5,058.705 (5,058.705) - Investment (Gain)/Loss 2019 4,675.386 (4,675.386) - Total 408,691.378 (350,698.072) 57,993.306 BofA Securities - Preliminary Analysis 3/10/2021 Page 17 of 18 City of Santa Ana Pension Obligation Bonds Scenario 1 - Base Case BOFA SECURITIES, INC. 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BofA Securities - Preliminary Analysis 3/10/2021 Page 18 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Section Page Summary of Results 2 Sources & Uses 3 Bond Pricing 4 Annual Debt Service 5 Debt Service by Financing 6 Total Annual Payments - Post Financing 7 Total Annual Obligation by Plan - Post Financing 8 Total Savings Analysis 9 Savings - Miscellaneous Plan 10 Savings - Safety Plan 11 Savings - General Fund Allocation 12 Adjusted Budgetary Savings 13 Simulation Analysis 14 Stress Test - Future UALs Attributable to POBs 15 UAL Selection Miscellaneous 16 UAL Selection Safety 17 Disclaimer 18 BofA Securities - Preliminary Analysis 3/10/2021 Page 1 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Long -Term UAL Funded by POB % UAL Funded Balance 6/30/22 Deposit Total Par Amount 648,905.000 Total UAL Funded 631,263.250 90.00% 701,395.050 591,634.604 Miscellaneous 222,571.872 76.04% 292,703.672 208,599.536 Safety 408,691.378 100.00% 408,691.378 383,035.067 Summary Statistics Total Miscellaneous Safety Average Life 13.2 years 12.7 years 13.5 years TIC 2.862% 2.843% 2.872% All -in TIC 2.883% 2.864% 2.893% Financial PV Savings (% of Par) 40.79% 39.82% 41.34% Financial PV Savings 264,693.169 93,547.844 171,145.325 Cumulative Savings 316,816.423 111,113.474 205,702.949 Budgetary Savings (vs FY22 UAL) 170,855.462 Savings (FY22-26) 103,421.460 37,465.702 103,421.460 Maximum Annual Debt Service 46,833.924 19,058.015 29,806.858 Maximum Annual Total Obligation 46,833.924 26,602.790 29,806.858 Actuarial PV Savings (% of Par) 32.43% 31.83% 32.77% Actuarial PV Savings 210,433.520 74,777.556 135,655.964 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 01L Otis OVA Otih OHO 0�1 Otis Oti0 O''O O�ti O''L O''li O''A O�h O''�o 0�1 O''4� OOP Otp OA, Opti Ot' i �tp, 00� Obi Ob1 Ob'b Obi Oho ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti Debt Service Unrefunded UAL -Current UAL FY22 UAL Deposit Date 7/15/2021 Deposit Discount Factor 0.937223 Miscellaneous Safety Total POB Proceeds 208,599.536 383,035.067 - 591,634.604 Discounting (Actuarial Rate) 13,972.336 25,656.311 - 39,628.646 UAL Payment 222,571.872 408,691.378 - 631,263.250 BofA Securities - Preliminary Analysis 3/10/2021 Page 2 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Miscellaneous Safety Total Sources: ParAmount 234,905.000 414,000.000 648,905.000 Premium / (Discount) - - - Other Sources - - - Total Sources 234,905.000 414,000.000 648,905.000 Uses: FY22 UAL Prepayment 25,244.430 29,101.640 54,346.070 POB Deposit 208,599.536 383,035.067 591,634.604 Capitalized Interest - - - Underwriter's Discount 528.536 931.500 1,460.036 Costs of Issuance 528.536 931.500 1,460.036 Additional Proceeds 3.961 0.293 4.253 Total Uses 234,905.000 414,000.000 648,905.000 Average Life 12.7 years 13.5 years 13.2 years TIC 2.843% 2.872% 2.862% All -in TIC 2.864% 2.893% 2.883% Bond Structure Dated Date 7/15/2021 7/15/2021 First Payment 6/1/2022 6/1/2022 First Maturity 6/1/2022 6/1/2022 Final Maturity 6/1/2044 6/1/2044 Capitalized Interest Until Bond Components Structure Par Amount Coupon Price Final Maturity Avg. Life Serials 347,515.000 2.333% 100.000 6/1/2035 8.6 years Term Bond 1 301,390.000 3.160% 100.000 6/1/2044 18.4 years Term Bond 2 - 100.000 1/0/1900 Total 648,905.000 2.870% 100.000 6/1/2044 13.2 years BofA Securities - Preliminary Analysis 3/10/2021 Page 3 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Maturity Component Principal Coupon 6/1/2022 Serials 21,730.000 0.420% 6/1/2023 Serials 11,705.000 0.470% 6/1/2024 Serials 14,765.000 0.700% 6/1/2025 Serials 17,305.000 1.130% 6/1/2026 Serials 17,140.000 1.330% 6/1/2027 Serials 16,995.000 1.680% 6/1/2028 Serials 16,900.000 1.880% 6/1/2029 Serials 26,080.000 2.150% 6/1/2030 Serials 32,170.000 2.250% 6/1/2031 Serials 32,895.000 2.350% 6/1/2032 Serials 33,660.000 2.450% 6/1/2033 Serials 34,490.000 2.550% 6/1/2034 Serials 35,370.000 2.650% 6/1/2035 Serials 36,310.000 2.750% 6/1/2036 Term Bond 1 37,310.000 3.160% 6/1/2037 Term Bond 1 38,480.000 3.160% 6/1/2038 Term Bond 1 39,700.000 3.160% 6/1/2039 Term Bond 1 39,260.000 3.160% 6/1/2040 Term Bond 1 38,200.000 3.160% 6/1/2041 Term Bond 1 38,060.000 3.160% 6/1/2042 Term Bond 1 25,100.000 3.160% 6/1/2043 Term Bond 1 24,375.000 3.160% 6/1/2044 Term Bond 1 20,905.000 3.160% 6/1/2045 Term Bond 1 - 3.160% 6/1/2046 Term Bond 1 3.160% 6/1/2047 Term Bond 1 3.260% 6/1/2048 Term Bond 1 3.260% 6/1/2049 Term Bond 1 3.260% 6/1/2050 Term Bond 1 3.260% 6/1/2051 Term Bond 1 3.260% Total 648,905.000 Yield 0.420% 0.470% 0.700% 1.130% 1.330% 1.680% 1.880% 2.150% 2.250% 2.350% 2.450% 2.550% 2.650% 2.750% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.260% 3.260% 3.260% 3.260% 3.260% Price 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 BofA Securities - Preliminary Analysis 3/10/2021 Page 4 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Principal Interest Debt Service 2022 21,730.000 14,481.468 36,211.468 2023 11,705.000 16,406.610 28,111.610 2024 14,765.000 16,351.596 31,116.596 2025 17,305.000 16,248.241 33,553.241 2026 17,140.000 16,052.695 33,192.695 2027 16,995.000 15,824.733 32,819.733 2028 16,900.000 15,539.217 32,439.217 2029 26,080.000 15,221.497 41,301.497 2030 32,170.000 14,660.777 46,830.777 2031 32,895.000 13,936.952 46,831.952 2032 33,660.000 13,163.919 46,823.919 2033 34,490.000 12,339.249 46,829.249 2034 35,370.000 11,459.754 46,829.754 2035 36,310.000 10,522.449 46,832.449 2036 37,310.000 9,523.924 46,833.924 2037 38,480.000 8,344.928 46,824.928 2038 39,700.000 7,128.960 46,828.960 2039 39,260.000 5,874.440 45,134.440 2040 38,200.000 4,633.824 42,833.824 2041 38,060.000 3,426.704 41,486.704 2042 25,100.000 2,224.008 27,324.008 2043 24,375.000 1,430.848 25,805.848 2044 20,905.000 660.598 21,565.598 2045 - - - 2046 2047 - - 2048 2049 - - 2050 2051 - - Total 648,905.000 245,457.388 894,362.388 BofA Securities - Preliminary Analysis 3/10/2021 Page 5 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Miscellaneous Safety Total 2022 19,058.015 17,153.453 36,211.468 2023 8,197.143 19,914.467 28,111.610 2024 9,406.122 21,710.475 31,116.596 2025 9,961.167 23,592.075 33,553.241 2026 9,739.328 23,453.367 33,192.695 2027 11,716.527 21,103.206 32,819.733 2028 12,215.727 20,223.490 32,439.217 2029 16,286.647 25,014.850 41,301.497 2030 18,519.555 28,311.222 46,830.777 2031 18,421.205 28,410.747 46,831.952 2032 18,514.895 28,309.025 46,823.919 2033 18,500.080 28,329.170 46,829.249 2034 17,023.107 29,806.647 46,829.754 2035 18,526.487 28,305.962 46,832.449 2036 18,520.912 28,313.012 46,833.924 2037 18,341.326 28,483.602 46,824.928 2038 17,022.102 29,806.858 46,828.960 2039 15,723.948 29,410.492 45,134.440 2040 14,632.022 28,201.802 42,833.824 2041 13,880.636 27,606.068 41,486.704 2042 7,389.678 19,934.330 27,324.008 2043 5,275.848 20,530.000 25,805.848 2044 2,836.900 18,728.698 21,565.598 2045 - - - - 2046 2047 - - 2048 2049 - - 2050 2051 - - Total 319,709.374 574,653.014 - - 894,362.388 BofA Securities - Preliminary Analysis 3/10/2021 Page 6 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Debt Service Miscellaneous Safety Total 2022 36,211.468 - - 36,211.468 2023 28,111.610 12,957.869 0.000 41,069.479 2024 31,116.596 13,100.589 - 44,217.185 2025 33,553.241 13,271.450 46,824.691 2026 33,192.695 13,633.279 46,825.974 2027 32,819.733 14,005.059 46,824.792 2028 32,439.217 14,387.063 46,826.279 2029 41,301.497 5,523.743 46,825.240 2030 46,830.777 - 46,830.777 2031 46,831.952 - 46,831.952 2032 46,823.919 - 46,823.919 2033 46,829.249 - 46,829.249 2034 46,829.754 - 46,829.754 2035 46,832.449 - 46,832.449 2036 46,833.924 - 46,833.924 2037 46,824.928 - 46,824.928 2038 46,828.960 - 46,828.960 2039 45,134.440 - 45,134.440 2040 42,833.824 - 42,833.824 2041 41,486.704 - 41,486.704 2042 27,324.008 - 27,324.008 2043 25,805.848 - 25,805.848 2044 21,565.598 - 21,565.598 2045 - - 2046 2047 2048 2049 2050 2051 Total 894,362.388 86,879.052 0.000 - 981,241.440 BofA Securities - Preliminary Analysis 3/10/2021 Page 7 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Miscellaneous Safety Total 2022 19,058.015 17,153.453 36,211.468 2023 21,155.012 19,914.467 41,069.479 2024 22,506.710 21,710.475 44,217.185 2025 23,232.616 23,592.075 46,824.691 2026 23,372.607 23,453.367 46,825.974 2027 25,721.586 21,103.206 46,824.792 2028 26,602.790 20,223.490 46,826.279 2029 21,810.390 25,014.850 46,825.240 2030 18,519.555 28,311.222 46,830.777 2031 18,421.205 28,410.747 46,831.952 2032 18,514.895 28,309.025 46,823.919 2033 18,500.080 28,329.170 46,829.249 2034 17,023.107 29,806.647 46,829.754 2035 18,526.487 28,305.962 46,832.449 2036 18,520.912 28,313.012 46,833.924 2037 18,341.326 28,483.602 46,824.928 2038 17,022.102 29,806.858 46,828.960 2039 15,723.948 29,410.492 45,134.440 2040 14,632.022 28,201.802 42,833.824 2041 13,880.636 27,606.068 41,486.704 2042 7,389.678 19,934.330 27,324.008 2043 5,275.848 20,530.000 25,805.848 2044 2,836.900 18,728.698 21,565.598 2045 - - - 2046 2047 - 2048 2049 - 2050 2051 - Total 406,588.426 574,653.014 - - 981,241.440 BofA Securities - Preliminary Analysis 3/10/2021 Page 8 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 56,216.012 (36,211.468) 20,004.544 20,165.931 2023 61,071.833 (12,957.869) (28,111.610) 20,002.355 19,390.620 2024 64,221.346 (13,100.589) (31,116.596) 20,004.161 18,878.698 2025 67,531.864 (13,271.450) (33,553.241) 20,707.173 19,009.504 2026 69,529.201 (13,633.279) (33,192.695) 22,703.228 20,227.318 2027 71,395.317 (14,005.059) (32,819.733) 24,570.526 21,251.214 2028 72,927.794 (14,387.063) (32,439.217) 26,101.514 21,921.960 2029 69,282.413 (5,523.743) (41,301.497) 22,457.173 18,446.526 2030 71,117.721 (46,830.777) 24,286.944 19,416.779 2031 73,027.521 (46,831.952) 26,195.569 20,328.625 2032 67,895.667 (46,823.919) 21,071.748 15,961.052 2033 67,036.958 (46,829.249) 20,207.709 14,892.551 2034 61,813.905 (46,829.754) 14,984.151 10,820.259 2035 59,692.424 (46,832.449) 12,859.975 9,074.548 2036 56,436.917 (46,833.924) 9,602.993 6,670.190 2037 50,733.458 (46,824.928) 3,908.530 2,829.238 2038 48,123.557 (46,828.960) 1,294.597 1,123.061 2039 45,140.358 (45,134.440) 5.918 302.831 2040 42,838.845 (42,833.824) 5.021 282.886 2041 41,490.921 (41,486.704) 4.217 270.219 2042 27,326.929 (27,324.008) 2.921 173.160 2043 25,812.261 (25,805.848) 6.413 163.481 2044 21,568.340 (21,565.598) 2.742 133.391 2045 4,558.752 - 4,558.752 2,329.124 2046 1,158.317 1,158.317 575.099 2047 104.981 - 104.981 50.652 2048 - - - 2049 - - 2050 2051 - Cash On Hand 4.253 4.253 Total 1,298,053.610 (86,879.052) (894,362.388) 316,816.423 264,693.169 BofA Securities - Preliminary Analysis 3/10/2021 Page 9 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 26,113.042 (19,058.015) 7,055.027 7,345.712 2023 28,212.056 (12,957.869) (8,197.143) 7,057.045 6,507.624 2024 29,562.724 (13,100.589) (9,406.122) 7,056.014 6,110.672 2025 30,992.098 (13,271.450) (9,961.167) 7,759.482 6,278.042 2026 31,910.742 (13,633.279) (9,739.328) 8,538.135 6,439.270 2027 32,768.782 (14,005.059) (11,716.527) 7,047.196 5,026.465 2028 33,650.418 (14,387.063) (12,215.727) 7,047.628 4,709.198 2029 28,951.341 (5,523.743) (16,286.647) 7,140.951 4,524.805 2030 29,703.976 (18,519.555) 11,184.421 6,546.286 2031 30,501.330 (18,421.205) 12,080.125 6,591.622 2032 26,643.217 (18,514.895) 8,128.323 4,219.187 2033 26,135.643 (18,500.080) 7,635.564 3,716.856 2034 23,677.362 (17,023.107) 6,654.255 3,036.720 2035 22,594.351 (18,526.487) 4,067.864 1,817.149 2036 21,070.280 (18,520.912) 2,549.368 1,131.314 2037 18,429.389 (18,341.326) 88.063 192.787 2038 17,025.951 (17,022.102) 3.849 143.302 2039 15,729.153 (15,723.948) 5.205 125.758 2040 14,633.708 (14,632.022) 1.686 110.726 2041 13,883.678 (13,880.636) 3.042 99.486 2042 7,392.007 (7,389.678) 2.329 49.685 2043 5,279.598 (5,275.848) 3.750 33.977 2044 2,837.096 (2,836.900) 0.196 16.952 2045 - - - - 2046 2047 - - 2048 2049 - 2050 2051 - - Cash On Hand 3.961 3.961 Total 517,697.940 (86,879.052) (319,709.374) 111,113.474 74,777.556 BofA Securities - Preliminary Analysis 3/10/2021 Page 10 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 30,102.970 (17,153.453) 12,949.517 13,006.567 2023 32,859.777 (0.000) (19,914.467) 12,945.310 12,062.042 2024 34,658.621 (21,710.475) 12,948.147 11,320.922 2025 36,539.766 (23,592.075) 12,947.691 10,618.212 2026 37,618.460 (23,453.367) 14,165.093 10,822.985 2027 38,626.535 (21,103.206) 17,523.330 12,392.894 2028 39,277.376 (20,223.490) 19,053.886 12,559.125 2029 40,331.072 (25,014.850) 15,316.222 9,560.539 2030 41,413.745 (28,311.222) 13,102.523 7,741.413 2031 42,526.191 (28,410.747) 14,115.444 7,774.393 2032 41,252.450 (28,309.025) 12,943.425 6,693.248 2033 40,901.314 (28,329.170) 12,572.145 6,085.570 2034 38,136.543 (29,806.647) 8,329.896 3,883.741 2035 37,098.073 (28,305.962) 8,792.111 3,803.012 2036 35,366.637 (28,313.012) 7,053.625 2,906.466 2037 32,304.070 (28,483.602) 3,820.468 1,584.608 2038 31,097.606 (29,806.858) 1,290.748 666.601 2039 29,411.205 (29,410.492) 0.713 227.938 2040 28,205.137 (28,201.802) 3.335 209.417 2041 27,607.244 (27,606.068) 1.176 192.938 2042 19,934.922 (19,934.330) 0.592 130.493 2043 20,532.663 (20,530.000) 2.663 128.533 2044 18,731.244 (18,728.698) 2.546 112.192 2045 4,558.752 - 4,558.752 931.800 2046 1,158.317 1,158.317 221.279 2047 104.981 - 104.981 18.744 2048 - - - 2049 - - 2050 2051 - - Cash On Hand 0.293 0.293 Total 780,355.670 (0.000) (574,653.014) 205,702.949 135,655.964 BofA Securities - Preliminary Analysis 3/10/2021 Page 11 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year Savings - Misc. GF Allocation Savings - Safety GF Allocation 2022 7,055.027 100.000% 12,949.517 100.000% 2023 7,057.045 100.000% 12,945.310 100.000% 2024 7,056.014 100.000% 12,948.147 100.000% 2025 7,759.482 100.000% 12,947.691 100.000% 2026 8,538.135 100.000% 14,165.093 100.000% 2027 7,047.196 100.000% 17,523.330 100.000% 2028 7,047.628 100.000% 19,053.886 100.000% 2029 7,140.951 100.000% 15,316.222 100.000% 2030 11,184.421 100.000% 13,102.523 100.000% 2031 12,080.125 100.000% 14,115.444 100.000% 2032 8,128.323 100.000% 12,943.425 100.000% 2033 7,635.564 100.000% 12,572.145 100.000% 2034 6,654.255 100.000% 8,329.896 100.000% 2035 4,067.864 100.000% 8,792.111 100.000% 2036 2,549.368 100.000% 7,053.625 100.000% 2037 88.063 100.000% 3,820.468 100.000% 2038 3.849 100.000% 1,290.748 100.000% 2039 5.205 100.000% 0.713 100.000% 2040 1.686 100.000% 3.335 100.000% 2041 3.042 100.000% 1.176 100.000% 2042 2.329 100.000% 0.592 100.000% 2043 3.750 100.000% 2.663 100.000% 2044 0.196 100.000% 2.546 100.000% 2045 - 100.000% 4,558.752 100.000% 2046 100.000% 1,158.317 100.000% 2047 100.000% 104.981 100.000% 2048 100.000% - 100.000% 2049 100.000% 100.000% 2050 100.000% 100.000% 2051 100.000% 100.000% To be Updated with City's feedback Savings to GF 20,004.544 20,002.355 20,004.161 20,707.173 22,703.228 24,570.526 26,101.514 22,457.173 24,286.944 26,195.569 21,071.748 20,207.709 14,984.151 12,859.975 9,602.993 3,908.530 1,294.597 5.918 5.021 4.217 2.921 6.413 2.742 4,558.752 1,158.317 104.981 Cash On Hand 3.961 100.000% 0.293 100.000% 4.253 Total 111,113.474 100.000% 205,702.949 100.000% 316,816.423 BofA Securities - Preliminary Analysis 3/10/2021 Page 12 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 FY22 UAL 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 CFY UAL 56,216.012 61,071.833 64,221.346 67,531.864 69,529.201 71,395.317 72,927.794 69,282.413 71,117.721 73,027.521 67,895.667 67,036.958 61,813.905 59,692.424 56,436.917 50,733.458 48,123.557 45,140.358 42,838.845 41,490.921 27,326.929 25,812.261 21,568.340 4,558.752 1,158.317 104.981 Budget Benchmark 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 50,733.458 48,123.557 45,140.358 42,838.845 41,490.921 27,326.929 25,812.261 21,568.340 4,558.752 1,158.317 104.981 Total Obligation 36,211.468 41,069.479 44,217.185 46,824.691 46,825.974 46,824.792 46,826.279 46,825.240 46,830.777 46,831.952 46,823.919 46,829.249 46,829.754 46,832.449 46,833.924 46,824.928 46,828.960 45,134.440 42,833.824 41,486.704 27,324.008 25,805.848 21,565.598 Savings 20,004.544 15,146.534 11,998.827 9,391.321 9,390.039 9,391.221 9,389.733 9,390.772 9,385.236 9,384.061 9,392.093 9,386.763 9,386.258 9,383.563 9,382.088 3,908.530 1,294.597 5.918 5.021 4.217 2.921 6.413 2.742 4,558.752 1,158.317 104.981 Total 1,686,480.368 1,298,053.610 1,152,096.902 981,241.440 170,855.462 BofA Securities - Preliminary Analysis 3/10/2021 Page 13 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Assumptions Expected Annual Return Annual Volatility Results Probability of Success Average Present Value Benefit Percentiles P5 P25 P50 P75 P95 7.000% 12.000% 86.10% 209,034.346 Discounted at Actuarial Discount Rate (56,493.802) (5% of outcomes less than) 45,546.592 (25% of outcomes less than) 149,668.678 (Median) 295,852.997 (25% of outcomes greater than) 668,146.338 (5% of outcomes greater than) 750.0 600.0 450.0 LL w 300.0 m a 150.0 (150.0) III I SIMULATIONS (ORDERED BY PV BENEFIT) Stress Test Scenarios Base Case Stress Test 1 Stress Test 2 Stress Test 3 -20% in First Year, 7% Annual Returns 6% Annual Returns 5% Annual Returns 7% After PV Benefit 210,433.520 210,433.520 210,433.520 210,433.520 PV Future UALs due to Act Losses - (160,030.373) (73,798.655) (130,933.294) Net PV Benefit 210,433.520 50,403.147 136,634.865 79,500.226 Net PV Benefit (% of Par Amount) 32.4% 7.8% 21.1% 12.3% BofA Securities - Preliminary Analysis 3/10/2021 Page 14 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Stress Test 1 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 N M V In ID n 00 0) O ci N M V In lD n 00 Ol O c-I N M * Ln l0 n 00 Dl O N N N N N N N N M M M M M M M M M M V ZT ZT V a a V V ZT V ul O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N � Debt Service � Unrefunded UAL � Stress Test 1 UAL -Current UAL Stress Test 2 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 N M V Ln w n 00 M O N M V Ln ID n 00 M O N M V Ln w n 00 Ol O N N N N N N N N M M M co M M M M M M V V V V V Z1, V V V V In O O o 0 o O O o o O O O o O O O o o O O o o O O o O o O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N Debt Service Unrefunded UAL Stress Test 2 UAL -Current UAL Stress Test 3 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 MM N M v in ID n oo m o N m v in ID n oo m o N M v in a n oo m o N N N N N N N N M M M M M M M M M M Z V a a V ZT V ZT V ZT ul O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N � Debt Service � Unrefunded UAL � Stress Test 3 UAL -Current UAL BofA Securities - Preliminary Analysis 3/10/2021 Page 15 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2006 (1,483.984) (1,483.984) Benefit Change 2007 25,025.094 - 25,025.094 Benefit Change 2007 119.441 119.441 Assumption Change 2009 27,257.475 - 27,257.475 Special (Gain)/Loss 2009 29,176.611 (29,176.611) - Special (Gain)/Loss 2010 10,760.315 (10,760.315) - Assumption Change 2011 12,363.217 - 12,363.217 Special (Gain)/Loss 2011 (7,365.492) (7,365.492) Payment (Gain)/Loss 2012 5,629.243 (5,629.243) - (Gain)/Loss 2012 (264.240) (264.240) (Gain)/Loss 2013 100,132.646 (100,132.646) - Assumption Change 2014 43,507.182 - 43,507.182 (Gain)/Loss 2014 (63,657.365) - (63,657.365) (Gain)/Loss 2015 32,663.590 (32,663.590) - Assumption Change 2016 16,168.642 - 16,168.642 (Gain)/Loss 2016 38,544.420 - 38,544.420 Assumption Change 2017 13,911.421 - 13,911.421 (Gain)/Loss 2017 (21,744.346) - (21,744.346) Method Change 2018 6,562.427 (6,562.427) - Assumption Change 2018 31,746.753 (31,746.753) - (Gain)/Loss 2018 (13,468.613) - (13,468.613) Al Significant Increase* 2019 141.851 (141.851) - Non -Investment (Gain)/Loss 2019 2,974.088 (1,755.142) 1,218.946 Investment (Gain)/Loss 2019 4,003.293 (4,003.293) - Total 292,703.672 (222,571.872) 70,131.800 BofA Securities - Preliminary Analysis 3/10/2021 Page 16 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case Amounts in $000s Amortization Base Year Balances UAL Refunded Fresh Start 2005 (2,800.549) Benefit Change 2006 1,500.690 (1,500.690) Assumption Change 2009 14,083.767 (14,083.767) Special (Gain)/Loss 2009 31,769.094 (31,769.094) Special (Gain)/Loss 2010 (11,745.462) - Assumption Change 2011 15,355.805 (15,355.805) Special (Gain)/Loss 2011 (4,365.942) Payment (Gain)/Loss 2012 8,239.758 (8,239.758) (Gain)/Loss 2012 74,443.250 (74,443.250) (Gain)/Loss 2013 140,365.987 (2,025.514) Assumption Change 2014 52,003.240 (52,003.240) (Gain)/Loss 2014 (84,279.949) - (Gain)/Loss 2015 59,805.689 (59,805.689) Assumption Change 2016 19,756.175 (19,756.175) (Gain)/Loss 2016 51,205.324 (51,205.324) Assumption Change 2017 23,218.574 (23,218.574) (Gain)/Loss 2017 (33,611.702) - Method Change 2018 5,497.157 (5,497.157) Assumption Change 2018 40,053.249 (40,053.249) (Gain)/Loss 2018 (1,536.868) Non -Investment (Gain)/Loss 2019 5,058.705 (5,058.705) Investment (Gain)/Loss 2019 4,675.386 (4,675.386) UAL Remaining (2,800.549) (11,745.462) (4,365.942) 138,340.472 (84,279.949) (33,611.702) (1,536.868) Total 408,691.378 (408,691.378) 0.000 BofA Securities - Preliminary Analysis 3/10/2021 Page 17 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Base Case BOFA SECURITIES, INC. IS NOT YOUR MUNICIPAL ADVISOR OR FIDUCIARY. BofA Securities, Inc. ("BofA") is providing the information contained herein for discussion purposes only either as an underwriter or in anticipation of being engaged to serve as an underwriter. By providing the information contained herein pursuant to the participation by an independent registered municipal advisor exemption provided under SEC Rule 156a1-1(d)(3)(vi) and the underwriter exclusion provided under SEC Rule 1513a1-1(d)(2)(i), BofA is not acting as your "municipal advisor" within the meaning of Section 15B of the Securities Exchange Act of 1934, as amended (the "Act"), and does not owe a fiduciary duty to you pursuant to the Act with respect to the information and material contained in this communication. BofA is either serving as an underwriter or is seeking to serve as an underwriter on a future transaction and not as a financial advisor or municipal advisor. 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BofA Securities - Preliminary Analysis 3/10/2021 Page 18 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Section Page Summary of Results 2 Sources & Uses 3 Bond Pricing 4 Annual Debt Service 5 Debt Service by Financing 6 Total Annual Payments - Post Financing 7 Total Annual Obligation by Plan - Post Financing 8 Total Savings Analysis 9 Savings - Miscellaneous Plan 10 Savings - Safety Plan 11 Savings - General Fund Allocation 12 Adjusted Budgetary Savings 13 Simulation Analysis 14 Stress Test - Future UALs Attributable to POBs 15 UAL Selection Miscellaneous 16 UAL Selection Safety 17 Disclaimer 18 BofA Securities - Preliminary Analysis 3/10/2021 Page 1 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Long -Term UAL Funded by POB % UAL Funded Balance 6/30/22 Deposit Total Par Amount 648,905.000 Total UAL Funded 631,263.250 90.00% 701,395.050 591,634.604 Miscellaneous 222,571.872 76.04% 292,703.672 208,599.536 Safety 408,691.378 100.00% 408,691.378 383,035.067 Summary Statistics Total Miscellaneous Safety Average Life 13.0 years 12.0 years 13.6 years TIC 2.857% 2.808% 2.882% All -in TIC 2.878% 2.831% 2.903% Financial PV Savings (% of Par) 40.14% 38.19% 41.25% Financial PV Savings 260,471.814 89,708.417 170,763.398 Cumulative Savings 311,127.629 107,120.761 204,006.868 Budgetary Savings (vs FY22 UAL) 136,067.118 Savings (FY22-26) 102,595.058 35,340.898 102,595.058 Maximum Annual Debt Service 47,238.786 19,060.874 30,332.342 Maximum Annual Total Obligation 47,238.786 26,532.866 30,332.342 Actuarial PV Savings (% of Par) 31.98% 30.43% 32.87% Actuarial PV Savings 207,541.398 71,474.280 136,067.118 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 01L Otis OVA Otih OHO 0�1 Otis Oti0 O''O O�ti O''L O''li O''A O�h O''�o 0�1 O''4� OOP Otp OA, Opti Ot' i �tp, 00� Obi Ob1 Ob'b Obi Oho ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti Debt Service Unrefunded UAL -Current UAL FY22 UAL Deposit Date 7/15/2021 Deposit Discount Factor 0.937223 Miscellaneous Safety Total POB Proceeds 208,599.536 383,035.067 - 591,634.604 Discounting (Actuarial Rate) 13,972.336 25,656.311 - 39,628.646 UAL Payment 222,571.872 408,691.378 - 631,263.250 BofA Securities - Preliminary Analysis 3/10/2021 Page 2 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Miscellaneous Safety Total Sources: ParAmount 234,905.000 414,000.000 648,905.000 Premium / (Discount) - - - Other Sources - - - Total Sources 234,905.000 414,000.000 648,905.000 Uses: FY22 UAL Prepayment 25,244.430 29,101.640 54,346.070 POB Deposit 208,599.536 383,035.067 591,634.604 Capitalized Interest - - - Underwriter's Discount 528.536 931.500 1,460.036 Costs of Issuance 528.536 931.500 1,460.036 Additional Proceeds 3.961 0.293 4.253 Total Uses 234,905.000 414,000.000 - 648,905.000 Average Life 12.0 years 13.6 years 13.0 years TIC 2.808% 2.882% 2.857% All -in TIC 2.831% 2.903% 2.878% Bond Structure Dated Date 7/15/2021 7/15/2021 First Payment 6/1/2022 6/1/2022 First Maturity 6/1/2022 6/1/2022 Final Maturity 6/1/2044 6/1/2044 Capitalized Interest Until Bond Components Structure Par Amount Coupon Price Final Maturity Avg. Life Serials 346,395.000 2.295% 100.000 6/1/2035 8.2 years Term Bond 1 302,510.000 3.160% 100.000 6/1/2044 18.4 years Term Bond 2 - 100.000 1/0/1900 Total 648,905.000 2.867% 100.000 6/1/2044 13.0 years BofA Securities - Preliminary Analysis 3/10/2021 Page 3 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Maturity Component Principal Coupon 6/1/2022 Serials 21,975.000 0.420% 6/1/2023 Serials 15,290.000 0.470% 6/1/2024 Serials 18,510.000 0.700% 6/1/2025 Serials 21,660.000 1.130% 6/1/2026 Serials 21,905.000 1.330% 6/1/2027 Serials 22,195.000 1.680% 6/1/2028 Serials 22,565.000 1.880% 6/1/2029 Serials 22,990.000 2.150% 6/1/2030 Serials 23,485.000 2.250% 6/1/2031 Serials 24,015.000 2.350% 6/1/2032 Serials 24,580.000 2.450% 6/1/2033 Serials 34,835.000 2.550% 6/1/2034 Serials 35,720.000 2.650% 6/1/2035 Serials 36,670.000 2.750% 6/1/2036 Term Bond 1 37,675.000 3.160% 6/1/2037 Term Bond 1 38,870.000 3.160% 6/1/2038 Term Bond 1 40,080.000 3.160% 6/1/2039 Term Bond 1 39,245.000 3.160% 6/1/2040 Term Bond 1 38,200.000 3.160% 6/1/2041 Term Bond 1 38,060.000 3.160% 6/1/2042 Term Bond 1 25,100.000 3.160% 6/1/2043 Term Bond 1 24,375.000 3.160% 6/1/2044 Term Bond 1 20,905.000 3.160% 6/1/2045 Term Bond 1 - 3.160% 6/1/2046 Term Bond 1 3.160% 6/1/2047 Term Bond 1 3.260% 6/1/2048 Term Bond 1 3.260% 6/1/2049 Term Bond 1 3.260% 6/1/2050 Term Bond 1 3.260% 6/1/2051 Term Bond 1 3.260% Total 648,905.000 Yield 0.420% 0.470% 0.700% 1.130% 1.330% 1.680% 1.880% 2.150% 2.250% 2.350% 2.450% 2.550% 2.650% 2.750% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.160% 3.260% 3.260% 3.260% 3.260% 3.260% Price 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 BofA Securities - Preliminary Analysis 3/10/2021 Page 4 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Principal Interest Debt Service 2022 21,975.000 14,236.497 36,211.497 2023 15,290.000 16,126.499 31,416.499 2024 18,510.000 16,054.636 34,564.636 2025 21,660.000 15,925.066 37,585.066 2026 21,905.000 15,680.308 37,585.308 2027 22,195.000 15,388.972 37,583.972 2028 22,565.000 15,016.096 37,581.096 2029 22,990.000 14,591.874 37,581.874 2030 23,485.000 14,097.589 37,582.589 2031 24,015.000 13,569.176 37,584.176 2032 24,580.000 13,004.824 37,584.824 2033 34,835.000 12,402.614 47,237.614 2034 35,720.000 11,514.321 47,234.321 2035 36,670.000 10,567.741 47,237.741 2036 37,675.000 9,559.316 47,234.316 2037 38,870.000 8,368.786 47,238.786 2038 40,080.000 7,140.494 47,220.494 2039 39,245.000 5,873.966 45,118.966 2040 38,200.000 4,633.824 42,833.824 2041 38,060.000 3,426.704 41,486.704 2042 25,100.000 2,224.008 27,324.008 2043 24,375.000 1,430.848 25,805.848 2044 20,905.000 660.598 21,565.598 2045 - - - 2046 2047 - - 2048 2049 - - 2050 2051 - - Total 648,905.000 241,494.754 890,399.754 BofA Securities - Preliminary Analysis 3/10/2021 Page 5 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Miscellaneous Safety Total 2022 19,060.874 17,150.623 36,211.497 2023 11,507.368 19,909.132 31,416.499 2024 12,854.191 21,710.445 34,564.636 2025 14,287.601 23,297.465 37,585.066 2026 15,127.540 22,457.769 37,585.308 2027 16,062.266 21,521.706 37,583.972 2028 16,879.818 20,701.278 37,581.096 2029 12,181.850 25,400.024 37,581.874 2030 11,088.073 26,494.516 37,582.589 2031 13,797.948 23,786.229 37,584.176 2032 9,884.280 27,700.544 37,584.824 2033 16,936.835 30,300.779 47,237.614 2034 16,935.435 30,298.886 47,234.321 2035 16,937.623 30,300.119 47,237.741 2036 16,937.060 30,297.256 47,234.316 2037 16,939.558 30,299.228 47,238.786 2038 16,888.152 30,332.342 47,220.494 2039 15,729.106 29,389.860 45,118.966 2040 14,632.022 28,201.802 42,833.824 2041 13,880.636 27,606.068 41,486.704 2042 7,389.678 19,934.330 27,324.008 2043 5,275.848 20,530.000 25,805.848 2044 2,836.900 18,728.698 21,565.598 2045 - - - - 2046 2047 - - 2048 2049 - - 2050 2051 - - Total 314,050.659 576,349.095 - - 890,399.754 BofA Securities - Preliminary Analysis 3/10/2021 Page 6 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Debt Service Miscellaneous Safety Total 2022 36,211.497 - - 36,211.497 2023 31,416.499 9,653.048 0.000 41,069.547 2024 34,564.636 9,653.048 0.000 44,217.684 2025 37,585.066 9,653.048 0.000 47,238.114 2026 37,585.308 9,653.048 0.000 47,238.356 2027 37,583.972 9,653.048 0.000 47,237.020 2028 37,581.096 9,653.048 0.000 47,234.144 2029 37,581.874 9,653.048 0.000 47,234.922 2030 37,582.589 9,653.048 0.000 47,235.637 2031 37,584.176 9,653.048 0.000 47,237.224 2032 37,584.824 9,653.048 - 47,237.872 2033 47,237.614 - - 47,237.614 2034 47,234.321 - 47,234.321 2035 47,237.741 - 47,237.741 2036 47,234.316 - 47,234.316 2037 47,238.786 - 47,238.786 2038 47,220.494 - 47,220.494 2039 45,118.966 - 45,118.966 2040 42,833.824 - 42,833.824 2041 41,486.704 - 41,486.704 2042 27,324.008 - 27,324.008 2043 25,805.848 - 25,805.848 2044 21,565.598 - 21,565.598 2045 - - - 2046 2047 - 2048 2049 - 2050 2051 - Total 890,399.754 96,530.480 0.000 - 986,930.235 BofA Securities - Preliminary Analysis 3/10/2021 Page 7 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Miscellaneous Safety Total 2022 19,060.874 17,150.623 36,211.497 2023 21,160.416 19,909.132 41,069.547 2024 22,507.239 21,710.445 44,217.684 2025 23,940.649 23,297.465 47,238.114 2026 24,780.588 22,457.769 47,238.356 2027 25,715.314 21,521.706 47,237.020 2028 26,532.866 20,701.278 47,234.144 2029 21,834.898 25,400.024 47,234.922 2030 20,741.121 26,494.516 47,235.637 2031 23,450.996 23,786.229 47,237.224 2032 19,537.328 27,700.544 47,237.872 2033 16,936.835 30,300.779 47,237.614 2034 16,935.435 30,298.886 47,234.321 2035 16,937.623 30,300.119 47,237.741 2036 16,937.060 30,297.256 47,234.316 2037 16,939.558 30,299.228 47,238.786 2038 16,888.152 30,332.342 47,220.494 2039 15,729.106 29,389.860 45,118.966 2040 14,632.022 28,201.802 42,833.824 2041 13,880.636 27,606.068 41,486.704 2042 7,389.678 19,934.330 27,324.008 2043 5,275.848 20,530.000 25,805.848 2044 2,836.900 18,728.698 21,565.598 2045 - - - 2046 2047 - 2048 2049 - 2050 2051 - Total 410,581.140 576,349.095 - - 986,930.235 BofA Securities - Preliminary Analysis 3/10/2021 Page 8 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 56,216.012 (36,211.497) 20,004.515 20,165.654 2023 61,071.833 (9,653.048) (31,416.499) 20,002.286 19,430.955 2024 64,221.346 (9,653.048) (34,564.636) 20,003.661 18,920.003 2025 67,531.864 (9,653.048) (37,585.066) 20,293.750 18,682.944 2026 69,529.201 (9,653.048) (37,585.308) 22,290.845 19,916.155 2027 71,395.317 (9,653.048) (37,583.972) 24,158.298 20,954.406 2028 72,927.794 (9,653.048) (37,581.096) 25,693.650 21,642.705 2029 69,282.413 (9,653.048) (37,581.874) 22,047.491 18,089.392 2030 71,117.721 (9,653.048) (37,582.589) 23,882.084 19,023.052 2031 73,027.521 (9,653.048) (37,584.176) 25,790.297 19,946.116 2032 67,895.667 (9,653.048) (37,584.824) 20,657.795 15,580.936 2033 67,036.958 (47,237.614) 19,799.344 14,608.713 2034 61,813.905 (47,234.321) 14,579.584 10,545.656 2035 59,692.424 (47,237.741) 12,454.683 8,806.823 2036 56,436.917 (47,234.316) 9,202.601 6,412.227 2037 50,733.458 (47,238.786) 3,494.672 2,567.734 2038 48,123.557 (47,220.494) 903.063 881.647 2039 45,140.358 (45,118.966) 21.392 311.882 2040 42,838.845 (42,833.824) 5.021 282.679 2041 41,490.921 (41,486.704) 4.217 270.033 2042 27,326.929 (27,324.008) 2.921 173.049 2043 25,812.261 (25,805.848) 6.413 163.387 2044 21,568.340 (21,565.598) 2.742 133.318 2045 4,558.752 - 4,558.752 2,331.637 2046 1,158.317 1,158.317 575.746 2047 104.981 - 104.981 50.711 2048 - - - 2049 - - 2050 2051 - Cash On Hand 4.253 4.253 Total 1,298,053.610 (96,530.481) (890,399.754) 311,127.629 260,471.814 BofA Securities - Preliminary Analysis 3/10/2021 Page 9 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 26,113.042 (19,060.874) 7,052.168 7,343.019 2023 28,212.056 (9,653.048) (11,507.368) 7,051.641 6,590.553 2024 29,562.724 (9,653.048) (12,854.191) 7,055.485 6,196.319 2025 30,992.098 (9,653.048) (14,287.601) 7,051.449 5,817.469 2026 31,910.742 (9,653.048) (15,127.540) 7,130.154 5,513.681 2027 32,768.782 (9,653.048) (16,062.266) 7,053.468 5,119.542 2028 33,650.418 (9,653.048) (16,879.818) 7,117.552 4,844.420 2029 28,951.341 (9,653.048) (12,181.850) 7,116.443 4,448.684 2030 29,703.976 (9,653.048) (11,088.073) 8,962.855 5,183.634 2031 30,501.330 (9,653.048) (13,797.948) 7,050.334 3,877.334 2032 26,643.217 (9,653.048) (9,884.280) 7,105.889 3,600.515 2033 26,135.643 (16,936.835) 9,198.808 4,417.927 2034 23,677.362 (16,935.435) 6,741.927 3,074.352 2035 22,594.351 (16,937.623) 5,656.729 2,439.336 2036 21,070.280 (16,937.060) 4,133.220 1,710.637 2037 18,429.389 (16,939.558) 1,489.831 671.774 2038 17,025.951 (16,888.152) 137.799 186.077 2039 15,729.153 (15,729.106) 0.047 124.219 2040 14,633.708 (14,632.022) 1.686 110.726 2041 13,883.678 (13,880.636) 3.042 99.486 2042 7,392.007 (7,389.678) 2.329 49.685 2043 5,279.598 (5,275.848) 3.750 33.977 2044 2,837.096 (2,836.900) 0.196 16.952 2045 - - - - - 2046 2047 - - 2048 2049 - 2050 2051 - - Cash On Hand 3.961 3.961 Total 517,697.940 (96,530.480) (314,050.659) 107,120.761 71,474.280 BofA Securities - Preliminary Analysis 3/10/2021 Page 10 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Prior UAL Unrefunded UAL Debt Service Savings PV Savings 2022 30,102.970 (17,150.623) 12,952.347 13,009.234 2023 32,859.777 (0.000) (19,909.132) 12,950.645 12,065.840 2024 34,658.621 (0.000) (21,710.445) 12,948.176 11,320.095 2025 36,539.766 (0.000) (23,297.465) 13,242.301 10,844.011 2026 37,618.460 (0.000) (22,457.769) 15,160.691 11,537.881 2027 38,626.535 (0.000) (21,521.706) 17,104.830 12,110.818 2028 39,277.376 (0.000) (20,701.278) 18,576.098 12,258.373 2029 40,331.072 (0.000) (25,400.024) 14,931.048 9,333.874 2030 41,413.745 (0.000) (26,494.516) 14,919.229 8,737.166 2031 42,526.191 (0.000) (23,786.229) 18,739.962 10,143.839 2032 41,252.450 (27,700.544) 13,551.906 6,982.939 2033 40,901.314 (30,300.779) 10,600.536 5,201.210 2034 38,136.543 (30,298.886) 7,837.657 3,676.455 2035 37,098.073 (30,300.119) 6,797.954 3,022.042 2036 35,366.637 (30,297.256) 5,069.381 2,180.618 2037 32,304.070 (30,299.228) 2,004.842 964.146 2038 31,097.606 (30,332.342) 765.264 498.793 2039 29,411.205 (29,389.860) 21.345 234.096 2040 28,205.137 (28,201.802) 3.335 209.417 2041 27,607.244 (27,606.068) 1.176 192.938 2042 19,934.922 (19,934.330) 0.592 130.493 2043 20,532.663 (20,530.000) 2.663 128.533 2044 18,731.244 (18,728.698) 2.546 112.192 2045 4,558.752 - 4,558.752 931.800 2046 1,158.317 1,158.317 221.279 2047 104.981 - 104.981 18.744 2048 - - - 2049 - - 2050 2051 - - Cash On Hand 0.293 0.293 Total 780,355.670 (0.000) (576,349.095) 204,006.868 136,067.118 BofA Securities - Preliminary Analysis 3/10/2021 Page 11 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year Savings - Misc. GF Allocation Savings - Safety GF Allocation 2022 7,052.168 100.000% 12,952.347 100.000% 2023 7,051.641 100.000% 12,950.645 100.000% 2024 7,055.485 100.000% 12,948.176 100.000% 2025 7,051.449 100.000% 13,242.301 100.000% 2026 7,130.154 100.000% 15,160.691 100.000% 2027 7,053.468 100.000% 17,104.830 100.000% 2028 7,117.552 100.000% 18,576.098 100.000% 2029 7,116.443 100.000% 14,931.048 100.000% 2030 8,962.855 100.000% 14,919.229 100.000% 2031 7,050.334 100.000% 18,739.962 100.000% 2032 7,105.889 100.000% 13,551.906 100.000% 2033 9,198.808 100.000% 10,600.536 100.000% 2034 6,741.927 100.000% 7,837.657 100.000% 2035 5,656.729 100.000% 6,797.954 100.000% 2036 4,133.220 100.000% 5,069.381 100.000% 2037 1,489.831 100.000% 2,004.842 100.000% 2038 137.799 100.000% 765.264 100.000% 2039 0.047 100.000% 21.345 100.000% 2040 1.686 100.000% 3.335 100.000% 2041 3.042 100.000% 1.176 100.000% 2042 2.329 100.000% 0.592 100.000% 2043 3.750 100.000% 2.663 100.000% 2044 0.196 100.000% 2.546 100.000% 2045 - 100.000% 4,558.752 100.000% 2046 100.000% 1,158.317 100.000% 2047 100.000% 104.981 100.000% 2048 100.000% - 100.000% 2049 100.000% 100.000% 2050 100.000% 100.000% 2051 100.000% 100.000% To be Updated with City's feedback Savings to GF 20,004.515 20,002.286 20,003.661 20,293.750 22,290.845 24,158.298 25,693.650 22,047.491 23,882.084 25,790.297 20,657.795 19,799.344 14,579.584 12,454.683 9,202.601 3,494.672 903.063 21.392 5.021 4.217 2.921 6.413 2.742 4,558.752 1,158.317 104.981 Cash On Hand 3.961 100.000% 0.293 100.000% 4.253 Total 107,120.761 100.000% 204,006.868 100.000% 311,127.629 BofA Securities - Preliminary Analysis 3/10/2021 Page 12 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 FY22 UAL 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 CFY UAL 56,216.012 61,071.833 64,221.346 67,531.864 69,529.201 71,395.317 72,927.794 69,282.413 71,117.721 73,027.521 67,895.667 67,036.958 61,813.905 59,692.424 56,436.917 50,733.458 48,123.557 45,140.358 42,838.845 41,490.921 27,326.929 25,812.261 21,568.340 4,558.752 1,158.317 104.981 Budget Benchmark 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 56,216.012 50,733.458 48,123.557 45,140.358 42,838.845 41,490.921 27,326.929 25,812.261 21,568.340 4,558.752 1,158.317 104.981 Total Obligation 36,211.497 41,069.547 44,217.684 47,238.114 47,238.356 47,237.020 47,234.144 47,234.922 47,235.637 47,237.224 47,237.872 47,237.614 47,234.321 47,237.741 47,234.316 47,238.786 47,220.494 45,118.966 42,833.824 41,486.704 27,324.008 25,805.848 21,565.598 Savings 20,004.515 15,146.465 11,998.328 8,977.898 8,977.656 8,978.993 8,981.869 8,981.091 8,980.376 8,978.788 8,978.141 8,978.399 8,981.691 8,978.271 8,981.696 3,494.672 903.063 21.392 5.021 4.217 2.921 6.413 2.742 4,558.752 1,158.317 104.981 Total 1,686,480.368 1,298,053.610 1,152,096.902 986,930.235 165,166.668 BofA Securities - Preliminary Analysis 3/10/2021 Page 13 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Assumptions Expected Annual Return Annual Volatility Results Probability of Success Average Present Value Benefit Percentiles P5 P25 P50 P75 P95 7.000% 12.000% 86.15% 206,154.594 Discounted at Actuarial Discount Rate (54,479.569) (5% of outcomes less than) 45,305.589 (25% of outcomes less than) 147,263.638 (Median) 290,628.586 (25% of outcomes greater than) 657,900.563 (5% of outcomes greater than) 750.0 600.0 450.0 LL w 300.0 m a 150.0 (150.0) SIMULATIONS (ORDERED BY PV BENEFIT) Stress Test Scenarios Base Case Stress Test 1 Stress Test 2 Stress Test 3 -20% in First Year, 7% Annual Returns 6% Annual Returns 5% Annual Returns 7% After PV Benefit 207,541.398 207,541.398 207,541.398 207,541.398 PV Future UALs due to Act Losses - (160,042.940) (72,732.736) (129,042.386) Net PV Benefit 207,541.398 47,498.458 134,808.662 78,499.011 Net PV Benefit (% of Par Amount) 32.0% 7.3% 20.8% 12.1% BofA Securities - Preliminary Analysis 3/10/2021 Page 14 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Stress Test 1 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 N M V In ID n 00 0) O ci N M V In lD n 00 Ol O c-I N M * Ln l0 n 00 Dl O N N N N N N N N M M M M M M M M M M V ZT ZT V a a V V ZT V ul O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N � Debt Service � Unrefunded UAL � Stress Test 1 UAL -Current UAL Stress Test 2 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 N M V Ln w n 00 M O N M V Ln ID n 00 M O N M V Ln w n 00 Ol O N N N N N N N N M M M co M M M M M M V V V V V Z1, V V V V In O O o 0 o O O o o O O O o O O O o o O O o o O O o O o O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N Debt Service Unrefunded UAL Stress Test 2 UAL -Current UAL Stress Test 3 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 MM N M v in ID n oo m o N m v in ID n oo m o N M v in a n oo m o N N N N N N N N M M M M M M M M M M Z V a a V ZT V ZT V ZT ul O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N � Debt Service � Unrefunded UAL � Stress Test 3 UAL -Current UAL BofA Securities - Preliminary Analysis 3/10/2021 Page 15 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Amortization Base Year Balances UAL Refunded UAL Remaining Fresh Start 2006 (1,483.984) (1,483.984) Benefit Change 2007 25,025.094 - 25,025.094 Benefit Change 2007 119.441 119.441 Assumption Change 2009 27,257.475 - 27,257.475 Special (Gain)/Loss 2009 29,176.611 (29,176.611) - Special (Gain)/Loss 2010 10,760.315 (10,760.315) - Assumption Change 2011 12,363.217 - 12,363.217 Special (Gain)/Loss 2011 (7,365.492) (7,365.492) Payment (Gain)/Loss 2012 5,629.243 (5,629.243) - (Gain)/Loss 2012 (264.240) (264.240) (Gain)/Loss 2013 100,132.646 (100,132.646) - Assumption Change 2014 43,507.182 - 43,507.182 (Gain)/Loss 2014 (63,657.365) - (63,657.365) (Gain)/Loss 2015 32,663.590 (32,663.590) - Assumption Change 2016 16,168.642 - 16,168.642 (Gain)/Loss 2016 38,544.420 - 38,544.420 Assumption Change 2017 13,911.421 - 13,911.421 (Gain)/Loss 2017 (21,744.346) - (21,744.346) Method Change 2018 6,562.427 (6,562.427) - Assumption Change 2018 31,746.753 (31,746.753) - (Gain)/Loss 2018 (13,468.613) - (13,468.613) Al Significant Increase* 2019 141.851 (141.851) - Non -Investment (Gain)/Loss 2019 2,974.088 (1,755.142) 1,218.946 Investment (Gain)/Loss 2019 4,003.293 (4,003.293) - Total 292,703.672 (222,571.872) 70,131.800 BofA Securities - Preliminary Analysis 3/10/2021 Page 16 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start Amounts in $000s Amortization Base Year Balances UAL Refunded Fresh Start 2005 (2,800.549) Benefit Change 2006 1,500.690 (1,500.690) Assumption Change 2009 14,083.767 (14,083.767) Special (Gain)/Loss 2009 31,769.094 (31,769.094) Special (Gain)/Loss 2010 (11,745.462) - Assumption Change 2011 15,355.805 (15,355.805) Special (Gain)/Loss 2011 (4,365.942) Payment (Gain)/Loss 2012 8,239.758 (8,239.758) (Gain)/Loss 2012 74,443.250 (74,443.250) (Gain)/Loss 2013 140,365.987 (2,025.514) Assumption Change 2014 52,003.240 (52,003.240) (Gain)/Loss 2014 (84,279.949) - (Gain)/Loss 2015 59,805.689 (59,805.689) Assumption Change 2016 19,756.175 (19,756.175) (Gain)/Loss 2016 51,205.324 (51,205.324) Assumption Change 2017 23,218.574 (23,218.574) (Gain)/Loss 2017 (33,611.702) - Method Change 2018 5,497.157 (5,497.157) Assumption Change 2018 40,053.249 (40,053.249) (Gain)/Loss 2018 (1,536.868) Non -Investment (Gain)/Loss 2019 5,058.705 (5,058.705) Investment (Gain)/Loss 2019 4,675.386 (4,675.386) UAL Remaining (2,800.549) (11,745.462) (4,365.942) 138,340.472 (84,279.949) (33,611.702) (1,536.868) Total 408,691.378 (408,691.378) 0.000 BofA Securities - Preliminary Analysis 3/10/2021 Page 17 of 18 City of Santa Ana Pension Obligation Bonds Scenario 2 - Fresh Start BOFA SECURITIES, INC. IS NOT YOUR MUNICIPAL ADVISOR OR FIDUCIARY. BofA Securities, Inc. ("BofA") is providing the information contained herein for discussion purposes only either as an underwriter or in anticipation of being engaged to serve as an underwriter. By providing the information contained herein pursuant to the participation by an independent registered municipal advisor exemption provided under SEC Rule 156a1-1(d)(3)(vi) and the underwriter exclusion provided under SEC Rule 1513a1-1(d)(2)(i), BofA is not acting as your "municipal advisor" within the meaning of Section 15B of the Securities Exchange Act of 1934, as amended (the "Act"), and does not owe a fiduciary duty to you pursuant to the Act with respect to the information and material contained in this communication. BofA is either serving as an underwriter or is seeking to serve as an underwriter on a future transaction and not as a financial advisor or municipal advisor. The primary role of BofA, as an underwriter, is to purchase securities with a view to distribution in an arm's-length commercial transaction between you and BofA and BofA has financial and other interests that differ from yours. BofA is acting for its own interests. You should discuss any information and material contained in this communication with any and all of your own internal or external municipal and/or financial, legal, accounting, tax and other advisors and experts, as applicable, to the extent you deem appropriate before acting on this information or material. This material has been prepared by the Public Finance Group and is not a research report and is not a product of the fixed income research department of BofA. This material is for information purposes only, is intended solely for your use, and may not be reproduced, disseminated, quoted or referred to in whole or in part, without our written consent. This material does not constitute an offer or solicitation to sell or purchase any securities and is not a commitment by BofA Securities or any of its affiliates to provide or arrange any financing for any transaction or to purchase any security in connection therewith. The calculations contained herein are based upon assumptions and information that either you or your advisors provided to BofA or which BofA deems in its sole discretion to be appropriate. BofA makes no representation or warranty as to the accuracy or completeness of this material or these calculations and any and all liability to you or any third parties relating to this material or the calculations is expressly disclaimed. The material and calculations made available to you may not be similar to the information generated by BofA or its affiliates proprietary models or valuations that are used for its own purposes or to the models or valuations available from other sources including from other dealers. BofA assumes no obligation to update or otherwise revise these materials. Values generated by the data or calculations may not reflect actual prices or values that can be obtained in the market at that time and the calculations should not be relied upon for any tax, accounting, legal or other purpose. BofA Securities - Preliminary Analysis 3/10/2021 Page 18 of 18 Requested Certificates 4 BofA SECURITIES ���� a CITY OF SANTA ANA ATTACHMENT A REFERENCES List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Reference Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Reference Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Contact Individual: Phone Number: Facsimile Number: Year: Contact Individual: Phone Number: Facsimile Number: Year: Contact Individual: Phone Number: Facsimile Number: Year: THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 19 of 24 a CITY OF SANTA ANA ATTACHMENT A REFERENCES List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Reference Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Reference Customer Name: Address: Contract Amount: Description of supplies, equipment, or services provided: Contact Individual: Phone Number: Facsimile Number: Year: Contact Individual: Phone Number: Facsimile Number: Year: Contact Individual: Phone Number: Facsimile Number: Year: THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 19 of 24 Proposer understands and agrees that this written RFP (or any part thereof specifically designated and accepted by the City of Santa Ana, hereinafter City) shall constitute the entire agreement between proposer and the City only after it has been accepted by the City Council, endorsed by the Clerk of the Council with her signature and official seal noting hereon the action of approval of the Council, signed by the Executive Director or his duly authorized agent, and signed by the City Attorney, denoting his approval of the form of this document, and its execution, and when it or an exact copy of it has been either delivered to proposer or deposited with the United States Postal Service properly addressed to the proposer with the correct postage affixed thereto. Proposer further agrees that upon delivery (as defined above) of the accepted agreement he/she will furnish City all required bonds and certificate of liability insurance within ten (10) days (excluding Saturdays, Sundays and City's legal holidays), or the funds, check, draft, or proposer's bond substituted in lieu thereof accompanying this proposal shall become the property of the City and shall be considered as payment of damages due to the delay and other causes suffered by City because of the failure to furnish the necessary bonds and because it is distinctly agreed that the proof of damages actually suffered by City is difficult to ascertain; otherwise said funds, check drafts, or proposer's bond substituted in lieu thereof shall be returned to the undersigned. Proposer understands that a proposal is required for the entire work, that the estimated quantities set forth in the RFP schedule are solely for the purpose of comparing proposals, and that final compensation under the contract will be based upon the actual quantities of work satisfactorily completed. All terms contained in the specifications, the certification of nondiscrimination by contractors, and the required insurance certificates are to be incorporated by reference into this agreement and are made specifically as part of this RFP. Firm BofA Securities, Inc. Signed and Printed Name: Title Managing Director Date March 10, 2021 Holly Vocal RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 20 of 24 (Title 23United States Code Section 112and Public Contract Code SectioD71O6) To the CITY OFGANTAANA |Oaccordance with Title 28United States Code Section 112and Public Contract Code 71O6the proposer declares that the prOpO8&| is not made in the interest of, or OD behalf of, any undisclosed person, partnership, company, 8sSOciatioD. VFg8ObcaUon, or corporation; that the proposal is genuine and not collusive or sham; that the proposer has not directly or indirectly induced or solicited any other proposer to put in 8false 0rsham proposal, and has not directly or indirectly colluded, conspired, connived or agreed with any proposer or anyone else to put in a sham proposal, or that anyone shall refrain from bidding; that the proposer has not in any manner, din*oi|y Or inUireCt|y, sought by agreement, communication, or conference with anyone to fix the proposal price of the proposer or any proposer, or to fix any overhead, profit, or cost element of the proposal price, or of that of any other prnp0oer, or to secure any advantage against the public body awarding the Contract of anyone interested in the proposed contract; that all statements contained in the proposal are true; and, further, that the proposer has not, directly or |ndinect|y, submitted his or her pn)p0Ga| price Or any breakdown thereof, or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any corporation, partnership, company association, organization, bid depository, or to any member or agent thereof toeffectuate acollusive orsham proposal. Note: The above nonCoUueion affidavit is part of the proposal. Signing this proposal on the signature portion thereof shall also constitute signature of this noncollusion affidavit. Proposers are cautioned that making a false certification may subject the certifier to criminal prosecution, State of California, County of n�� nneo/oeror�meonDme_���or d ' ' 2O�� ,by '��� proved tonneonthe basis nfsatisfactory evidence to bethe pe on�� �ho�pp��r�db��r�[O�. �� �p' � � Notary Public Signature " Notary Public Seal THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PR - OPO SAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFPNo. 2/-O25 Underwriting Services for Pension Refinancing Bonds Faoe21 of 24 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of San Mateo Subscrib d and sworn to (or affirmedme m On this®� day of )- , 20�, by A01 proved to me on the basis of satisfactory evidence to be the person who appeared before me. AYUSH KHADKA COMM.2261418 c I.F. - NOTARY PUBLIC • CALIFORNIA • SAN MATEO COUNTY My commission expires October 6, 2022 (Seal) Signature The prospective participant certifies, by signing and submitting this bid or proposal, to the best of his or her knowledge and belief, that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form--LLL, "Disclosure of Lobbying Activities," in conformance with its instructions. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. The prospective participant also agrees by submitting his or her bid or proposal that he or she shall require that the language of this certification be included in all lower tier subcontracts, which exceed $100,000 and that al uch subrecipients shall certify and disclose accordingly. Signed: Holly Vocal Title: Managing Director Firm: BofA Securities, Inc. Date: March 10, 2021 N [oil log RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 22 of 24 The undersigned consultant or corporate officer, during the. performance of this contract, certifies as follows: The Consultant shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Consultant shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without, regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Consultant agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause. 2. The Consultant shall, in all solicitations or advertisements for employees placed by or on behalf of the Consultant, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. 3. The Consultant shall send to each labor union or representative of workers with which he/she has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers' representatives of the Consultant's commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. 4. The Consultant shall comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. 5. The Consultant shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his/her books, records, and accounts by the administering agency and the Secretary of Labor for purposes of investigation, to ascertain compliance with such rules, regulations, and orders. 6. In the event of the Consultant's non-compliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, the contract may be canceled, terminated, or suspended in whole or in part and the Consultant may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Execution Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulations, or order of the Secretary of Labor, or as otherwise provided by law. RFP No, 21-025 Underwriting Services for Pension Refinancing Bonds Page 23 of 24 (9) 7. The Consultant shall include the portion of the sentence immediately preceding paragraph (1) and the provisions of paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontract or purchase order as the administering agency may direct as means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event the Consultant becomes involved in, or is threatened with, litigation with a subconsultant or vendor as a result of such direction by the administering agency, the Consultant may request that the United States enter into such litigation to protect the interests of the United States. & Pursuant to California Labor Code Section 1735, as added by Chapter 643 Stats. 1939, and as amended, no discrimination shall be made in the employment of persons upon public works because of race, religious creed, color, national origin, ancestry, physical handicaps, mental condition, marital status, or sex of such persons, except. as provided in Section 1420, and any consultant of public works violating this Section is subject to all the penalties imposed for a violation of the Chapter. Signed:Air�Holly Vocal Title: -.-Managing Director Firm: BofA Securities, Inc. Date: March 10, 2021 THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 24 of 24 EXHIBIT 3 rti p 1 �NaE Ca UN1Y QYt of GpYEIHME HI �I Ir...,.. �... THE GOLDEN CITY ` F011Fl7EG 1849 SUBMISSION DEADLINE: 5:00 PM PTTHURSDAY, MARCH 11, 2021 STIFEL STIFEt March 11, 2021 Kathryn Downs Executive Director of Finance & Management Services Agency City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 Re: Proposal to Provide Underwriting Services Dear Kathryn, Thank you for the opportunity to present our qualifications to provide underwriting services to the City of Santa Ana (the "City') on its proposed pension obligation bonds (the "POBs"). Whether the City decides to refinance all or a portion of its unfunded pension liabilities, this is likely to be the largest and most important financing the City undertakes for decades to come. We understand the magnitude of that sheer fact and, in turn, the magnitude that even a 1 or 2 basis point difference can have. So why entrust this borrowing to Stifel? We could argue many reasons, but most important is our consistency setting the lowest POB credit spreads and our proven track record of selling POBs successfully in all types of markets for a wide range of California cities with different attributes (i.e. ratings, name recognition, size, etc.). Additionally, please consider the following: #1 California Bond Underwriter. #1 Taxable Bond Underwriter. #1 Pension Bond Underwriter. Since 2018, Stifel has brought to market 569 California bond issues totaling $14.3 billion, making us the #1 underwriter by number of issues with a market share of 24%. During the same time, Stifel has led 118 taxable financings totaling $3.6 billion and senior managed 7 pension obligation bonds totaling $989 million, which includes the recent sale of the $287 million City of Orange POBs. Additionally, Stifel is set to lead manage next week's $363 million Huntington Beach POBs. Our primary market presence keeps Stifel's sales professionals in constant dialogue with the buyers of California credits to understand their portfolio needs and credit apprehensions. Distribution Platform that Combine to Deliver Aggressive Pricing. Stifel is one of the few underwriting firms doing business in California that underwrites California bonds from a California underwriting desk. In fact, the firm has 3 California underwriters on 2 California underwriting desks. Our underwriters' knowledge of California communities facilitates our ability to match buyers with communities and credits that meet these investors' varying investment criteria. Furthermore, our sales platform includes 22 institutional municipal sales specialists, approximately 200 fixed -income generalists and 280 retail sales professionals among 36 California private client offices. Sale of taxable bonds to overseas buyers is led by Michael Levy, the Head of Institutional Sales for Stifel Europe. Michael oversees 20 institutional sales people covering European corporations, sovereign funds, pension funds and other European - based asset managers. We will leverage all corners of this distribution network to drive down interest rates on the City's POBs. , • Incomparable Experience with Local Credits. Select Clients (Since 2016) soel rL0°° ' 0`= orange $286 nudllon Huntington Beach $364'mllon Stifel has extensive experience working with Anaheim Brea ublic a ies throughout Orange Count p gencrou g g y . Buena Park O f, / 1 ' The accompanying map highlights issuers for Costa Mesa Fountain Valley °O'e .® • Fullerton c mQ;,o�e v zort Poss zoa voss which we have served since 2016. This vast Garden Grove W Ost° f senior Manager Senior Manager experience of working with all of the Cit 's p g Y • Huntington Beach;c .Irvine To, s c R Piacent,a Orange County neighbors provides our bankingand b underwriting team with a better • Newport Beach .orange city Orange County Po _ sin Oy o hp -.},,, $53 million � $334 million understanding of local credits and insights on . Placentia Stanton huna 3ton cosOes. B, appropriate pricing levels. Tustin • T Westminster —'°ke NF ror� 1, M2020 lags Sole Manager Manager Senior Manager Senior STIFEt Taking Pride in Crafting the Rating Presentation. The rating agencies area human beings. They see dozens of presentations made by investment bankers all year long. Many of our competitors believe that since S&P's rating methodology is mostly quantitatively -driven that the presentation k,- does not matter — therefore they do not put a lot of thought or time into �� �� �� City of Orange a story board. Stifel believes the opposite. A substantial amount of � 2021 Taxable Pension Obligation E S&P's rating criteria is based on qualitative factors which require careful j:� Prasentationto5tandard&Poor's - � Fenr.ary e, zau explanation and positioning of a city's strengths and weaknesses relative to its peer group (i.e. other cities that received the same ratings recently). Stifel takes pride in crafting our credit presentations and focusing on these qualitative factors. In addition, we use the insights garnered by being the #1 ranked CA bond underwriter to advise our clients on how to layout their pension management plans more thoughtfully and advocate more effectively for a higher rating. Especially during the COVID pandemic, Stifel has more experience securing General Fund ratings for California cities during this stressful time and we understand how to use the UAL policies and POB strategies employed by our clients as an asset in the rating discussions. Revealing the "Real" Santa Ana for Wall Street Investors — A Marketing Plan Like No Other. The City has a lot to be proud about. Its history, central location, growth, and diversity are core attributes which Wall Street should appreciate as real credit strengths that will only grow over time. Words on the page of a prospectus or rating report alone cannot describe these qualities adequately. We've had great success using full-scale video productions to convey our clients' stories to Wall Street and have produced videos for successful POB sales in 2021 for the cities of Chula Vista ($349M) and Orange ($287M). Our excitement in telling the City's story led us to conducting research on the City and storyboarding ideas with a professional video production team. To provide an example of the creativity and passion we would bring to the City's effort, we produced a 3-minute video [https://vimeo.com/522542200/d55a767815] for your review that encapsulates how we would present the "real" Santa Ana to the world. Being the `Quintessential' Team Player. Whether'leading the charge' or serving in a more complementary role, we pride ourselves on being the quintessential team player. Our goal as lead manager is to foster a collaborative environment that leverages the strengths of each co -manager to secure the best possible outcome (lowest borrowing cost) for our issuer clients. We have had the pleasure of serving as lead manager of a multi -firm syndicate on several recent POBs, including the Orange POBs that priced last Thursday (3/3) and upcoming Huntington Beach POBs, which are scheduled to price next week (3/15). As an example of our teamwork and collaboration, at the request of the city, its advisor, and in coordination with our co -manager, we seamlessly expedited the pricing of the Orange POBs from a 2-day process to 1-day in order to lock -in aggressive interest rates amidst market volatility. Also of note, Stifel supported the City by underwriting roughly $17 million of unsold balances at the end of the order period. While we believe our talents and experience are best suited as lead -managing underwriter of a syndicate, please know that as a potential co -managing underwriter, both our bankers and underwriters will take an active role in supporting the lead -manager to best structure, market, and sell the City's POBs at the most aggressive rates possible. We understand the importance of this borrowing for the City of Santa Ana. We have assembled a team that brings to the table credit expertise and structuring/marketing experiences that will be valuable to delivering the best results for the City. Thank you for the opportunity to present our qualifications. Sincerely, John Kim, Managing Director jkim@stifel.com (213) 443-5203 / Tom Jacob, Managing Director tjacob@stifel.com (213) 443-5010 STIFEL CITY OF SANTA ANA Proposal to Provide Underwriting Services TABLE OF CONTENTS 1. Cover Letter 2. Agreement Statement........................................................................... 3. Firm and Team Experience.................................................................... 4. Pension Obligation Bond Experience.................................................... 5. Distribution Capabilities........................................................................ 6. Structuring Ideas and Marketing Plan for Proposed Debt Issuance...... 7. Cost Proposal......................................................................................... 8. Certifications......................................................................................... 9. References............................................................................................. ....................................................................... 1 ....................................................................... 1 ....................................................................... 5 ....................................................................... 7 ....................................................................... 8 ..................................................................... 15 ..................................................................... 15 ..................................................................... 15 Appendix A —Certifications (Attachments) and Stifel Non -Discrimination Policies Appendix B — POB Experience Since 2010 AppendixC —Team Resumes Appendix D — Most Significant Engagements Since 2016 Appendix E — Sources and Uses of Funds Appendix F — Proposer Questionnaire ************************************************************************************************************************* RFP EXEMPTION DISCLOSURE: As outlined in the SEC's Municipal Advisor Rule, Stifel, Nicolaus & Company, Incorporated ("Stifel") is providing the attached material and all information and advice contained therein in response to a request for proposals or request for qualifications (the "RFP") by a municipal issuer or obligated person with respect to a specific issue of municipal securities. Stifel has not acted, and will not act, as your municipal advisor with respect to the issuance of the municipal securities that is the subject to the RFP. Stifel is providing information and is declaring to the proposed municipal issuer and any obligated person that it has done so within the regulatory framework of MSRB Rule G-23 as an underwriter (by definition also including the role of placement agent) and not as a financial advisor, as defined therein, with respect to the referenced proposed issuance of municipal securities. The primary role of Stifel, as an underwriter, is to purchase securities for resale to investors in an arm's- length commercial transaction. Serving in the role of underwriter, Stifel has financial and other interests that differ from those of the issuer. The issuer should consult with its' own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate. These materials have been prepared by Stifel for the client or potential client to whom such materials are directly addressed and delivered for discussion purposes only. All terms and conditions are subject to further discussion and negotiation. Stifel does not express any view as to whether financing options presented in these materials are achievable or will be available at the time of any contemplated transaction. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Stifel to provide or arrange any financing for any transaction or to purchase any security in connection therewith and may not relied upon as an indication that such an offer will be provided in the future. Where indicated, this presentation may contain information derived from sources other than Stifel. While we believe such information to be accurate and complete, Stifel does not guarantee the accuracy of this information. This material is based on information currently available to Stifel or its sources and is subject to change without notice. Stifel does not provide accounting, tax or legal advice; however, you should be aware that any proposed indicative transaction could have accounting, tax, legal or other implications that should be discussed with your advisors and /or counsel as you deem appropriate. City of Santa Ana I Proposal to Provide Underwriting Services STIFEL 2. Agreement Statement Agreement Statement Proposal shall include a statement outlining your concurrence or concerns with any and all provisions as contained in this RFP. We have reviewed and concur with all provisions contained within the Scope of Services, Sections 1-7, 8 (Attachments A, B, C, D), and 9-11. Regarding Section 8, Attachment E (Non -Discrimination Certification), Stifel maintains our own comprehensive Non -Discrimination Policies, which are included as part of Appendix A. 3. Firm and Team Experience i. Firm Overview A general description of the firm, including structure, size, number of employees, relevant financing experience, and any past or contemplated changes in ownership. Additionally, the following shall be included: Provide a list, in tabular form with a grand total, of all Pension Obligation Bond transactions in which the firm has served as senior manager since January 2010, specifically identifying staff members involved and their roles. Provide a list, in tabular form with a grand total, of all Pension Obligation Bond transactions in which the firm has served as co -manager since January 2010, specifically identifying staff members involved and their roles. Stifel (NYSE: SF), founded in 1890, is one of the nation's leading independent investment banking firms with over 8,000 employees located in 370 offices around the globe. Our growth and success over the years is the result of both organic growth and strategic acquisitions. Stifel is a diversified wealth management and investment banking firm serving a broad group of clients — individuals, institutions, municipalities, and corporations — providing a wide array of services, ranging from investment advice, securities brokerage, lending and trust services, debt and equity capital raising, strategic advice, sector research, and restructuring. Stifel is organized around two primary business groups, Institutional Capital Markets, which includes our Municipal Securities Group, and Global Wealth Management, serving the needs of retail clients. The graphic to the right depicts our overall organization structure, including the reporting lines for our municipal securities business. Stifel's California municipal finance group is the anchor of our national public finance practice and our commitment to California is demonstrated through our expansive presence. As further described below, Stifel has 36 public finance offices across the nation with two offices located in California. Stifel is the only underwriting firm that has two municipal bond underwriting desks in the State (Los Angeles and San Francisco). In total, we have nearly 700 employees based in California. Getting to Know Stifel Our organization and capabilities Investment Banking Private Client Group Equity Sales & Trading Stifel Asset Management Research Stifel Bank & Trust Fixed Income Capital Markets F Municipal Securities Group Public Finance • John Kim (primary) and Tom Jacob Municipal Capital Markets • Municipal Syndicate Desk (secondary), our proposed Project — Ben Stern, Betsy Kiehn, Marcus Managers Peters all located in California • 30 banking offices from coast to coast • Municipal Institutional Sales with 250 team members with regional • Taxable and Tax -Exempt Trading and sector coverage • Credit As requested, in Appendix B, we include a detailed list of the firm's POB experience as both lead and co -managing underwriter since January 1, 2010. Please see our response below and in questions 3(vi), 3(viii), and 4(i) for additional detail on our relevant experience. ii. Governmental Staff and Experience A description of the size of the firm's governmental staff and the firm's experience with governmental agencies of a similar size, nature, and scope. Emphasis should be placed on assignments undertaken within the past three (3) years and on engagements undertaken by the personnel proposed to be assigned to this agreement. Nationally, our Municipal Securities Group includes over 300 professionals focused on investment banking, sales & trading, underwriting and support for our public sector clients. Stifel's three California -based underwriters coordinate a 2S0+ person national salesforce (including 200 taxable sales professionals) that provide access to over 6,000 institutional municipal bond investors. Additionally, our Private Client Group manages over $300 billion for retail investors nationwide. Below is a summary of our resources dedicated to our municipal clients. City of Santa Ana I Proposal to Provide Underwriting Services Page 1 STIFEL Public Finance Investment Banking: 36 Offices Across 28 States 243 Professionals Institutional Sales & Trading: 12 Municipal Underwriters 22 Muni Sales Professionals 9 Muni Traders Private Client Group: 300+ Offices :Finance 2,300+ Professionals e Client Group $300+ Billion AUM �ment Banking 1.6 Million Accounts ituional Sales Offices y&Fixed Income) 1,118 Retail Muni Traders Fixed Income Group: 200 Taxable Sales Professionals While Stifel is headquartered in St. Louis, our California municipal finance group is the backbone of our national practice. Our storied history in Southern California is a result of the acquisitions of Stone & Youngberg (2011) and De La Rosa & Co. (2014), the top two underwriting firms in California. The merger of these two firms with Stifel created the largest California banking team with one of the largest distribution platforms in the municipal securities industry. Stifel's commitment to the sector and more specifically to California, is evident by our continued leadership as the #1 underwriter of California municipal bonds in all the areas that matter most to the City. Stifel is #1 in All the Areas that Matter Most to the City #1 Underwriter in California. No firm underwrites more California municipal bonds than Stifel. Our experience with California entities comprises all financings. Since 2018, Stifel has underwritten 569 California transactions, nearly 250 more than our nearest competitor. This translates into roughly 1 out of every 4 issues that comes to market. #1 Underwriter of California Taxable Bonds. If we narrow experience down to taxable transactions, Stifel once again leads the pack. Since 2018, Stifel has priced 118 issues totaling $3.6 billion in par value in California. #1 Underwriter of California POBs. Since 2018, Stifel has led 7 POB transactions for California issuers totaling $989M making us the #1 underwriter of California POBs by number of issues and par. 600 569 140 8 118 500 120 7 100 85 6 400 324 80 6 300 262 253 62 60 52 4 200 38 3 131 qp 100 1 i 20 2 1 STIFEL Raymond RBC Piper citi STIFEL Raymond RBC Piper Citi James Sandler James Sandler Source: SDC, from 11112018 to 31812021, ranked by number of issues. 7 5 5 4 3 STIFEL Ramirez BofA Hilltop Cabrera Our primary contacts John Kim and Tom Jacob have worked their entire careers in Southern California, assisting municipalities such as the City. Provided below is a snapshot of their POB experience over the past three years. We provide additional detail on their specific pension experience in our responses to question 4(i). City of Santa Ana I Proposal to Provide Underwriting Services Page 2 STIFEL RECENT POB Experience (Over Past 3 Years) 4-0'?4+cam Case Study: City of Orange $286,485,000 1 2021 Taxable POBs Role: Lead Rating: AA Pricing: March 4 � g� � g� Purpose: Refinance 100% of the current CalPERS UAL. Ratinf Stifel crafted the S&P presentation, highlighting the City's history of conservative budgeting, strong reserves, and AkCADiA prudent management policies. The POBs received a 'AA' rating. oFGLEI�� 4 ONrE,Qtt' ofPAS� Pricing Results: Stifel organized several efforts to expand demand, such as producing a 6-minute video introducing ? o investor's to the City and obtaining an aggressive insurance bid from BAM. The issue was structured with serial bonds through �AORAVVI °ttrfou�'`P °RarEo�J 2036 and two insured term bonds maturing in 2040 and 2044. Originally scheduled for a 2-day pricing period, the financing UPCOMING POB Experience (Q1/2 2021) team decided to shorten to one day to mitigate interest rate risk. Stifel guided the underwriting team to a successful outcome (see response to Question 6(f)). The Bonds achieved a f► _ final borrowing cost of just 2.74%. The POBs received $398 �t million in total investor orders, including international buyers. POB Payments Relative to UAL Amortization Approval of Preliminary Final Pricing ATAIV` �4n "'—=^ ..�—µ'= „ sts Event Issuance Pricing (Rate Lock) Date of Event 14-Jul-20 2-Mar-21 3-10ar-21 10Year UST Yield 0.63% 1.42% 1.47% n f T;T..vC• �Ly—.. �,ii _ 11 — — s--- _ _— $zo ParAmount $292,500,000 $286,090,000 $286,485,000 Wl1111111n ice■ 1� �`"=�..rm::� ®-'�'m""- St True Interest Cost 3.53% 2.75% 2.74% —�sWWYa� s5o IIIIIIIIIIIIIIIII I I Combined UAL 290,557,472 284,609, 168 284,609,168 C Huntington Beach POBs to Price 3/15• Total UAL Payments 556,538,011 536,626,163 536,626,163 Total Debt Service 421,690,903 386,811,083 386,399,435 Stifel is Lead Manager of 3-Firm Syndicate ott torn tote rate toad roar ,oa, toae toes ,moo ,o„ ,� UAL Savings $134,947,108 $149,815,081 $150,226,728 $PVof UALSavings 98,286,476 119,671,884 120,110,210 % PV of UAL Savings 33.8% 42.1% 42.2% iii. Project Managers Name and contact information of the primary and secondary Project Managers to -be -assigned to the engagement Stifel's banking team will be led by John Kim (primary) and Tom Jacob (secondary). John Kim, Managing Director Tom Jacob, Managing Director Primary Secondary 515 S. Figueroa St. Suite 1800 515 S. Figueroa St. Suite 1800 Los Angeles, CA 90071 Los Angeles, CA 90071 jkim@stifel.com tjacob@stifel.com P: (213) 443-5023 1 C: (415) 999-4779 P: (213) 443-5010 1 C: (213) 434-3067 iv. Commitment Level of Assigned Personnel Indicate level of commitment of each of the assigned key personnel and how you wi In ensure the accessibility of key personnel to the City during this engagement. Please know that we take pride in always being available to our clients; providing thoughtful and engaging customer service, always delivering a work product that is of the utmost quality in a timely manner. John is a member of Stifel's Executive Committee and Sara Brown and Erica Gonzalez (providing additional pension expertise and oversight) are the co -heads of the firm's California Public Finance practice. All three will ensure that all the firm's resources are available to the City. Tom, with the support of Esthela Carreon and Nick Tracewell, will also be available to field day-to-day questions. City of Santa Ana I Proposal to Provide Underwriting Services Page 3 STIFEL v. Financing Team Resumes Resumes for the professional staff assigned to the engagement. Include a brief biography of each person specifically addressing experience relevant to the City's proposed financing. A discussion of educational background and relevant experience of the Partner, Supervisor(s) and Staff which will be assigned to this engagement as well as their assigned responsibilities under the proposal shall be included. Rounding out our core banking team and providing Banking Team Resources execution support to our project managers, John and Betsy Kiehn John Kim Tom Jacob Managing Director Managing Director Managing Director Tom, will be Esthela Carreon, Assistant Vice Head of Muni Capital Markets Primary Project Manager Secondary Project Manager President, and Nick Tracewell, Analyst. Providing Los Angeles, CA Los Angeles, CA San Francisco, CA Esthela Carredn Nick Tracewell ^ Ben Stern oversight and ensuringthat all of the firm's resources Senior West Coast Underwriter g — Assistant Vice President Analyst Project Support Project Support Lead Underwriter will be available to the City are Sara Brown and Erica �, Los Angeles, CA San Francisco, CA Los Angeles, CA Gonzalez, both Managing Directors and co -heads of Additional Resources and 0�ersiglhtMarcus Peters Vice President our California Public Finance practice. Our Sara Brown Erica Gonzalez Investor Liaison Managing Director Managing Director San Francisco, CA underwriting team is comprised of Ben Stern, from Co -Head of CA Public Finance Co -Head of CA Public Finance our Los Angeles desk, and Betsy Kiehn and Marcus San Francisco, CA A San Francisco, CA Peters, both from our San Francisco desk. Full resumes can be found in Appendix C. vi. Relevant Experience A description of the Proposer's experience in providing similar services to those requested in this RFP. As the leading underwriter of municipal bonds, we have extensive experience in providing similar services to those listed in the RFP. We briefly shared our experience since 2018 in question 3(ii); however, please also consider the following: Stifel is the #1 POB Underwriter for California Public Agencies Since 2010 Since 2010, 73 POBs totaling over $7.65 billion in par value have come to market. They've been sold by 18 different underwriters. While that may seem like a lot of firms with experience, half (9 firms) have only completed 2 or more transactions. Of the remaining firms (9 firms), Stifel is the #1 ranked POB underwriter — we've underwritten 23 POBs totaling nearly $1.8 billion. As illustrated below, our closest competitors have completed 6 and 7 deals apiece since 2010. 1. Stifel 1 23 32% 1 $1,762 23% 2. BofA 2 7 10% 2 1,273 17% 3. Ramirez 3 6 8% 6 434 6% 4. Hilltop 4 5 7% 5 621 8% 5. JP Morgan 5 5 7% 3 1,154 15% 6. Raymond James 6 5 7% 4 1,016 13% 7. Wedbush 7 5 7% 10 114 2% 8. Stinson 8 4 5% 13 36 0% 9. Cabrera 9 3 4% 9 363 5% Industry Totals 73 $7,654 vii. References Identify three taxable bond issuer references for which the proposed primary Project Manager and the secondary Project Manager have carried out similar responsibilities to those contemplated under this RFP. Include contact information for each. Additional references (Arcadia, Chula Vista, and Glendora) are provided in Attachment A. Orange (2021 POBs) Will Kolbow `< Assistant City Manager" wkolbow@cityoforange.org 714-744-2235 Huntington Beach (2021 POBs) Sunny Rief, CPA, CFE Assistant CFO j sunny.rief@surfcity-hb.org r % 714-536-5907 Pasadena (2020 POBs) Matt Hawkesworth Finance Director mhawkesworth@cityofpasadena.net 626-744-4350 City of Santa Ana I Proposal to Provide Underwriting Services Page 4 STIFEL viii. Significant Engagements A list of the local office's most significant engagements in the last five (5) years, indicating whether they are public or private sector, and including scope of work, date, and name and telephone number of the client contact. Please refer to Appendix D. ix. Conflicts of Interest A statement that the firm is independent of the City and that it is unaware of potential conflicts of interest. There are no conflicts or perceivable conflicts of interest with the City. To the best of our knowledge, Stifel has no such arrangements material to our services and performance related to this agreement. x. Affirmative Statement Verifying California Registration An affirmative statement verifying the firm and all assigned key professional staff are properly licensed to practice in California. The firm and all assigned key professional staff are properly licensed to practice in California. A. Errors and Omissions Insurance A warrant that the firm maintains a prudent amount of errors and omissions insurance that covers negligent acts and is applicable to the work requested in this RFP. The firm maintains E&O insurance that is applicable to the work requested in this RFP. xii. Acknowledgement of Contractual Authorization An acknowledgement by signature that the signer is authorized to contractually bind the firm. Both of the proposed project managers, John Kim and Tom Jacob, are authorized to contractually bind the firm. xiii. Litigation Any pending legal actions and litigations against the firm. Legal actions against the firm in the previous five years shall be included. Stifel, Nicolaus & Company, Incorporated ("Stifel") is an investment banking and securities firm providing investment services to individuals and institutional clients, investment banking, and related services including the day-to-day purchase and sale of securities. Stifel is a wholly -owned subsidiary of Stifel Financial Corp. (SF). In the normal course of business, at any given time, Stifel is subject to a number of claims and disputes, as well as regulatory matters including examinations, reviews, investigations, or formal actions. All required disclosures of material litigation and regulatory matters are made in Stifel Financial Corp.'s public filings with the SEC and other regulatory authorities, such as its Form 10-K and the most recent Form 10-Qfiled with the U.S. Securities and Exchange Commission (the "SEC"), 8-K's, and in other regulatory filings, such as Form B/D, as amended. You are further referred to the FINRA website, where you can access Broker Check reports for Stifel, Nicolaus & Company, Incorporated which may be located with the following hyperlink: http://brokercheck.finra.org/Firm/Summary/793. 4. Pension Obligation Bond Experience i. Assigned Personnel Experience Describe the firm's and selected personnel's experience within the last thrity-six (36) months regarding the issuance of Pension Obliagtions Bonds. Please include but not limited to the following items: i. Name of Municipality or District ii. Amount of Debt Issuance iii. Par amount of debt issued iv. Number of underwriters within the engagement - if multiple underwriters, indicate if co or senior As previously mentioned, Stifel is the leading underwriter of California pension financings. Below we list Stifel's California pension experience over the last 36 months as well as those transactions scheduled to come to market in the first half of 2021, highlighting in blue those transactions staffed by our project managers. City of Santa Ana I Proposal to Provide Underwriting Services Page 5 STIFEL Q2 '21* $152,000,000 ElSegundo 2021 POBs 2 Co -Senior Kim Q2 '21* 92,500,000 Manhattan Beach 2021 POBs 2 Co -Senior Kim Q2 '21* 272,000,000 Corona 2021 POBs 1 Sole Brown 3/17/21* 363,620,000 Huntington Beach 2021 POBs 3 Senior Kim, Jacob 03/03/21 286,485,000 Orange 2021 POBs 2 Senior Kim, Jacob, Brown 02/10/21 350,025,000 Chula Vista 2021 POBs 1 Sole Brown 02/02/21 106,335,000 Monterey Park 2021 POBs 2 Co -Manager Jacob 11/09/20 101,490,000 Gardena 2020 POBs 3 Co -Senior Kim 10/29/20 52,950,000 Placentia 2020 Lease Rev Bonds 1 Sole 10/27/20 90,000,000 Arcadia 2020 POBs 1 Sole Jacob, Kim 02/05/20 131,805,000 Pasadena 2020 Refunding POBs 2 Senior Jacob, Kim 08/22/19 64,420,000 Glendora 2020 POBs 1 Sole Jacob 12/04/18 15,325,000 Fairfield 2018 Refunding POBs 1 Sole Senior: $1,972,620,000 12 Transactions Co: $106,335,000 1 Transaction *Currently underway. Our Proven Track Record of Setting the Lowest POB Credit Spreads. As the most active POB underwriter for California public agencies, Stifel has consistently set the lowest rates on its California POBs. The list below highlights all the long- term POB transactions sold in California over the past 3 years, sorted by "credit spread" (see explanation below). .. Performing (Lowest Spread) California Pension Issues Since 2018 Sale Date Is! P Maturity Rate 30-Yr LIST Spread Firm(s) 03/03/21 Orange $286.49 AA 2044 2.74% 2.27% 0.47% Stifel/Citi 02/11/21 Chula Vista 350.03 AA 2045 2.51% 1.94% 0.57% Stifel 08/22/19 Glendora 64.42 AAA 2044 2.85% 2.11% 0.74% Stifel 02/02/21 Monterey Park 106.34 AA 2043 2.67% 1.87% 0.80% Ramirez/Stifel 02/09/21 Downey 113.59 AA 2044 2.75% 1.95% 0.80% BofA 02/05/20 Pasadena 131.81 AAA 2045 3.06% 2.14% 0.92% Stifel/BofA 01/13/21 El Cajon 147.21 AA 2043 2.84% 1.82% 1.02% BofA 12/17/20 Ukiah 49.86 A+ 2049 2.77% 1.68% 1.09% Piper 10/27/20 Arcadia 90 AAA 2040 2.70% 1.57% 1.13% Stifel 07/25/18 La Verne 54.27 AA+ 2044 4.26% 3.06% 1.20% Hilltop The "credit spread" represents the risk premium that bond underwriters add to the daily US Treasury rates when setting the taxable interest rates for a particular POB issue. The POB credit spread is heavily dependent on the credit rating of the public agency (higher ratings lead to lower spreads), market perception of the public agency's name value, overall investor demand (i.e. how many investors are competing for the bonds), prepayment provisions, bond size (larger deals attract lower spreads) and relative US Treasury levels at the time of sale (when UST rates are low, the credit spread tends to be lower). An underwriter's ability to manage these factors simultaneously and be the best advocate for the proposed pricing levels for the POB determines how low the credit spread can be set. We are proud of achieving the following track record in just the last three years: ■ Set the lowest POB credit spread to US Treasuries (+0.47%) for Orange ("AA" rating) on March 3, 2021; ■ Top 3 lowest POB credit spreads (Orange, Chula Vista, and Glendora); ■ 5 of the top 10 lowest POB credit spreads were negotiated by Stifel (no other firm has more than two deals); and ■ Achieved the lowest all -in TIC (2.51%) for a California, long-term POB (for Chula Vista). City of Santa Ana I Proposal to Provide Underwriting Services Page 6 STIFEL 5. Distribution Capabilities i. Taxable Marketing and Distribution Capabilities Proposers shall provide a brief summary of their firm's fixed income marketing and distribution capabilities, specifically taxable municipal bonds. Description of firm's corporate bond sales and trading capabilities shall include, but not be limited to the following: i. Number of sales and trading personnel. ii. League tables/rankings iii. Personnel assigned to sell taxable municipal bonds One of the Largest Distribution Platforms in the Industry Stifel has one of the most potent distribution platforms in the municipal origination business. The "potency" of our capabilities is evidenced in our consistent ability to achieve the best pricing levels in the sale of California municipal bonds, which is the reason why so many public agencies select Stifel as their underwriter. For more detail on our experience and pricing performance, please refer to questions 3(i), 3(ii), 3(vi), and 4(i). Institutional Investors. Stifel has 222 institutional sales professionals: 22 municipal Stifel Distribution Channel bond specialists and 200 Fixed Income Municipal Securities Group 9 Municipal Underwriters (taxable) specialists. Combined, Stifel 22 Municipal Sales People provides the City with access to over 6,000 - Denver - Los Angeles large, medium and small institutions that - New York purchase municipal bonds. - San Francisco - St Lois • 9 Municipal Traders ■ International Investor Coverage. 3 Municipal Strategists Comprised of 20 institutional Rates Group professionals based in London, 100 Sales People Frankfurt, Paris, and Madrid. As noted • 35 Strategists in our Investor Targeting Strategy Corporate Credit • 18 Corporate Credit Sales section, we plan to broaden our 10 High Yield & 7 Emerging Mkts investor outreach and complement our 'Anchor' orders with those from Stifel Europe 20 Institutional Sales People municipalities, international London, Frankfurt, Paris, Madrid Investors, among others. Private Client Group • 2,300 Advisors Individual Retail Investors. Stifel's retail sales $300 Billion Assets platform includes over 300 Private Client sales • 300+ offices Stifel Bank&Trust Investor Base Tier 1 Accounts • Municipal Bond Mutual Funds • Asset Managers • Global Banking Institutions • US Insurance Companies • Opportunity Funds with Muni Strategies • Separate Account Managers Middle Market Institutions Depository Institutions Crossover Buyers International Retail Investors • High Net Worth • Family Office • Mom and Pop offices, from which approximately 2,300 sales executives manage $300 billion in assets. In Orange County alone, we have 43 sales executives in 3 offices. Presently, the firm manages 19,422 Orange County accounts with $4.2 billion in assets under management, of which 250 million is municipal product. Three California Based Underwriters Working for the City. Stifel's capital markets team will be led by Ben Stern, from our Los Angeles desk, and Betsy Kiehn and Marcus Peters, both from our San Francisco desk. Betsy, Ben and Marcus have led all of the California underwritings that Stifel has brought to market since 2015. All together, they commit the firm's capital as senior manager on over 200 issues totaling more than $6 billion each year. Betsy Kiehn, Head of Ben Stern, Marcus Peters, Municipal Capital Markets Managing Director Vice President a San Francisco, CA 94104 Ij Los Angeles, CA 90071 San Francisco, CA 94104 bkiehn@stifel.com bstern@stifel.com mpeters@stifel.com i (415) 364-2791 (213) 443-5225 (415) 364-6842 City of Santa Ana I Proposal to Provide Underwriting Services Page 7 STIFEL 6. Structuring Ideas and Marketing Plan for Proposed Debt Issuance i. Specific Structuring Ideas A. It is the City's current expectation to issue pension obligation bonds by December 31, 2021. Describe how your firm would structure the proposed 2021 POBs on a traditional fixed rate basis assuming a not to exceed par value of approximately $671 million (90% of the UAL) and $372 million (50% of the UAL). Please provide the coupons on a maturity -by -maturity basis and the overall True Interest Cost (TIC). Identify spreads to Treasuries on a maturity -by -maturity basis. Furthermore, provide comparable pricing information that supports your proposed spreads to Treasuries. Also, please include a Sources and Uses of Funds with a detailed breakout of all cost assumptions. Based on market conditions as of March 8, 2021, we present our proposed structure below. A breakout of the Sources and Uses is provided in Appendix E. Note that our proposed structure will be the same, regardless of the size of the POBs. Please see below and refer to question 6 for a list of all our assumptions and structuring recommendations. A Few Notes on Our Proposed Structure ✓ Designed to Maximize Investor Participation: Our structure contemplates serial bonds through 2039 (much longer than any other recent POB) and two term bonds in 2041 and 2044 (our recommended final maturity). ✓ No Reserve Fund: The lack of a reserve fund will not impact the marketing or pricing given the expected 'AA' rating. ✓ Standalone S&P Rating: As detailed in the Rating Strategy section, Stifel recommends securing a rating from S&P alone, as it has the most favorable view of POBs among the three major rating agencies. ✓ Optional Call Flexibility: 10-year optional call to preserve future flexibility to refinance. Process to Deriving our Proposed Spreads. Five pension financings have come to market since the beginning of the year, all 'AA' rated by S&P. Because these comparable transactions priced at different times in varying market conditions, it is important to evaluate not only their performance in the primary market but also their secondary market trades in recent weeks. Our analyses of these trends along with the City's strong underlying credit lead us to our proposed spreads, which are based on market conditions as of March 8, 2021. Our resulting estimated true interest cost is 2.76%. As previously mentioned, Stifel has more pension financing experience than any other firm; experience that includes some of the lowest yielding long-term POBs that have ever come to market (Glendora, Chula Vista, and Orange). With our proven performance track record, we are confident that we can deliver the most aggressive pricing possible for the City. Issuer City of Santa Ana City of Orange City of Chula Vista City of Downey City of Monterey Park City of El Cajon Issue POBs POBs POBs POBs POBs POBs Par TBD $286,485,000 $350,025,000 $113,585,000 $106,335,000 $147,210,000 Callable 10-Year Par Call 9/1/2030 @ 100 6/1/2031 @ 100 6/1/2030 @ 100 6/1/2031 @ 100 4/1/2030 @ 100 S&P AA (Expected) AA AA AA AA AA Insurance TBD BAM: Term Bonds BAM: Bifurcated Term Bonds None None None Manager TBD Stifel (Lead) Stifel (Sole) BofA (Lead) Ramirez (Lead) BofA (Sole) Sale Date Q4 20" March 3, 2021 February 11, 2021 February 9, 2021 February 2, 2021 January 13, 2021 2022 1 0.290 1 0.160 1 2-yr +0.13 +2Rl 00.21541 0.111 2yr +0.04 `0.213 0.113 2yr +0.10 0.449 0.149 2yr +0.30 2023 0.360 9 141 2-yr 10.160 2yr +0.13 0.317 0.117 2yr +0.20 0.363 0.113 2yr +0.25 0.649 0.149 2yr +0.50 2024 0.589 0.339 3-yr +0.25 0.587 0.2 3-yr +0.30 0.419 0.179 3yr +0.24 0.487 0.187 3yr +0.30 0.626 0.176 3yr +0.45 0.927 0.227 3yr +0.70 2025 1.047 0.847 5-yr +0.20 o.974 0.724 5- +0.25 0.660 0.460 Syr +0.20 0.772 0.472 Syr +0.30 0.887 0.437 Syr +0.45 1.179 0.479 Syr +0.70 2026 1.297 0.847 5-yr +0.45 1.224 0.724 5-yr + 0 0.840 0.460 Syr +0.38 0.972 0.472 Syr +0.50 1.087 0.437 Syr +0.65 1.429 0.479 Syr +0.95 2027 1.680 1.280 7-yr +0.40 1.587 1.137 7-yr +0.4 1.164 0.804 7yr +0.36 1.367 0.817 7yr +0.55 1.430 0.780 7yr +0.65 1.696 0.796 7yr +0.90 2028 1.880 1.280 7-yr +0.60 1.787 1.137 7-yr +0.65 1. 4 0.804 7yr +0.61 1.567 0.817 7yr +0.75 1.630 0.780 7yr +0.85 1.896 0.796 7yr +1.10 2029 2.141 1.591 10-yr +0.55 2.070 1.470 10-yr +0.60 1.628 13810yr +0.49 1.750 1.150 10yr +0.60 1.793 1.093 10yr +0.70 2.090 1.090 10yr +1.00 2030 2.291 1.591 10-yr +0.70 2.220 1.470 10-yr +0.75 1.728 1.1 10yr +0.59 1.850 1.150 10yr +0.70 1.893 1.093 10yr +0.80 2.190 1.090 10yr +1.10 2031 2.391 1.591 10-yr +0.80 2.270 1.470 10-yr +0.80 1.828 1.1381 +0.69 1.950 1.150 10yr +0.80 1.993 1.093 10yr +0.90 2.290 1.090 10yr +1.20 2032 2.491 1.591 10-yr +0.90 2.450 1.470 10-yr +0.98 1.938 1.138 10yr .80 2.050 1.150 10yr +0.90 2.093 1.093 10yr +1.00 2.390 1.090 10yr +1.30 2033 2.591 1.591 10-yr +1.00 2.550 1.470 10-yr +1.08 2.048 1.138 10yr +0.9 2.150 1.150 10yr +1.00 2.193 1.093 10yr +1.10 2.490 1.09010yr +1.40 2034 2.691 1.591 10-yr +1.10 2.650 1.470 10-yr +1.18 2.138 1.138 10yr +1.00 01.15010yr +1.10 2.293 1.093 10yr +1.20 2.640 1.090 10yr +1.55 2035 2.791 1.591 10-yr +1.20 2.750 1.470 10-yr +1.28 2.298 1.138 10yr +1.16 2.35 5010yr +1.20 2.393 1.093 10yr +1.30 2.740 1.090 10yr +1.65 2036 2.891 1.591 10-yr +1.30 2.820 1.470 10-yr +1.35 2.398 1.138 10yr +1.26 2.493 1.093 10yr +1.40 2.790 1.090 10yr +1.70 2037 2.991 1.591 10-yr +1.40 2.488 1.138 10yr +1.35 2038 3.041 1.591 10-yr +1.45 2039 3.091 1.591 10-yr +1.50 2040 3.015 2.265 30-yr +0.75 2.845 1.945 30yr +0.90 2041 3.155 2.305 30-yr +0.85 2.81/2.71 1.955 30yr+0.85/0.75 2043 3.021 1.871 30 +1.15 3.284 1.834 30yr +1.45 2044 3.255 2.305 30-yr +0.95 3.115 2.265 30-yr +0.85 2.995 1.945 30yr +1.05 2045 2.91/2.81 1.955 30yr+0.95/0.85 L Takeaways: Relative to Orange POBs: Tighter (Lower) Spreads 2022-2036; \L Serialization Out Much Longer; Expected Insurance on Term Bonds City of Santa Ana I Proposal to Provide Underwriting Services Page 8 STIFEL B. Given current market conditions and interest rate environment, please recommend the optimal POB structure, including any structuring ideas that may be appropriate for refinancing the UAL. Please discuss any specific structuring considerations that may pertain to POBs in general including the specific bases to be funded with POB proceeds. In your discussion of any alternative financing ideas that the City should consider, please be clear as to the risks and/or considerations involved with the potential structure. We understand that the City has been working with its advisor in identifying all the 'tools in the toolbox' to combat rising pension costs, including POBs. POBs are an important financial decision and can be a valuable tool to help stabilize costs; however, they should be considered as just one component of a more comprehensive pension management plan. Our recommendations below fit within 4 specific objectives designed to address the immediate concerns of rising costs while preparing the City for long-term fiscal sustainability. Objective Recommendation 1. Achieve Long -Term —Refinance $385 million of UAL with 2021 POBs Fiscal Sustainability —Target Short/Long-Term Safety Bases 2. Mitigate Market Timing Risks —Given Risks, Target 85% Funded Ratio with 2021 POBs (Funding a Higher % May Limit Available Tools in the Future) 3. Design Optimal Structure —'Modified Level' Repayment Schedule (Present -Forward Thinking) —Modest 'Upfront' Savings to Bolster Reserves —Shorten UAL Payments by 3 Years to 2044 —Evaluate Use of Insurance from BAM 4. Ongoing Liability Management —Earmark Surplus Revenues for Contributions —Dedicate Deferred UAL/POB Savings to Pay Down Liabilities —Future POBs Dictated by Pension Policy 1. Achieve Fiscal Sustainability Refinance $385 million of Safety Plan Bases; Balanced Approach (Short and Long -Term) to Targeting Bases. It is our understanding that the City is considering refinancing anywhere from 50% ($372 million) to 90% ($671 million) of its unfunded liabilities. Over the past few years, most POB issuers have opted to refinance 100% and while an attractive prospect given the historic low interest rate environment, market timing vis-a-vis CalPERS investment performance merits careful consideration and analysis, as we further explain in the second step of our 4-step pension management plan ('Mitigate Market Timing Risks'). In short, a dollar -cost -average strategy to issuing and investing can help address these concerns. We believe the most prudent approach is for the City to target a payoff amount of $385M, or roughly half of the City's outstanding pension liabilities, which would result in a funded ratio of 85%. As explained below, after a few years, the City could evaluate the need to refinance the remaining half. Please see the chart below for estimated savings for each of the considered funding scenarios. Assuming a partial refinancing, issuers have the discretion to apply POB proceeds either on a pro-rata basis or toward specific amortization bases. Given our objective of long-term fiscal sustainability, we recommend targeting both short and long-term bases. This approach is designed to achieve long-term savings while providing near -term flexibility to proactively manage future pension costs. Addressing solely long-term bases will limit near -term flexibility and targeting only short- term bases would not address long-term fiscal sustainability. Since our primary concern is the General Fund, and because the General Fund is financially responsible for 100% of the Safety Plan and only 72% of the Miscellaneous Plan, we focus our analysis on the Safety Plan. As illustrated on the following page, we have carefully selected short and long-term Safety Plan bases that aggregate to roughly $385M, which if prepaid, would bring the City's UAL funded ratio to 85%. Scenario Recommended Alternative Funded Ratio 85% 97% Par Amount $387,190 $638,790 TIC 2.76% 2.75% UAL Savings $176,311 $291,242 $ NPV $139,152 $240,479 % NPV 36% 38% Primary Benefit Mitigates Higher Timing Risks PV Savings Both scenarios incorporates our structure recommendations (Step 4: 'Design Optimal Structure') on the following page. City of Santa Ana I Proposal to Provide Underwriting Services Page 9 STIFEL Surgical Approach to Paying Off Safety Bases Base Year Reason Term Balance (2021) % Payoff $80.0 ,MiLf- 3 2009 Assum Change 10 $14,943,657 Full (100%) $Bo.o ty0 6 2011 Assum Change 12 16,001,459 Full (100%) $50.0 11 2014 Assum Change 15 53,834,473 Full (100%) $40.0 $30.0 14 2016 Assum Change 17 19,877,718 Full (100%) $200 16 2017 Assum Change 18 22,905,189 Full (100%) $10.0 18 2018 Assum Change 19 5,325,258 Full (100%) $0.0 rvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrv�s�rvry 19 2018 Assum Change 19 38,800,765 Full (100%) Short -Term Bases (Less than 20 Years) $171,688,519 45% of Total Recommended Approach AT ISSUANCE:$385M Payoff IRS%) $80.0 —2021POBs 4 2009 Loss 20 $31,977,596 Full (100%) :$" 0 60.0 Miscellaneous Balance Safety Balance —Original UAL 9 2012 Loss 23 74,450,415 FUII (100%) $50.0 10 2013 Loss 24 70,331,616 Pro -Rats (50%) $40.0 15 2016 Loss 27 27,722,249 Pro -Rats (55%) $30.0 $20.0 21 2019 Loss 20 5,185,187 Full (100%) $10.0 22 2019 Loss 20 4,463,871 Full (100%) $°° Long -Term Bases (20 Years or More) $214,130,934 55% of Total rvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvrvry TOTAL (85% Funded Ratio) $385,819,453 2. Mitigate Market Timing Risks Spread Rather than Concentrate Risk. While historic low interest rates have enticed nearly all recent POB issuers to refinance 100% of their UAL, the reinvestment side of the equation should carry equal importance in determining if, when, and how much to issue. As previously mentioned, we would not recommend that the City target the higher funded ratio. Underperformance on investments, especially in the first few years after issuance, can exponentially exacerbate an issuer's already burdensome debt and UAL profile. Furthermore, given that POBs are the most powerful tool in the toolbox, refinancing as much as possible today would significantly limit the City's options to manage future pension liabilities. If investment returns exceed expectations after the first few years post -issuance, the City could evaluate the need for a second issuance. Ultimately, while the prevailing sentiment is that a recession is not on the immediate horizon, the most prudent strategy will be for the City to spread, rather than concentrate market risk through multiple issuances. Lastly, as explained below, any future issue should be governed by the pension funding policy. 3. Design Optimal Structure (Both Present and Forward -Thinking) Structure 'Modified' Level Repayments (A). We recommend a 'modified' level repayment structure, which is characterized by level payments over the first 19 years that then decline in proportion to the prepaid UAL bases. An alternative approach is to structure level annual payments over the life of the POBs, which result in slightly lower payments overtime; however, this structure will produce negative savings in later years and generate less net present value savings overall (as illustrated in the accompanying graphic). 'Modest' Upfront Savings with Minimal Impact on NPV Savings (B). The City has the option to structure upfront savings in the first few years by deferring a portion of principal - savings that, for example, can be used to bolster General Fund or pension reserves. While this structuring nuance would result in slightly higher POB payments (and lower UAL savings), the POBs could be structured so that NPV savings are nominally impacted. We incorporated this structuring nuance on the recent Orange POBs, generating $3 million in upfront savings while only impacting NPV savings by—$10,000. 'Modified Level' Structure $45.0 (Slightly Higher Annual Payments; Higher NPV Savings) $40.0 $35.0 $30.0 $t, 0 .Illlllllllllllll________. $10.0 Slightly Higher Annual Payments; 550.0 .0 ----- Savings Every Year, Higher NPV Savings F------------ i--------- $ ......................... 2021 POBs —Prepaid Safety Bases Level Structure $45.0 (Lower Annual Payments; However, Low NPV Savings) $40.0 $35.0 $30.0 $25.0 _.....�NE■on z0.o $ $15.0 _— -- ------------------------ Sio.o Lower Annual Payments; $5.0 j__ Dissavings from 2042-44 j ---------------- $0.0-• ese rvrvrvrvrvrvrvmmmmmmmmmme<e << ry ry ry ^� 2021 POBsry —Prepaid Safety Bases ry ry ry ry ry ry Shorten the Final Maturity (C). To expedite the payoff of POB and UAL payments, several issuers have shortened the final POB maturity to match the last significant prepaid UAL payment. As you can see from the chart below, the prepaid Safety base payments peak around FY 2030, slowly decline through FY 2040, and then rapidly drop-off until the final FY 2047 UAL City of Santa Ana I Proposal to Provide Underwriting Services Page 10 STIFEL payment. We recommend shortening the POB amortization by 3 years to match the last significant UAL payment in FY 2043. While shortening would increase annual payments through 2039 by—$200,000, the City would save roughly $4 million in overall interest costs over the life of the POBs. We do not recommend extending the maturity beyond 2047 as S&P could view this as a corrective measure to address an imbalance (potential credit challenge). Evaluate Use of Insurance (D). In most circumstances, bond insurance (rated 'AA') does not 'pencil' on credits rated 'AA' or higher - and as detailed in the following question, we expect the 2021 POBs will achieve a 'AA' S&P rating. However, in recent months, some investors have been willing to pay a much higher price (resulting in a lower yield) for insured maturities. In the case of the recent Chula Vista and Orange POB pricings (both 'AA' rated), Stifel identified demand for insured maturities, which resulted in a net benefit of roughly 5 basis points. While we understand that the City's POBs won't likely come to market for some time, we recommend evaluating the use of insurance closer to the time of sale. A. Modified Level Payments: POB Payments Structured to Provide $45.0 $40.0 UAL Savings in Every Year. $35.0 B. Modest Upfront Savings: $30.0 $4 million in Upfront Savings to Bolster $25.0 General Fund/Pension Reserves; Minimal $20.0 Impact on NPV Savings $15.0 C. Shorten Final Maturity: $10.0 Final POB Maturity in 2044 (Last Prepaid $5.0 Safety Payment in 2047) $0.0 D. Evaluate Use of Insurance: Expected Net Benefit of —5 Basis Points on Terms 4. Ongoing Pension Management 3. Design Optimal Structure (Subject to Prevailing Market Conditions at Time of Sale) B: Upfront Savings: $4M to Bolster Reserves; Minimal Impact to NPV Savings A: 'Modified' Level Payments: UAL 'Savings' in Every Year C: Shorten Maturity: Match Last Significant Safety Payment (S&P Views Favorably) D: Insurance: May Provide Value on Term Bonds N N N N N N N M M M M M M M M M M 0 V V M It V V V V 0000000000000000000000000 N N N N N N N N N N N N N N N N N N N N N N N N N 2021 POBs —Prepaid Safety Bases Additional Discretionary Payments and Future POB Issues. A critical component to any successful comprehensive pension plan will be the proactive management of future liabilities. The City recently adopted the Unfunded Employee Pension Liability Cost Reduction Policy, which provides, among other things, guidelines for additional discretionary payments (e.g. surplus Measure X revenues, future TAB savings, future Water Bond savings for Miscellaneous Plan base prepayment, etc.) and the issuance of additional POBs. Strict adherence to the policy is important to ensure long-term fiscal health. Additional Thoughts and Considerations Annual CalPERS Prepayment and First POB Payment. We expect the City to continue its practice of prepaying its annual UAL liability by July 31 in order to realize a discount. Given the timeline of validation proceedings, the City could be in a position to price its POBs by late September or early October. To avoid 'double paying' in FY 2022, the City should consider delaying its first POB payment until FY 2023. We have assumed a long first payment date of December 1, 2022 as part of our 'Optimal Structure' detailed above. Select Convenient, Financially Viable POB Payment Dates. POB issuers typically select payment dates that mimic other General Fund debt, align with the fiscal year, or match large inflows of general fund tax revenue (generally November/December or May/June given large inflows of property tax revenues). We have assumed June (principal, interest) and December (interest) payment dates in our proposed structure. 'Wrap' Around Other General Fund Supported Debt. The General Fund currently supports multiple debt issuances, including the Police Station bonds (mature in FY 2024) and several private placements (varying maturities from FY 2024 to FY 2028). To minimize the impact to the General Fund over the next few years, the City could 'wrap' the 2021 POB payments around the other outstanding obligations. Of course, doing so would require deferring a portion of principal, which would result in a slightly more expensive structure. Lease Revenue Bonds vs. POBs. Over the past year, several municipalities have structured their pension financings as lease revenue bonds (LRBs) in an attempt to avoid lengthy validation proceedings and potential related legal challenges. However, LRBs require collateral (equal to the par amount of the financing) and are rated one notch lower than POBs by City of Santa Ana I Proposal to Provide Underwriting Services Page 11 STIFEL S&P. Therefore, based on our understanding of the City's available assets and the objective of achieving long-term financial sustainability, we do not recommend a lease revenue bond structure. C. The City has no outstanding General Fund bonded indebtedness. The City's last General Fund rating was provided by S&P in February 2016 as AA/Stable. Please discuss your credit strategy, including assumed credit rating for the proposed POBs, and any effect you believe the proposed POBs will have on the City's credit. Secure S&P Rating. When the uptick in issuance of POBs began about 18 months ago, underwriters were encouraging two ratings for any issue over $100 million. However, because of the different treatment of POBs among the three rating agencies, two ratings often meant split ratings with S&P higher than Moody's and Fitch. More recently, evidence suggests that the negative impact of split ratings is greater than the positive impact of having two ratings. Therefore, no matter the size of the 2021 POBs, we recommend a single rating from S&P. Estimated S&P Rating and Credit Strategy. S&P most recently affirmed the City's issuer credit rating at 'AA' in January 2020. Unfortunately, the outbreak of COVID-19 and subsequent Factor weight Score High Low Rating impact on the global economy just a few months later caused Institutional Framework Economy 10% 2.00 30% 3.00 1.00 1.65 1.64 1.94 AAA AA+ S&P to reevaluate all sectors of municipal finance. While we Management 20% 1.00 1.95 2.34 AA do not expect any downward rating action (especially since the Liquidity Budgetary Flexibility 10% 1.00 10% 1.00 2.35 2.85 2.84 3.24 AA - A+ City has maintained its strong credit profile), we do believe it Budgetary Performance 10% 3.00 3.25 3.64 A will be difficult to obtain an upgrade in the current economic Debt& Contingent Liabilities 10% 4.00 3.65 3.94 A - Estimated Score 2.20 3.95 4.24 BBB+ climate. As the City may already know, S&P takes a fairly Estimated POB Rating AA 4.25 4.54 BBB transparent, formulaic approach that heavily weighs the 4.55 4.74 BBB - strength of the local and regional economy, management practices and policies, budgetary performance, liquidity, and the debt and liability profile of the issuer. Using data from the 2020 CAFR and 2021 Budget, we estimate that the City would maintain its strong 'AA' rating. The credit story we plan to take to S&P will address the categories listed above; however, a primary focus will be on the City's underlying economic fundamentals in light of the COVID-induced economic contraction, the financial management policies, and Unfunded Employee Pension Liability Cost Reduction Policy it puts in place to ensure the long-term financial sustainability of the General Fund. Provided below are some initial credit thoughts. The only glaring weakness in S&P's 2016 rating report and something outside the City's control. However, since 2016, the City's median household income has grown nearly 40%, surpassing national levels. Market values have skyrocketed, with citywide values increasing by 26% over the past 5 years. Single family home growth has been equally impressive, growing by 44% since 2016. Management: Management continues to be one of the strongest areas of the City's overall credit profile. Comprehensive and fully integrated policies and practices that are regularly reviewed and updated. Most notably, the City recently strengthened its budget and reserve policy in 2017. As we intend to do for S&P during the review process, we have summarized the most important policies in the accompanying graphic. Budgetary Flexibility: Unlike many neighboring cities, the City has significantly strengthened its budgetary flexibility over the past year, with operating reserves growing by roughly $8 million to a total of $53 million, representing 16.6% of General Fund operating reserves (adopted policy goal). Budgetary Liquidity & Debt & Economy Management Performance Flexibility C Liabilities 30% 20% 10% 20% 10% I I! i Igll! rllil i Practice Description Strategic Plan Updated 2020; vision for the City's goals and priorities. c General Plan Updated 2020; long-range planning policies that reflect the aspirations p and values of residents, land owners, businesses, and organizations. m c 10-Year Forecast FYs 2021-30; takes into consideration economic indicators, trend analysis, judgmental forecasting, and opinions of the City's consultants a 7-Year CIP FYs 2021-27; street, park and traffic improvements, and other capital programs. Broken out by category for each year. Pension Policy Refinancing parameters and methods for funding future pension debt. Operating Budget FY 2021; quarterly reports to City Council. Debt Management Detailed guidance on debt management; in alignment with Strategic Plan and Capital Improvement Plan. 'o t: Securities Disclosure Ensures compliance with federal securities laws, promotes best m' 0 practices, and enhances internal controls and control environment. n Investment Safety, liquidity, yield, diversification. Investment report presented LL to Council on quarterly basis. Operating reserve at 16.67%to 20% of GF revenues. Economic Reserves Uncertainty Reserve at 1%to 10% of GF revenues. City of Santa Ana I Proposal to Provide Underwriting Services Page 12 STIFEL D. Discuss the investors you would target for the City's POBs. Briefly discuss your firm's marketing strategy for placing the City's POBs, including whether or not you would use a formal investor relations program and/or internet roadshow. Describe any challenges in the marketing of POBs by a CA municipality in the current market. ---------------------------------------------------------------------------- Our banking and underwriting team structure, market, and price more bonds than the competition (that includes taxable bonds and POBs!). Our constant market presence provides a unique insight into active potential buyers (not just the top bondholders) for the City's POBs. Three -Part Investor Targeting Strategy Stifel has a three part strategy for targeting investors: 1. Target Anchor Investors. First, Stifel's underwriter will identify and market to investors that buy POBs who we see as 'anchor investors.' These investors (e.g. bond funds) were large buyers of the recent Chula Vista and Orange POBs. 2. Broaden Outreach. We will broaden our outreach to a growing list of POB buyers, including municipalities, and international buyers, to help drive down the interest rate. 3. Leverage Private Client Group. Stifel will leverage its Private Client platform to generate interest from individual retail and smaller money managers interested in purchasing for retirement portfolios. Targets for Anchor Orders. The accompanying table identifies about 50 buyers of recent California POB issuances and details which part of the yield curve they tend to target. Based on our recent experience with the Chula Vista and Orange POBs and the significant secondary trading activity Stifel executed on other POBs, we identified several investors as anchor orders for the City's POBs, highlighted in yellow. Of course, the make-up of the anchor group is subject to change and will be re-evaluated based on insight from our sale of the Huntington Beach POBs scheduled next week (among others). 40/86 Advisor AIG American Family Life Americo Life Insurance ASB Capital Mgmt Baird Advisors Bel Air Investment Advisors Belle Haven Investments Bethpage FCU BlackRock Bluefin Trading Brean Capital LLC Cantor Fitzgerald Colorado Financial Mgmt Inv. Federated Life Insurance Fiduciary Trust Co. of NY First New York Securities First Technology FCU Global Atlantic Advisors Globe Life Goldman Sachs AM Gurtin Fixed Income Hexagon Asset Mgmt Invesco Municipal Demand to Further Drive Demand. Our broker colleagues serve as investment advisors to many municipalities around the country. We've utilized the demand from these buyers to help drive down interest rates that we set in the short -end of our POB transactions (first 5 years). Over the past 6 months, Stifel garnered nearly $70 million of orders from municipalities to purchase high-grade taxable bonds, as illustrated in the accompanying chart. - Liberty Mutual Group Mackay Shields Millennium Partners Multi -Bank Securities National Exchange Bank National Rural Insurance Neuberger Berman Norwest Trust Old Orchard Performance Trust PIMCO Ramirez Asset Mgmt RE Advisors Corporation Searle & Company SNW Asset Mgmt Southern Farm Bureau Life Spring Lake Asset Mgmt Union Bank Victory Capital Mgmt Wasmer Schroeder Watermill Asset Mgmt Wllington Capital Mgmt . Wells Capital Mgmt Whittier Trust Maturity 1 2 3 4 5 $1,000 $1,000 $1,000 $1,000 $1,000 - - - - 1,875 3,150 - - 2,000 1,520 2,030 1,000 - - - 3,805 5,155 1,840 1,175 stem, TX - 3,000 4,000 - 1,500 1,500 3,000 2,500 4,035 - - 1,000 2,225 - 1,000 - Investor Takeaways: Chula Vista and Orange POBs $500 Step 3: Leverage Private Client Group Throughout $400 $300 Step 2: Broaden Outreach (Municipalities; Int'I Buyers) Step 1: Establish Anchor Orders $200 1�- $100 $0 - ----- N M V Ln w r, co m O N M V Ln w n c ti v cn O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N ■ Trading Account ■ Broker/Dealer ■ Hedge Fund ■International Other ■ Bond Fund ■ Insurance ■ Trading Account ■ Municipality Allen, TX Chula Vista, CA Clovis, CA Laguna Beach, CA Oceanside, CA Oxnard, CA Lubbock, TX San Antonio Water Sy Pasadena, CA Redlands, CA Thousand Oaks, CA Santa Clara County, CA - - 17,640 - - Total $6,305 $11,655 $31,630 $9,420 $10,940 Total $5,000 1,875 3,150 2,000 3,550 1,000 11,975 7,000 12,535 3,225 1,000 17,640 $69,950 City of Santa Ana I Proposal to Provide Underwriting Services Page 13 STIFEL Marketing Plan Stifel will employ a 3-point marketing plan for the City's POBs. Early Outreach to Anchor Investors. Beginning about one month before the POBs come to market, Stifel will begin to communicate with potential anchor investors. Stifel's California based salesforce will target domestic institutional accounts while working concurrently with Stifel Europe to communicate with international accounts. Based on their feedback we can begin tracking where they are buying and trading similar credits, giving us a better understanding of where they will price this credit. 2. Drone Video/Investor Presentation. Many underwriters have used 'flat' investor presentations to accompany the sale of POBs. We would prefer to show a more dynamic presentation of the community, describe the vision that Council and management have for the City and provide context of the City's strategic location within Orange County. As noted in our cover letter, along with our proposal, we provide a brief video that would be used to market the City's POBs. 3. Local Retail Marketing Plan. Newspaper ads in local publications (both print and online editions) will be used to publicize the bond sale to tsevsw.aoo---• Daily Pilot_ - _ MFEL �3 ;� 5 mple St fel PosxaN _ s:, :.mom 5 :.A ,AdP,oe,am�AOPd1 g ild residents. Stifel would place ads, at no cost to the City, in publications like the Los Angeles Times, the Orange County Register and The Daily Pilot. Recent examples of our local retail marketing campaign efforts are provided in the accompanying graphic. E. In what circumstances, if any, would you recommend a private placement of POBs rather than a public offering? What would be the pros and cons of such a strategy? For a transaction as large as the City's, we do not believe a private placement will produce a better result than a public bond sale. A private placement would be set as one blended interest rate (with more weight given to the final maturity of the POBs) whereas a public bond offering would enable the City to divide the issuance into smaller pieces by serializing the Bonds (years 1-15) and then splitting up the remainder of the issue with multiple term bonds. F. Describe a recent engagement your firm was involved in a debt issuance in which there were multiple underwriters engaged. We have had the pleasure of serving as lead manager of a multi -firm syndicate on several recent POBs, including the Orange POBs that priced last Thursday (3/3) and upcoming Huntington Beach POBs, which are scheduled to price next week. Our goal as lead manager is to foster a collaborative environment that leverages the strengths of each co- manager to secure the best possible outcome (lowest borrowing cost) for our issuer clients. As mentioned in our cover letter, at the request of the city, advisor and in coordination with our co -manager, we seamlessly expedited the pricing period from a 2 to 1-day process for the recent Orange POBs to lock -in aggressive interest rates amidst market volatility. The strategy paid off as, over the next two days, US Treasury yields increased up to 9 basis points throughout the yield curve. City of Santa Ana I Proposal to Provide Underwriting Services Page 14 STIFEL 7. Cost Proposal i. NTE Underwriting Fees Provide an estimate of your total, not to exceed, underwriting costs associated with serving as senior manager to the City on a not -to -exceed approximately $671 million issue of fixed rate POBs. Please note that any payment to the underwriter is contingent on the closing of the bonds. In your response, please specifically include: i. Proposed takedown on a maturity -by -maturity basis. ii. Management Fee, if any. iii. Expenses. In this section, clearly identify expense estimates. iv. Underwriter's Counsel. Please identify three firms that you would propose to serve as underwriter's counsel, along with the primary counsel for each firm. Stifel's cost proposal is comprehensive, competitive and realistic to deliver the lowest cost of borrowing for the City. Based on a par amount of $671 million, we propose a gross spread of $1.86 per bond. a) Sales Takedown. Designed to compensate sales professionals for marketing the POBs as aggressively as possible, ensuring the lowest interest cost. b) Management Fee. Stifel does not propose a management fee if selected as sole manager of the City's POBs. If selected as senior manager, we propose a flat $30,000 fee. c) Expenses. Remaining fees are attributable to continuing disclosure, IPREO, and various other expenses. d) Underwriter's Counsel. The three firms and contacts we propose to serve as our counsel are Juan Galvan at Jones Hall, Albert Reyes, at Kutak Rock, and Kevin Hale at Orrick. Expenses $0.15 $102,500 Average Takedown 1.70 1,143,165 Total Gross Spread Expense $1.86 $/bond $1,245,665 Amount Underwriter's Counsel $0.04 $25,000 Miscellaneous Fees 0.00 1,391 IPREO Fees 0.09 61,688 Blue Sky Survey 0.00 500 DTC Setup 0.00 800 CDIAC 0.01 5,000 CUSIP Numbers 0.00 621 Day Loan 0.01 7,500 Total Expenses $0.15 $102,500 It is important to emphasize that the City's financing costs are primarily (more than 99%) determined by the interest rates set on the POBs while the underwriting fee represents roughly 0.2% of the total estimated par amount. Over the 13.3 year average life of the proposed POBs, the City will pay approximately $253.5 million in interest costs (assuming the City's issues $671 million in Bonds). By comparison, our proposed fee of $1.86 equates to $1,246,000. Each $0.50 in takedown equates to $335,000 while each basis point (0.01%) in interest rate equates to approximately $720,000 in interest costs. 8. Certifications i. Certifications The following forms, included in this RFP, shall be signed and included as part of the proposal submittal package: Attachment A: References; Attachment B: Proposer's Statement; Attachment C: Non -Collusion Affidavit; Attachment D: Non -Lobbying Certification; Attachment E: Non -Discrimination Certification Please refer to Appendix A. 9. References i. References Contractor shall provide three (3) references from public agency customers for which actuarial work similar to services specified in this RFP have been performed, including contact names and telephone numbers, and types of services your firm has provided. Use Attachment A — References. The respondent grants permission for the City to contact any individuals listed as references. Please refer to Appendix A. City of Santa Ana I Proposal to Provide Underwriting Services Page 15 STIFEL Appendix A: Certifications (Attachments) and Stifel EEO Policy Please see attachments beginning on the following page City of Santa Ana I Proposal to Provide Underwriting Services Appendix A CITY OF SA ANA ATTACHMENT A REFERENCES List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Reference Customer Name: Arcadia Address: 240 W. Huntington Dr. P.O.Box 60021 Arcadia, CA 91066 Contract Amount: $270,000 ($2.32/Bond) Description of supplies, equipment, or services provided: Sole Manager on 2020 Taxable Pension Obligation Bonds Reference Customer Name: Chula Vista Address: 276 4th Ave. Chula Vista, CA 91910 Contract Amount: $875,062.50 ($2.50/Bond) Description of supplies, equipment, or services provided: Sole Manager on 2021 Taxable Pension Obligation Bonds Reference Customer Name: Glendora Address: 116 E. Foothill Blvd. Glendora, CA 91741 Contract Amount: $467,045.00 ($7.25/Bond) Description of supplies, equipment, or services provided: Sole Manager on 2019 Taxable Pension Obligation Bonds Contact Individual: Hue Quach, Director of Administrative Services Phone Number: (626) 574-5425 Facsimile Number: (626) 574-5400 Year: 2020 Contact Individual: Maria Kachadoorian, City Manager Phone Number: (619) 409-5818 Facsimile Number: (619) 691-5044 Year: 2021 Contact Individual: June Overholt, Director ofAdministrative Services Phone Number: (626) 914-8241 Facsimile Number: (626) 914-8221 Year: 2019 THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL, PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 19 of 24 u CITY OF SANTAA A ATTACHMENT B PROPOSER'S STATEMENT Proposer understands and agrees that this written RFP (or any part thereof speccally designated and accepted by the City of Santa Ana, hereinafter City) shall constitute the entire agreement between proposer and the City only after it has been accepted by the City Council, endorsed by the Clerk of the Council with her signature and official seal noting hereon the action of approval of the Council, signed by the Executive Director or his duly authorized agent, and signed by the City Attorney, denoting his approval of the form of this document, and its execution, and when it or an exact copy of it has been either delivered to proposer or deposited with the United States Postal Service properly addressed to the proposer with the correct postage affixed thereto. Proposer further agrees that upon delivery (as defined above) of the accepted agreement he/she will furnish City all required bonds and certificate of liability insurance within ten (10) days (excluding Saturdays, Sundays and City's legal holidays), or the funds, check, draft, or proposer's bond substituted in lieu thereof accompanying this proposal shall become the property of the City and shall be considered as payment of damages due to the delay and other causes suffered by City because of the failure to furnish the necessary bonds and because it is distinctly agreed that the proof of damages actually suffered by City is difficult to ascertain; otherwise said funds, check drafts, or proposer's bond substituted in lieu thereof shall be returned to the undersigned. Proposer understands that a proposal is required for the entire work, that the estimated quantities set forth in the RFP schedule are solely for the purpose of comparing proposals, and that final compensation under the contract will be based upon the actual quantities of work satisfactorily completed. All terms contained in the specifications, the certification of nondiscrimination by contractors, and the required insurance certcates are to be incorporated by reference into this agreement and are made specifically as part of this RFP. Stifel, Nicolaus &Company, In Signed and Printed Name: Title V\ a S %' r Date o►nti0.S �AGo� THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 20 of 24 C CITY OF SAN A ATTACHMENT C NON -COLLUSION AFFIDAVIT (Title 23 United States Code Section 112 and Public Contract Code Section 7106) To the CITY OF SANTA ANA In accordance with Title 23 United States Code Section 112 and Public Contract Code 7106 the proposer declares that the proposal is not made in the interest of, or on behalf of, any undisclosed person, partnership, company, association, organization, or corporation; that the proposal is genuine and not collusive or sham; that the proposer has not directly or indirectly induced or solicited any other proposer to put in a false or sham proposal, and has not directly or indirectly colluded, conspired, connived or agreed with any proposer or anyone else to put in a sham proposal, or that anyone shall refrain from bidding; that the proposer has not in any manner, directly or indirectly, sought by agreement, communication, or conference with anyone to fix the proposal price of the proposer or any proposer, or to fix any overhead, profit, or cost element of the proposal price, or of that of any other proposer, or to secure any advantage against the public body awarding the contract of anyone interested in the proposed contract; that all statements contained in the proposal are true; and, further, that the proposer has not, directly or indirectly, submitted his or her proposal price or any breakdown thereof, or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any corporation, partnership, company association, organization, bid depository, or to any member or agent thereof to effectuate a collusive or sham proposal. Note: The above noncollusion affidavit is part of the proposal. Signing this proposal on the signature portion thereof shall also constitute signature of this noncollusion affidavit. Proposers are cautioned that making a false certification may subject the certifier to criminal prosecution. Signed State of California, County of Subscribed and sworn to (or affirmed) before me on this (�{� day of %{�1YrL� , 20�, by oimUl:i Iproved to me on the basis of satisfactory evidence to be the persons) who appeared before me. MARTHA JEANETTE CARRION �' "' ` - Notary Public California Z Los Angeles County > Commission # 2238142 My Comm. Expires May 12, 2022 Notary Public Seal THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 21 of 24 CITY OF SANTA A ATTACHMENT D NON -LOBBYING CERTIFICATION The prospective participant certifies, by signing and submitting this bid or proposal, to the best of his or her knowledge and belief, that: (1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure of Lobbying Activities," in conformance with its instructions. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. The prospective participant also agrees by submitting his or her bid or proposal that he or she shall require that the language of this certification be included in all lower tier subcontracts, which exceed $100,000 and that all such subrecipients shall certify and disclose accordingly. Signed: �/ 1�1( eD � f' Title: a rt� . i r\ t r Q c t o r Firm: Stifel, Nicolaus & Company, Incorporated Date: 3/ ` V 2- ( THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 22 of 24 CITY OF SANTA ANA 7. The Consultant shall include the portion of the sentence immediately preceding paragraph (1) and the provisions of paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontract or purchase order as the administering agency may direct as means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event the Consultant becomes involved in, or is threatened with, litigation with a subconsultant or vendor as a result of such direction by the administering agency, the Consultant may request that the United States enter into such litigation to protect the interests of the United States. 8. Pursuant to California Labor Code Section 1735, as added by Chapter 643 Stats. 1939, and as amended, no discrimination shall be made in the employment of persons upon public works because of race, religious creed, color, national origin, ancestry, physical handicaps, mental condition, marital status, or sex of such persons, except as provided in Section 1420, and any consultant of public works violating this Section is subject to all the penalties imposed for a violation of the Chapter. Signed: Title: Flrm: Stifel, Nicolaus &Company, Incorporated Date: �I eC�Se CQ�e C� �or dJ r Cc2►'\S`.� 2 l�%sc�;m'n��-ion I�o1;c�eS THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 24 of 24 NON-DISCRIMINATION POLICIES Equal Employment Opportunity Stifel is committed to providing equal employment opportunities ("EEO") to all Associates, applicants for employment, and individuals providing services in the workplace without regard to actual or perceived race, color, religion, creed, gender, pregnancy (including childbirth, lactation, child-bearing capacity, sterilization, fertility, past pregnancy condition and the potential or intention to become pregnant and related medical conditions), sexual and reproductive health decisions, sexual orientation, gender identity and gender expression (including transgender individuals who are transitioning, have transitioned, or are perceived to be transitioning to the gender with which they identify), national origin, ancestry, age, disability, weight, genetic information, marital status, citizenship status, familial status, homelessness (i.e., lack of a permanent mailing address or a mailing address that is a shelter or social services provider), status as a covered veteran or any other protected criteria in accordance with applicable federal, state, and local laws. Stifel complies with all applicable state and local laws governing non-discrimination in employment applicable to each location in which the Firm operates. Stifel strictly prohibits any form of unlawful discrimination. Equal opportunity extends to all aspects of the employment relationship, including hiring, transfers, promotions, training, termination, working conditions, compensation, benefits, and all other terms and conditions of employment. All Stifel Associates are responsible for implementing this EEO policy in their daily actions, conduct, and decisions. All Associates are expected to treat each other with respect and professionalism. Associates are encouraged to contact Human Resources regarding any potential violation of this policy as soon as possible. Stifel strictly prohibits any type of retaliation against an individual who in good faith reports a violation of this policy, raises a complaint or concern regarding discrimination or harassment, or otherwise engages in protected activity under the law. Stifel also complies with the applicable provisions of the Americans with Disabilities Act, as amended, and similar state and local laws, and it does not discriminate against any qualified Associate or applicant because of a real or perceived disability. Stifel will make reasonable accommodations for qualified Associates or applicants with disabilities or for pregnancy consistent with applicable law. Retaliation for requesting an accommodation for a disability or pregnancy is strictly prohibited. Americans with Disabilities Act The Americans with Disabilities Act ("ADA"), as amended, requires employers to provide reasonable accommodations to qualified individuals with disabilities. Stifel complies with the ADA and prohibits discrimination based on disability. The Firm also reserves the right under the ADA to seek medical certification, when appropriate, to facilitate its compliance with the ADA. Effective 2019 It is Stifel's policy not to discriminate against qualified individuals with disabilities with regard to application procedures, hiring, advancement, discharge, compensation, training, or other terms, conditions, and privileges of employment. An applicant who can be reasonably accommodated for a job, without undue hardship to Stifel, will be given the same consideration for that position as any other applicant. Any individual who seeks a reasonable accommodation should contact Human Resources. Anti -Discrimination and Anti -Harassment Stifel is committed to a work environment where all individuals are treated with respect and dignity. Every individual has the right to work in a professional atmosphere where equal opportunity is encouraged and promoted, where diversity is accepted and valued, and where discriminatory practices, including harassment, are prohibited. Discrimination and harassment are violations of Stifel's Code of Conduct. Therefore, Stifel expects that all interactions and relationships among individuals who conduct business for and with the Firm will be professional and free of bias, prejudice, and harassment. These individuals include, but are not limited to, all Associates (including supervisors and managers), clients, contractors, vendors, and outside agencies. Discrimination, harassment, and inappropriate behavior will not be tolerated and will be addressed promptly and appropriately. Unlawful discrimination is defined as behavior that displays prejudice towards an individual based on age, ancestry, citizenship status, color, gender, gender expression, gender identity, genetic information, marital status, medical condition, military or veteran status, national origin, physical or mental disability, pregnancy, race, religion, creed, sex, sexual orientation, weight, sexual and reproductive health decisions, or any other basis protected by federal, state, or local laws. Unlawful harassment is defined as unwelcome conduct toward an individual because of his or her age, ancestry, citizenship status, color, gender, gender expression, gender identity, genetic information, marital status, medical condition, military or veteran status, national origin, physical or mental disability, pregnancy, race, religion, creed, sex, sexual orientation, weight, sexual and reproductive health decisions, or any other basis protected by federal, state, or local laws, when the conduct creates an intimidating, hostile, or offensive work environment, and/or negatively affects job opportunities. Examples of harassment that may violate the law and will violate this policy include, but are not limited to: • Oral or written communications that contain offensive name-calling, jokes, slurs, negative stereotyping, or threats. This includes comments or jokes that are distasteful or targeted at individuals or groups based on any characteristic noted above or otherwise protected by federal, state, or local law. • Nonverbal conduct, such as staring, leering, or giving inappropriate gifts. • Inappropriate physical contact, including any unwanted touching. • Visual images, such as derogatory or offensive pictures, cartoons, drawings, or gestures. Such prohibited images include those in hard copy or electronic form. Effective 2019 Sexual harassment is a form of harassment that is based on a person's sex, and includes requests for sexual favors, sexual advances, or other sexual conduct where: • The conduct is made as a term or condition of employment; • The acceptance or refusal of the conduct is used as a factor in employment decisions; or • The conduct creates an intimidating, hostile, or offensive environment. Because Stifel strives to ensure a professional, respectful work environment, Stifel reserves the right to respond to unprofessional or disrespectful behavior, even if not illegal, or no one has complained about the behavior. Effective leadership requires that managers talk with their Associates about their job performance. Managers should be clear about how each Associate is performing and how the Associate's overall behavior contributes to the workgroup's ability to deliver results. While these discussions may be difficult, they should always be conducted with professionalism and respect. The Firm also prohibits Associates from engaging in bullying behavior. Bullying is defined as aggressive or inappropriate behavior, either direct or indirect, whether verbal, physical, or otherwise, conducted by one or more persons against another, and which is repeated or is highly likely to be repeated in the course of employment. The Firm will not tolerate bullying behavior. The Firm provides periodic, mandatory anti -harassment and anti -discrimination training for all Associates. Any Associate who fails to complete such training when provided will be subject to disciplinary action. If the Firm receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties an appropriate opportunity to participate, and reaches reasonable conclusions based on the evidence collected. The Firm prohibits retaliation, including but not limited to threats, whether verbal, written, or by electronic means, against any individual who reports and/or provides any information concerning unlawful discrimination, harassment, and/or other violations of Firm policies, rules, and standards of conduct. Any Associate found engaging in retaliation will be subject to disciplinary action, up to and including termination. Non -Retaliation It is unlawful and expressly against Firm policy for any Associate to retaliate against any other Associate for making a complaint of discrimination or harassment, or for cooperating in an investigation of any allegations of discrimination or harassment. Accordingly, individuals who report incidents of discrimination or harassment in good faith, or who cooperate in an investigation regarding any such allegations, will not be subject to any form of retaliation. Any Associate who believes that he or she has been retaliated against, or who believes that he or she has witnessed any form of unlawful retaliation, is required to report it immediately to his or Effective 2019 her supervisor. In the event that this is not possible for any reason, or the Associate is uncomfortable reporting the conduct to his or her supervisor, the Associate must report the conduct to Human Resources. The reporting and investigation of allegations of retaliation will follow the procedures set forth in the reporting and investigation of discrimination or harassment. Any person found to have retaliated against an individual for reporting discrimination or harassment, or for participating in an investigation of allegations of any such conduct, will be subject to disciplinary action, up to and including termination of employment. Reporting and Investigation It is the responsibility of every Associate to further the implementation of the Firm's policies forbidding discrimination, harassment, and retaliation. If any Associate believes that he or she has been subjected to discrimination, harassment, or retaliation, or believes that he or she has witnessed any form of discriminatory, harassing, or retaliatory conduct in the workplace, he or she is required to report the incident(s) to his or her supervisor. In the event that this is not possible for any reason, or the Associate is uncomfortable reporting the conduct to his or her supervisor, the Associate must report the incident(s) to Human Resources or to Stifel's Legal Department. An Associate may also report an allegation to the Firms EthicsPoint Hotline by calling 1466-514-5292. An appropriate person will conduct a prompt and thorough investigation of the allegations. Because discrimination, harassment, and retaliation issues can be sensitive, Stifel will take reasonable efforts to protect the privacy of all parties involved. However, confidentiality cannot be assured because it may be necessary to discuss allegations with the accused individual or others in order for the Firm to conduct a thorough investigation. As with any other investigation conducted by the Firm, Associates involved in an investigation must: • Cooperate fully; • Be completely honest and forthcoming; and • Agree to limit the flow of information only to those who need to know as determined by the Firm. If, as a result of the investigation, it is determined that unlawful discrimination, harassment, and/or retaliation has occurred, the Firm will take such prompt remedial action as it deems reasonably necessary under the circumstances to both stop the inappropriate conduct and prevent it from recurring in the future. Depending on the circumstances, appropriate remedial action may take the form of disciplinary action, up to and including termination of employment. If an investigation results in a finding that an Associate knowingly made a false complaint, or a witness knowingly made a false statement, disciplinary action may be taken, up to and including termination of employment. Effective 2019 STIFEL Appendix B: POB Experience Since 2010 Q2' 2021 $14,000,000 Drexel Heights FD 2021 COPS (Pension Obligation) Sole AZ Q2' 2021 5,800,000 Verde Valley FD 2021 COPS (Pension Obligation) Sole AZ Q2' 2021 14,000,000 Navajo County 2021 Pledged Revenue (Pension Obligation) Sole AZ Q2' 2021 4,600,000 Wickenburg 2021 Pledged Revenue (Pension Obligation) Sole AZ Q2' 2021 50,000,000 Central Arizona FMA 2021 COPS (Pension Obligation) Sole AZ Q2' 2021 150,000,000 El Segundo 2021 Pension Obligation Bonds Co (Co-Snr) CA JK Q2' 2021 95,000,000 Wheeling 2021 Pension Obligation Bonds Lead WV Q2' 2021 92,000,000 Manhattan Beach 2021 Pension Obligation Bonds Co (Co-Snr) CA JK Q2' 2021 270,000,000 Corona 2021 Pension Obligation Bonds Sole CA Q2' 2021 30,000,000 Kingman 2021 Excise Tax Revenue (Pension Obligation) Sole AZ Q2' 2021 50,000,000 Lake Havasu 2021 Pledged Revenue Obligations Sole AZ Q1' 2021 26,000,000 Lyons 2021 GO Bonds (Pension Obligation) Lead IL Q1' 2021 363,620,000 Huntington Beach 2021 Pension Obligation Bonds Lead (Snr) CA JK/TJ 03/03/21 286,485,000 Orange 2021 Pension Obligation Bonds Lead (Snr) CA JK/TJ 02/16/21 658,055,000 Tucson 2021 COPS (Pension Obligation) Co (Joint-Snr) AZ 02/10/21 350,025,000 Chula Vista 2021 Pension Obligation Bonds Sole CA 02/09/21 11,880,000 Bradley 2021 GO Bonds (Pension Obligation) Sole IL 02/02/21 106,335,000 Monterey Park 2021A Pension Obligation Bonds Co CA TJ 11/09/20 101,490,000 Gardena 2020 Pension Obligation Bonds Co (Co-Snr) CA JK 10/29/20 52,950,000 Placentia PFA 2020 LRBs (Pension Obligation) Sole CA 10/27/20 90,000,000 Arcadia 2020 Pension Obligation Bonds Sole CA JK/TJ 10/22/20 16,855,000 Gila County 2020 Pledged Revenue Obligations Sole AZ 10/21/20 89,055,000 Pinal County 2020 Pledged Revenue Obligations Sole AZ 07/23/20 131,000,000 Flagstaff 2020 COPs (Pension Obligation) Sole AZ 06/10/20 30,705,000 Fort Ord 2020 TABS (Pension Obligation) Lead (Snr) CA 02/05/20 84,195,000 Pasadena 2020A Pension Obligation Refunding Bonds Lead (Snr) CA JK/TJ 02/05/20 47,610,000 Pasadena 2020E Pension Obligation Refunding Bonds Lead (Snr) CA JK/TJ 08/22/19 64,420,000 Glendora 2019 Pension Obligation Refunding Bonds Sole CA TJ 12/04/18 15,325,000 Fairfield 2018 Pension Obligation Bonds Sole CA 05/24/17 31,960,000 Riverside 2017 Pension Obligation Bonds Sole CA JK 05/12/16 31,145,000 Riverside Pension Obligation Refunding BANS Sole CA JK 01/07/16 334,275,000 Orange County 2016 Pension Obligation Bonds Lead (Snr) CA 08/27/15 21,835,000 Fairfield 2015 Pension Obligation Bonds Sole CA 08/19/15 15,995,000 Fountain Valley 2015 Pension Obligation Bonds Sole CA JK 07/22/15 32,020,000 Oceanside 2015 Pension Obligation Refunding Bonds Sole CA 05/07/15 30,940,000 Riverside 2015 Taxable Pension Obligation Refunding BANS Sole CA JK 01/08/15 339,625,000 Orange County Pension Obligation Bonds 2015 Series A Co CA 05/08/14 30,940,000 Riverside Pension Obligation Refunding BANs Sole CA JK 07/30/13 32,715,000 Santa Rosa 2013 Pension Obligation Refunding Bonds Sole CA 06/04/13 248,095,000 Indiana Bond Bank 2013 School Severance Refunding Bonds Member IN 05/01/13 30,940,000 Riverside 2013 Pension Obligation Refunding BANs Sole CA JK 05/29/12 3,583,000 San Anselmo 2012 Pension Obligation Bonds Plcmnt Agnt CA 05/18/12 2,645,000 Ross Valley 2012 Pension Obligation Bonds Plcmnt Agnt CA 05/01/12 30,940,000 Riverside 2012 Pension Obligation Refunding BANS Sole CA JK 05/05/11 30,775,000 Riverside 2011 Pension Obligation Refunding BANS Sole CA JK 12/21/10 15,870,000 Fairfield 2010 Pension Obligation Bonds Sole CA 06/22/10 4,490,000 San Rafael 2010 Pension Obligation Bonds Sole CA 05/11/10 30,600,000 Riverside 2010 Pension Obligation Refunding BANS Sole CA JK 01/06/10 17,650,000 CSCDA (San Ramon) 2010 Pension Obligation Bonds Senior CA JK Senior Total: $3,924,388,000 46 Sole, Senior and Co -Senior Transactions since 2010 Co Total: $694,055,000 3 Co -Managed Transactions since 2010 City of Santa Ana I Proposal to Provide Underwriting Services Appendix B STIFEL Appendix C: Team Resumes John Kim John Kim has more than 24 years of experience working with public agencies. John co -leads Managing Director management of Stifel's California general government practice group and is a member of the Role: Co -Lead Banker Firm's Executive Committee that runs our national public finance department. John is serving Los Angeles, CA as or served as lead banker on the Gardena, Manhattan Beach, Orange, and Huntington Beach (213) 443-5203 proposed $363 million POBs, scheduled for early next year. jkim@stifel.com BA— University of California, Berkley Tom Jacob Tom Jacob has 14 years of public financing experience and during his career, he has assisted Managing Director municipal bond issuers with the sale of over $5 billion in par value. Of particular relevance to Role: Co -Lead Banker the City's proposed POBs, Tom has served as lead banker on several recent pension financings Los Angeles, CA including the Glendora, Pasadena, and Arcadia POBs, and will be assisting the city of Huntington (213) 443-5010 Beach on the proposed $363 million POB financing scheduled to come to market next week. tjacob@stifel.com Prior to working at Stifel, Tom worked at PFM as a municipal advisor. BA— University of California, Santa Cruz; MBA - USC Esthela Carreon Esthela Carreon joined Stifel in 2016 and has over 4 years of public finance experience. Esthela Assistant Vice President has provided analytical and pricing support for a variety of California credits, including pensions Role: Support Banker and large taxable financings. Esthela's recent POB experience includes financings for the cities Los Angeles, CA of Gardena, Sierra Madre, and upcoming Manhattan Beach. (213) 443-5221 ecarreon@stifel.com BA— University of California, Los Angeles Nick Tracewell Nick Tracewell joined Stifel in 2019 and has since assisted on a variety of financings. Nick has Analyst provided credit analysis and execution support on a variety of credits throughout California. Role: Support Banker Nick's POB experience includes financings for the cities of Orange, Monterey Park, and San Francisco, CA upcoming El Segundo. (415) 364-5968 tracewelln@stifel.com BS—Miami University Sara Brown Sara Brown has worked in municipal finance since 1996, beginning her career in Washington, Managing Director D.C., lobbying for publicly financed affordable housing and moving into investment banking in Co -Head of CA Public Finance 1997. Since joining Stone & Youngberg in 2000, which was acquired by Stifel in 2011, she has San Francisco, CA helped structure and bring to market more than 350 financings totaling over $8 billion. This (415) 364-6872 includes recent POB financings for the cities of Chula Vista and Orange. Sara serves as the co- sbrown@stifel.com head of Stifel's California Public Finance practice and is a member of the Public Finance Department's Executive Committee. BA — Syracuse University; MPM — University of Maryland Erica Gonzalez Erica Gonzalez has over 15 years of public finance experience and during her career has assisted Managing Director municipal bond issuers with the sale of over 400 issues totaling nearly $11 billion in par value. Co -Head of CA Public Finance Erica has recent experience this past year working on large taxable financings for San Mateo - San Francisco, CA Foster School District, San Ramon Valley USD, among others. Erica serves with Sara as the co- (415) 364-6841 head of Stifel's California Public Finance practice and is a member of the Public Finance egonzalez@stifel.com Department's Executive Committee. BS — University of Southern California City of Santa Ana I Proposal to Provide Underwriting Services Appendix C STIFEL Betsy Kiehn Betsy Kiehn joined Stone & Youngberg (now Stifel) in 2004. She directs the pricing and Head of Municipal Institutional marketing of tax-exempt and taxable municipal issues underwritten by Stifel making Sales, Trading & Underwriting commitments on nearly 200 new issues totaling more than $5 billion each year. In addition, Ms. Role: Co -Lead Underwriter Kiehn manages Stifel's short-term underwriting and variable rate remarketing efforts — a book San Francisco CA of 75 issues totaling $1.3 billion. (415) 364-2791 bkiehn@stifel.com BS — University of Vermont Benjamin Stern Ben Stern directed all underwriting at one of Stifel's predecessor firm, De La Rosa & Co. He has Managing Director 28 years of municipal experience and directs the pricing and marketing of tax-exempt and Role: Co -Lead Underwriter taxable municipal issues underwritten by Stifel from our Los Angeles municipal syndicate desk. Los Angeles, CA Ben has underwritten more than $235 billion of municipal financings over the course of his (213) 443-5225 career. Ben has lead all of the firm's successful POB underwritings in California over the past bstern@stifel.com few years. BA & MBA— University of California, Los Angeles Marcus Peters Marcus Peters joined Stifel in early 2017 with over 5 years of experience in the industry. His Vice President previous experience includes being a municipal credit analyst supporting an $80 billion Role: Co -Lead Underwriter municipal bond portfolio as well as a bond insurance underwriter and credit analyst. San Francisco CA (415) 364-6842 petersm@stifel.com BA— University of California, Irvine; MBA— Carnegie Mellon University City of Santa Ana I Proposal to Provide Underwriting Services Appendix C STIFEL Appendix D: Most Significant Engagements Since 2016 Public Senior Underwriter 03/03/21 Orange Taxable POBs $286.49 Will Kolbow 714-744-2235 Public Senior Underwriter 02/10/21 Chula Vista Taxable POBs 350.03 Maria Kachadoorian 609-691-5144 Public Senior Underwriter 12/09/20 William S. Hart UHSD Taxable GO Bonds 137.03 Mike Kuhlman 661-259-0033 Public Senior Underwriter 09/10/20 Saugus USD GO Bonds 102.40 Nick Heinlein 661-294-5300 Public Senior Underwriter 04/03/20 Chino Valley USD GO Bonds 258.00 Gregory Stachura 909-628-1201 Public Senior Underwriter 09/12/19 Fresno USD Taxable GO Bonds 103.74 Ruth Quinto 559-457-6225 Public Senior Underwriter 07/11/19 Perris UHSD GO Bonds 148.00 Candace Reines 951-943-6369 Public Senior Underwriter 06/06/18 Riverside TRANS 340.00 Ivan Chand 951-955-1127 Public Senior Underwriter 01/04/18 Anaheim, RDA TABs 107.46 John Woodhead 714-765-4301 Public Senior Underwriter 11/08/17 Fontana RDA TABs 200.32 Lisa Strong 909-350-7671 Public Senior Underwriter 06/15/17 Irvine USD Special Tax Bonds 203.82 John Fogarty 949-936-5035 Public Senior Underwriter 05/24/17 Cal Pollution Control FA Solid Waste Rev Bonds 228.17 Jerry Uhland 530-639-2190 Public Senior Underwriter 04/25/17 Chino Valley USD GO Bonds 208.00 Sandra Chen 909-628-1201 Public Senior Underwriter 01/19/17 San Diego RDA TABS 155.40 Lakshmi Kommi 619-236-6928 Public Senior Underwriter 01/18/17 Palm Desert RDA TABS 140.13 Janet Moore 760-346-0611 Public Senior Underwriter 12/13/16 Montebello USD GO Bonds 100.00 Ruben Rojas 323-887-7900 Public Senior Underwriter 09/08/16 Irvine Special Tax Bonds 135.84 Grace K. Leung 949-724-6264 Public Senior Underwriter 08/04/16 Los Angeles County RDA TABS 251.29 Douglas Baron 213-974-8359 Public Senior Underwriter 06/09/16 Riverside County TRANs 340.00 Ivan Chand 951-955-1141 Public Senior Underwriter 04/05/16 San Diego USD GO Bonds 145.92 Jenny Salkeld 619-725-7667 Public Senior Underwriter 01/14/16 San Diego USD GO Bonds 117.83 Jenny Salkeld 619-725-7667 Public Senior Underwriter 01/07/16 Orange County Taxable POBs 334.28 Suzanne Luster 714-834-3362 City of Santa Ana I Proposal to Provide Underwriting Services Appendix D STIFEL Appendix E: Sources and Uses of Funds SOURCES AND USES OF FUNDS City of Santa Ana, Califomla 2021 Taxable Pension Obligation Bonds r���rr�•rrr�����r�•rr��rr•ss�•r��rrr�a*k..**�..•w���a�x■■ire..��**�*•rr�����r**•r��rrr��r•*•�rrr��rr Sizing Reflects'90%' UAL Funding Scenario All Numbers are Preliminary- Based on Underlying Rating of 'AA' from S&P Dated Date 10/1312021 Delivery Date 10/1312021 Sources: Bond Proceeds: Par Amount Uses Project Fund Deposits: 638,79D,000.00 6 38.79 D,000.00 Project Fund 636,214,694.50 Delivery Date Expenses Cost of Issuance 444,000.00 Underwriter's Discount 1,188,149.40 Bond Insurance 984,249.47 2,572,397.87 Other Uses of Funds: Rounding 2,917.63 6 38,79 D,000.00 City of Santa Ana I Proposal to Provide Underwriting Services Appendix E STIFEL Appendix F: Proposer Questionnaire A. Investigation Within the past 36 months, has your firm and/or any of its principals been the subject of any investigation relating to the municipal securities industry by the SEC, FINRA, NYSE, or any other State or Federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry? Glen I Project Lawsuit. A putative class action lawsuit was filed in late 2019 against Stifel, Nicolaus & Company, Incorporated ("Stifel") in Missouri State Court, Case No. 1916-CV29250, by several institutional investors (the "Ivy Fund Lawsuit"). The plaintiffs in the Ivy Fund Lawsuit allege there were inadequate disclosures relating to the sale of municipal bonds they purchased from Stifel, which were issued by the Greene County Development Authority for the construction of a senior housing community in a luxury development in Georgia (known as the Glen I Project). Other bondholders in the same issuance also filed two additional lawsuits against our Company in late 2019 asserting nearly identical allegations and claims: a second Missouri lawsuit, Hoffman et al. v. Stifel, Case No. 1916-CV32491, and one lawsuit now pending in Georgia state court, Principal Street Partners f/k/a Green Square Boston, LLC, d/b/a Green Square Capital Advisors on behalf of Advantage Advisers Tax Exempt High Income Fund I and Advantage Advisers Tax Exempt High Income Fund II v. Stifel, Case No. 2019CV328671. (The Georgia lawsuit was initially filed in federal court and also included additional claims and defendants, which were subsequently dismissed voluntarily by the plaintiffs). Stifel believes these lawsuits have no merit and is vigorously defending against the claims. Troy Bank Lawsuit Summary. A putative class action lawsuit was filed on or about February 28, 2020 against Stifel in Missouri State Court, Case No. 20SL-CC01077, by Troy Bank and Trust Company, individually and on behalf of a class of those similarly situated relating to a municipal bond issuance in the City of Chicago (the "Ernst" issuance). The plaintiff alleges there were inadequate disclosures relating to the sale of municipal bonds in the Ernst issuance they purchased from Stifel, which were issued by the Illinois Finance Authority to acquire affordable housing units in Chicago. The plaintiff's claims primarily relate to the alleged failure to identify or disclose housing code violations in prior issuances involving the same non-profit, Better Housing Foundation. The Company believes the lawsuit has no merit and is vigorously defending against the claims. Karegnondi Water Authority. Stifel has been named as a defendant in a United States District Court, Eastern District of Michigan, Southern Division, litigation in connection with the underwriting of bonds to finance the Karegnondi Water Authority ("KWA") pipeline, a new water pipeline intended to serve Flint, Michigan and surrounding areas. The lawsuit is filed against JP Morgan Chase, as senior manager, and Stifel and Wells Fargo, as co -managers, who underwrote the bonds for the KWA in 2014. The complaint alleges novel claims against the underwriter defendants, including conspiracy and professional negligence. We intend to defend vigorously against the allegations. B. Litigation Within the past 36 months, has your firm and/or any of its principals been involved in any litigation, arbitration, disciplinary or other actions arising from the firm's underwriting, management or handling of municipal securities? Stifel, Nicolaus & Company, Incorporated ("Stifel") is an investment banking and securities firm providing investment services to individuals and institutional clients, investment banking, and related services including the day-to-day purchase and sale of securities. Stifel is a wholly -owned subsidiary of Stifel Financial Corp. (SF). In the normal course of business, at any given time, Stifel is subject to a number of claims and disputes, as well as regulatory matters including examinations, reviews, investigations, or formal actions. All required disclosures of material litigation and regulatory matters are made in Stifel Financial Corp.'s public filings with the SEC and other regulatory authorities, such as its Form 10-K and the most recent Form 10-Qfiled with the U.S. Securities and Exchange Commission (the "SEC"), 8-K's, and in other regulatory filings, such as Form B/D, as amended. You are further referred to the FINRA website, where you can access Broker Check reports for Stifel, Nicolaus & Company, Incorporated which may be located with the following hyperlink: http://brokercheck.finra.org/Firm/Summary/793. This contains the regulatory reports on Stifel's disciplinary disclosures. City of Santa Ana I Proposal to Provide Underwriting Services Appendix F STIFEL C. Conflicts of Interest Does there exist any relationship between your firm and any other non-affiliated firms) or individuals involving any compensation arrangement that may be associated with your possible engagement to assist with the City's proposed debt issue? There appear to be no conflicts or perceivable conflicts of interest. To the best of our knowledge, Stifel has no such arrangements material to our services and performance related to this agreement. City of Santa Ana I Proposal to Provide Underwriting Services Appendix F EXHIBIT 4 March 11, 2021 r�- PROPOSAL FOR UNDERWRITING SERVICES FOR PENSION REFINANCING BONDS RFP NUMBER: 21-025 RAMIREZ & CO., INC. Los ANGELES OFFICE 633 W. 5T", SUITE 2600 Los ANGELES, CALIFORNIA 90071 PHONE: (213) 605-5120 CELEBRATING 50 YEARS RAM. IRE Z TABLE OF CONTENTS Page COVER LETTER II. AGREEMENT STATEMENT 1 III. FIRM AND TEAM EXPERIENCE 1 IV. PENSION OBLIGATION BOND EXPERIENCE 6 V. DISTRIBUTION CAPABILTIIES 6 VI. STRUCTURING IDEAS AND MARKETING PLAN FOR PROPOSED DEBT ISSUANCE 8 VII. COST PROPOSAL 15 Vill. CERTIFICATIONS 15 IX. REFERENCES 15 X. EVIDENCE OF FINANCIAL CAPACITY 15 XI. INSURANCE 15 Appendix A: Certifications Appendix B: Proposer Questionnnaire Appendix C: Ramirez & Co.'s Underwriting Experience - Cities Population +250,000 Residents Appendix D: Assigned Team Resumes Appendix E: All California City Pobs Issued Since 2017 Appendix F: Pending Litigation Detail Appendix G: Ramirez & Co.'s Taxable Deal List Appendix H: Detailed Cash Flows Of Structuring Proposal Appendix I: Top Buyer of California POBs Legal Disclaimer RAMIREZ GROW " W IT H US March 11, 2021 Kathryn Downs, Executive Director of Finance & Management Services Agency City of Santa Ana 20 Civic Center Plaza Santa Ana, CA 92701 Dear Kathryn: Thank you for the opportunity to present Samuel A. Ramirez & Co., Inc.'s ("Ramirez & Co.") proposal for Underwriting Services for Pension Refinancing Bonds to the City of Santa Ana (the "City"'). It has been our honor and pleasure to have served the City on its two most recent refinancings. Ramirez & Co. is prepared to roll up our sleeves, once again, and make the City's pension obligation bond (POB) issue our top priority. In making your selection, we ask that you consider the following: We paid attention to the City; and paid attention early. Few, if any, firms responding to this RFP have dedicated the time, resources or paid attention to the City, like Ramirez & Co. Importantly, in October of 2019, Ramirez & Co. was the first to present POB data to the City. Our team has presented subsequent POB analyses in November 2019, February 2020, March 2020 and June 2020. Additionally, in the height of the COVID-19 shutdown, our team developed the Ramirez Cash Flow Protection Program to help preserve liquidity. And, we have provided a weekly market update since April 2020. We developed a statewide strategy to change an SCO policy and deliver savings. In 2007, the City issued Gas Tax Bonds to fund street improvements. Subsequently, the State Controller's Office ("SCO") restricted the use of this financing structure, thereby limiting the City's ability to refinance the 2007 Gas Tax Bonds. Ramirez & Co. coordinated a statewide strategy that included three cities across three counties and statewide policy makers, to successfully change the SCO's policy, allowing the City to safely refinance its 2007 Gas Tax Bonds. We delivered two (2) double 'AA' category rating upgrades; we are ready to deliver a 3rd. As senior manager for the City's Tax Allocation Refunding Bonds, Series 2018AB, our banking team delivered a two notch rating upgrade from 'A+' to'AA' that saved the City $545,000 in issuance costs by eliminating the need of bond insurance. Similarly, our team helped the City secure a three notch rating upgrade on the City's Gas Tax Revenue Refunding Bonds, Series 2019, from 'A-' to 'AA-' that reduced issuance cost by $170,000 by eliminating the need for bond insurance as well. Our team knows the City and we will build on that institutional knowledge to help deliver better than expected results, once again. We know the City's General Fund credit. In the credit discussion, we include specific recommendations that will build on our prior rating success. Notably, the Ramirez & Co. team includes Peter Block, a former 14-year S&P State & Local Gov't Rating Analyst. With Peter's help, we developed a credit model to provide an indicative rating for the City's upcoming POB transaction. We assign the highest rating to the City's Budgetary Flexibility, Budgetary Performance and Liquidity. However, like most California cities, the City's debt and contingency liability is weak due to large unfunded pension/OPEB liabilities. Hence, like we did in 2018 and 2019, our focus will be to articulate the strengths of the City's Management Team and the local/regional Economy. Based on our recent rating successes, we firmly expect that the City should earn a strong 'AA' category POB rating. Relevant California City POBs Experience. Since 2017, Ramirez & Co. has senior -managed eight (8) California City POB transactions, representing 26% of all California city POBs. Moreover, Ramirez & Co. set the standard by incorporating a 10-year option call in our City of Brawley POB financing in 2017. Importantly, with each subsequent POB issue, we have broadened the investor base for POBs. Our recent California POB clients include the cities of Monterey Park, Coachella, Hawthorne, El Monte, Baldwin Park, Pomona, Brawley, and San Fernando (pending); RAM IREZ cities with similar demographics and economic metrics as the City, making us uniquely qualified to lead the City's proposed POB transaction. Distribution Resources to Deliver the Lowest Borrowing Rate. Ramirez & Co.'s distribution resources are comparable to our larger competitors: a 17 member taxable municipal bond sales force, a 16 member fixed income (corporate bond) sales group, and three sales professionals focused on state & local government investment pools and pensions systems. With sufficient capital to sole manage a $3.15 billion bond issue, Ramirez & Co. will make the City of Santa Ana our firm -wide priority. We commit to dedicate all of the Firm's resources to ensure the best execution. Additionally, we commit that we will not senior manage any other transaction on the day of the City's POB pricing. Consider the use of Joint -Senior Managers. Many frequent (large) issuers utilize Joint Senior Managers, which allows an issuer to reward more than one firm with the coveted "senior manager" role. Notably, Ramirez & Co. served as Joint Senior Manager for both the State of CA and LACCD in 2020. And, we are currently serving as Joint - Senior Manager on an upcoming $617 million San Francisco International Airport transaction. We encourage the City to consider this approach. Thank you for your consideration of Ramirez & Co. to serve the City, as senior manager, on this most important financing. We look forward to serving the City once again. Sincerely, Raul Amezcua, Senior Managing Director T: (213) 605-5120 E: raul.amezcua@ramirezco.com Fernando Guerra, Managing Director T: (310) 993-1440 E: fernando.guerra@ramirezco.com Michael Mejia, Senior Vice President M: (510) 364-1423 E: michael.mejia@ramirezco.com RAMIREL Proposal shall include a statement outlining your concurrence or concerns with any and all provisions as contained in this RFP. Ramirez & Co. agrees to all the provisions in this RFP. i. A general description of the firm, including structure, size, number of employees, relevant financing experience, and any past or contemplated changes in ownership. Description of the Firm: Ramirez & Co. is proud to celebrate its 501" anniversary in 2021! Since its inception in 1971, the cornerstone of Ramirez & Co., Inc. has been and continues to be municipal finance. More than 80% of the Firm's activities focus on state and local government finance, with the balance in debt/equity capital markets and asset management. Our focus on this sector elevates the importance of each municipal finance transaction within the Firm. Structure: 100% employee -owned corporation, incorporated as a "C-corp" in New York State. Size: Ramirez & Co. has the size and resources to have senior managed 72 transactions greater than $100 million in the last five years. With capital sufficient to sole manage a $3.15 billion financing in a given day and 39 institutional sales people that include: 17 municipal taxable/tax-exempt sales specialists, 16 fixed income/corporate bonds sales professionals and 3 sales specialists focused on state & local government investment pools and pension clients. As one of the highest capitalized privately -owned firms in the municipal bond industry, we trade, on average $100 million daily and carry a daily municipal inventory of $150 million. ■ Since 2015, Ramirez & Co. has traded $11.6 billion (29,617 trades) of California bonds in the secondary market, including $3.3 billion (4,264 trades) of taxable bonds and $22.9 million (84 trades) of City of Santa Ana bonds. Number of Employees: Ramirez & Co. has 133 employees in thirteen U.S. offices: Los Angeles, New York, Albany, Austin, Boston, Chicago, Dallas, Denver, Houston, Orlando, Puerto Rico, San Antonio and San Juan, Puerto Rico. Notably, every Ramirez & Co. office is managed by a woman, minority or US Veteran. 79% of the Public Finance Department's employees are minorities and/or women. Relevant Financing Experience: Since 2017, Ramirez & Co. has participated in 23% of all negotiated municipal underwritings nationally. More relevant, since 2017, Ramirez & Co. has senior managed 26% of all Pension Obligation Bond issues issued by California cities. Past or Contemplated Changes in Ownership: In our 50-year history, we have not had any ownership changes, mergers, name changes or Federal bailouts. Samuel A. Ramirez Sr., President and CEO and Sam Ramirez, Jr. own 90% of the Firm, with 19 employees owning the remaining 10%. Ramirez & Co. is a Top Ranked Underwriter of POBs (California and Nationally). Ramirez & Co. is one of the most experienced POB underwriters in California. Since 2010 Ramirez & Co. has senior managed eight POB transactions, all for California cities, with a par amount totaling $699.5 million (including Joint -Book Runner) and served as co -manager on five POB transaction with a par amount of $5.8 billion. Notably, Raul Amezcua, formerly the head of the Stifel California Public Finance Team and the De La Rosa & Co. Banking Group, joined Ramirez & Co. in 2021. Raul brings over $2 billion of pension financing experience spanning three decades, from the initial 37-Act County POB issues in the 1990's, to the wave of city POBs issued in the 2000's, 2010's and in the new 2020 decade. His experience includes POB issues for the cities of Placentia, Chula Vista, Riverside and the Counties of Orange, Riverside, San Bernardino, among others. LA, RAMIREL i' Date I Issue Par Amount (millions) Team Members Senior Manager Pending Experience San Fernando, 2021 POBs $45.0 RA, MM, FG, PG 02/02/21 Monterey Park, 2021 POBs $106.3 MM, RA, PM 11/19/20 Coachella, 2020 POBs $17.5 FG, MM, PM 08/13/20 Pomona, 2020 POBs (Joint Book -runner) $219.9 FG, MM, PM 06/06/20 El Monte, 2020 POB $118.7 FG, MM, PM 09/24/19 Hawthorne, 2019 POBs $121.8 FG, MM, PM 02/20/19 Baldwin Park, 2019 POBs $54.0 MM, PM 07/12/17 Brawley, 2017 POBs $16.3 MM, PM Co -Manager Experience Pending* City of Philadelphia, 2021 POBs $100.0 MM, FG, PM 12/20/17 City of Houston, 2017 POBs $1,005.1 FG, PM 10/25/17 State of Illinois, 2017 POB $4,500.0 FG, PM 06/08/16 West Palm Beach, 2016 POBs $50.4 FG, PM 12/04/14 Long Island Power Authority, 2014 POBs $164.9 FG, PM Total Senior Manager Experience (8 transactions) $699.5 Total Co -Manager Experience (5 transactions) $5,820.4 RA = Raul Amezcua; MM= Michael Mejia; FG=Fernando Guerra; PM=Patty McGrorry. ii. A description of the size of the firm's governmental staff and the firm's experience with governmental agencies of a similar size, nature, and scope. Emphasis should be placed on assignments undertaken within the past three (3) years and on engagements undertaken by the personnel proposed to be assigned to this agreement. Ramirez & Co.'s Governmental Staff. Ramirez & Co.'s Municipal Finance Group is national in scope and resources, with 67 professionals: 30 investment banking professionals, 30 sales and trading professionals, 5 underwriting professionals and 2 credit/strategy professionals. Experience and Success with - the City of Santa Ana and - Similar Size Governmental Agencies. The City of Santa Ana - the "seat of Orange County" - is the 11' largest in California, with 335,000 residents and one of the most dynamic in the state. Importantly, rating agencies and investors will evaluate the City to a peer group based on both size and demographic/economic metrics. Experience with cities that have similar PCIB demographi%conomic metrics: Our team has Credit Experience Similar to Santa Ana extensive experience underwriting bonds for Median Median working class cities that have similar economic city Rating Home Price HH Income metrics as Santa Ana. This is important because Baldwin Park --/AA-/-- $516,500 $65,904 30% of the City's rating will be anchored on its wealth levels, demographics and economic Monterey Park --/AA/-- $647,500 $61,819 profile. Rating agencies and investors have Pomona --/AA-/A+ $545,000 $60,598 traditionally seen these areas as credit deficient. San Fernando TBD $488,500 $58,425 However, COVID-19 has shown the resiliency of Hawthorne A2/AA-/-- $777,500 $54,215 El Monte --/A+/A- $565,000 $49,003 these communities and that residents of these Brawley --/A-/-- $221,509 $42,326 cities are the backbone of the local and national Coachella --/AA-/-- $294,829 $37,419 economy. The adjacent table lists the wealth metrics of our recent California POB clients, demonstrating that we excel with cities that have similar economic and demographic metrics to Santa Ana. K RAMIREL Experience with large cities (population greater than 250,000): Since 2010, Ramirez & Co. has underwritten 285 issues totaling $86.2 billion for cities with a population greater than 250,000 (26 individual cities are listed below). Appendix C includes a comprehensive list. Atlanta, GA Colorado Springs, CO Indianapolis, IN NY, NY Santa Ana, CA Austin, TX Corpus Christi, TX Jacksonville, FL Orlando, FL Yonkers, NY Buffalo, NY Dallas, TX Kansas City, MO Philadelphia, PA Charlotte, NC Denver, CO Los Angeles, CA Pittsburgh, PA Chicago, IL El Paso, TX Memphis, TN San Antonio, TX Cleveland, OH Houston, TX New Orleans, LA San Francisco, CA Most important experience: the City of Santa Ana: Our team successfully underwrote the City's last two refinancings. Each transaction had significant challenges that required a banking effort above and beyond the traditional underwriting assignment and our team delivered better than expected results. $72,310,000, Successor Agency (City of Santa Ana), Tax Allocation Refunding Bonds, Series 2018A & B (Taxable) Ramirez & Co. Role: Senior Manager Identified an opportunity others missed, delivered a two notch rating upgrade and greater savings: In 2014 the City engaged a competitor firm to refund redevelopment bonds but the refinancing was "shelved" when savings fell below minimum threshold levels. In 2018, Ramirez & Co. informed the City that adding refunding candidates, excluded from the RFP, would substantially increase savings. Based on our analysis, the City engaged Ramirez & Co. to move forward with the improved refunding structure. We worked with staff to successfully secure a two notch rating upgrade, from 'A+' to 'AA,' and reduced the City's issuance cost by $545,000 (the higher rating eliminated the need for bond insurance). The final structure generated $3.6 million of cash flow savings to the City's general fund in the first year and $14.6 million of savings to other public agencies. Savings were critical to sustain the City's FY19/FY20 budgets. $44,650,000, City of Santa Ana, Gas Tax Refunding Bonds, Series 2019 Ramirez & Co. Role: Senior Manager Marshaled statewide strategy to solve complex policy problem, delivered rating upgrade and better than expected savings: In 2007, the City issued its 20007 Gas Tax Bonds to fund street improvements. Subsequently, the State Controller's Office ("SCO") restricted the use of this financing structure. Due to concerns of a possible audit from the SCO's office, the City decided not refinance the 2007 Gas Tax Bonds. Ramirez & Co. coordinated a statewide strategy to allow the City to refinance its 2007 Gas Tax Bonds. To minimize the SCO audit risk, we engaged cities across three counties to secure pre -approval from the SCO to refinance the Gas Tax Bonds issued by the City and the cities of Coachella and Oxnard. Our team also secured a three notch rating upgrade, from 'A-' to 'AA-', which reduced issuance cost by $170,000 and increased cash flow savings by $1.2 million. Through an aggressive marketing campaign, Ramirez & Co. generated strong investor demand producing higher savings than all prior estimates. Moreover, Ramirez & Co. put its capital at risk by underwriting $1.3 million of unsold bonds to preserve low interest rates. These efforts resulted in $18.8 million in cash flow savings and $11.2 million or 20.18% in NPV savings. iii. Name and contact information of the primary and secondary Project Managers to be assigned to the engagement.. Raul Amezcua Senior Managing Director (213) 605-5120 raul.amezcua@ramirezco.com i' Michael Mejia Senior Vice President (510) 364-1423 michael.mejia@ramirezco.com 3 z z Ln LL O i' RAMIREL iv. Indicate level of commitment of each of the assigned key personnel and how you will ensure the accessibility of key personnel to the City during this engagement. Commitment of Key Personnel. The two recent financings Ramirez & Co. completed for the City in 2018 and 2019 were not in response to an RFP. Both were generated by our banking team combing through the City's CAFR, doing extensive analyses and thinking 'outside the box' to solve problems. Few, if any, firms responding to this RFP have dedicated the time, resources or paid attention to the City like Ramirez & Co. Importantly, in October of 2019 Ramirez & Co. was the first to present POB data to the City. Our team has presented subsequent POB analyses in November 2019, February 2020, March 2020 and June 2020. In the height of the COVID-19 shutdown, our team developed the Ramirez Cash Flow Protection Program to help preserve liquidity. Importantly, we have provided a weekly market update since 2020. Accessibility of Key Personnel. Raul Amezcua (213-605-5120) and Michael Mejia (510-364-1423) are available 24 hours a day, seven days a week. Additionally, Raul Amezcua, a resident of Orange County, and Michael Mejia live minutes away from the City. We make our firm commitment that no other transaction will take priority over this assignment. We will not plan vacation or time off until this financing is completed. And, we will be present at every single working group call/meeting and council presentation. v. Resumes for the professional staff assigned to the engagement. Include a brief biography of each person specifically addressing experience relevant to the City's proposed financing. A discussion of educational background and relevant experience of the Partner, Supervisor(s) and Staff which will be assigned to this engagement as well as their assigned responsibilities under the proposal shall be included. Most Experienced California POB Team. Ramirez & Co.'s proposed team is the most experienced POB financing team in California. No other firm has successfully completed more POB transactions in California in the last three years (note: we use three years as a benchmark because all deals prior to 2017 included a make -whole call option which severely restricted long-term flexibility). The table below lists the individuals who will work on the City's POB financing. Resumes with contact information are provided in Appendix D. Raul Amezcua Senior Managing Director Michael Mejia Senior Vice President Fernando Guerra Managing Director Tiffany Lee Vice President Esther Feliz Analyst Arthur Chan Managing Director Patty McGrorry Managing Director John Young Managing Director Peter Block Managing Director 30+years Lead Banker and Project Manager 15+years Day -to -Day Banking 31+years Project Support 4+years Banking Support 1+year Analytical Support 33+years Quantitative Support 19+years Lead Underwriter 45+years Co -Lead Underwriter 20+ years Credit Specialist/Former S&P Analyst vi. A description of the Proposer's experience in providing similar services to those requested in this RFP. Ramirez & Co. has senior managed 26% of all POBs issued by California cities since. Since the statewide shut -down in March 2020, Ramirez & Co. has underwritten 26% of all California POBs issued by cities (5 of 19 deals total). It is important to note that all POBs senior managed by Ramirez & Co. have been responsibly structured by including a 10-year par call. We have included a list of all California City POBs issued since 2017 in Appendix E. We also include case studies for five California POBs in Appendix E. POB experience in California is more important than experience in other states because understanding and telling the City's credit story — to both S&P and investors - is critical to the success of the transaction. 4 i' RAMIRE2 vii. Identify three taxable bond issuer references for which the proposed primary Project Manager and the secondary Project Manager have carried out similar responsibilities to those contemplated under this RFP. Include contact information for each. The references that can attest to the Firm's capability in structuring and marketing taxable bonds. Los Angeles CCD City of Los Angeles City of Placentia Dr. Francisco Rodriguez Ben Ceja Jessica Brown Chancellor Assistant CAO Director of Finance 770 Wilshire Boulevard 200 N. Main Street, Rm 1500 401 E Chapman Avenue Los Angeles, CA 90017 Los Angeles, CA 90012-4190 Placentia, CA 92870 (231) 891-2201 (213) 978-7688 (714) 993-8237 viii. A list of the local office's most significant engagements in the last five (5) years, indicating whether they are public or private sector, and including scope of work, date, and name and telephone number of the client contact. Date Issuer Scope of Work Par (m) Role Contact Name Phone 02/02/21 Monterey Park POBs $106.34 Lead Martha Garcia (626) 307-1349 11/19/20 Coachella POBs $17.59 Sole Nathan Statham (760) 398-2702 10/29/20 LACCD GO Ref $1,793.81 Lead Francisco Rodriguez (231) 891-2201 09/02/20 State of CA GO & Ref $2,630.95 Lead Blake Fowler (916) 651-6743 08/19/20 LADWP Wtr Rev Bonds $120.47 Lead Peter Huynh (213) 367-4671 06/09/20 El Monte POBs $118.73 Lead Bruce Foltz (626) 580-2075 02/06/20 Oxnard Rev Ref. Bonds $16.91 Sole Kevin Riper (805) 385-7475 11/21/19 Santa Ana Gas Tax Bonds $44.65 Sole Kathryn Downs (714) 647-5420 09/24/19 Hawthorne POBs $121.87 Sole Felice Lopez (310) 349-2923 10/18/18 Santa Ana RDA TAB Ref $72.32 Sole Kathryn Downs (714) 647-5420 10/10/18 LADWP Revenue Bonds $300.00 Lead Peter Huynh (213) 367-4671 08/02/18 El Monte Water Revenue Bonds $18.88 Sole Fin Dir. (626) 580-2002 05/22/18 UC Regents General Rev Bonds $1,227.71 Lead Peggy Arrivas (510) 987-9067 03/21/18 LAX Revenue Bonds $226.50 Lead Ryan Yakubik (424) 646-5251 01/18/18 Los Angeles Rev Ref. Bonds $25.63 Lead Ben Ceja (213) 978-7688 07/12/17 Brawley POBs $16.31 Sole Ruby Walla (760) 344-8941 ix. A statement that the firm is independent of the City and that it is unaware of potential conflicts of interest. Ramirez & Co. is independent of the City and, to the best of our knowledge, we are unware of any potential conflicts of interest that might arise from this engagement. x. An affirmative statement verifying the firm and all assigned key professional staff are properly licensed to practice in California. Ramirez & Co., and the personnel assigned, are properly licensed and registered to practice in California. xi. A warrant that the firm maintains a prudent amount of errors and omissions insurance that covers negligent acts and is applicable to the work requested in this RFP. Ramirez & Co. maintains adequate insurance coverage of errors and omissions insurance. xii. An acknowledgement by signature that the signer is authorized to contractually bind the firm. We acknowledge that the signers below are authorized to contractually bind the Firm. 5 i' RAMIRE2 -- Raul Amezcua, Senior Managing Director T: (213) 605-5120 E: raul.amezcua@ramirezco.com Michael Mejia, Senior Vice President M: (510) 364-1423 E: michael.mejia@ramirezco.com xiii. Any pending legal actions and litigations against the firm. Legal actions against the firm in the previous five years. There are currently three legal actions related to underwritings for issuers within the State of Puerto Rico. The legal actions include several underwriting firms and we believe there will be no material adverse impact to Ramirez & Co. Further details are provided in Appendix F. Describe the firm's and selected personnel's experience within the last thirty-six (36) months regarding the issuance of Pension Obligations Bonds. Pension Obligation Bond Experience. Since 2017, Ramirez & Co. has underwritten 9 POBs nationally with a total par of $6.2 billion. Michael Mejia, Fernando Guerra, and Patty McGrorry, all assigned to the City of Santa Ana, have participated in all POBs outlined in the table below, bringing a wealth of knowledge to successfully structure any POB transaction. Moreover, Raul Amezcua who recently joined Ramirez & Co., completed recent POB financings for Placentia, Riverside and Chula Vista. Par Ramirez Sale Date Issuer Amount Role Ramirez Team Underwriters (mm) Pending* San Fernando $45.00 Sole RA, MM, FG, PM 1 Pending* City of Philadelphia $100.00 Co -Sr MM, PM 2 2/2/2021 Monterey Park $106.30 Lead RA, MM, FG, PM 2 11/19/2020 Coachella $17.50 Sole MM, FG, PM 1 8/13/2020 Pomona $219.80 Co -Mgr MM, FG, PM 2 6/9/2020 El Monte $118.70 Lead MM, FG, PM 2 9/24/2019 Hawthorne $121.80 Sole MM, FG, PM 1 2/20/2019 Baldwin Park $54.10 Sole MM, FG, PM 1 12/20/2017 Houston, Texas $1,005.10 Co -Mgr PM 8 10/25/2017 Illinois $4,500.00 Co -Mgr PM 23 7/12/2017 Brawley $16.30 Sole MM, FG, PM 1 Total Par Amount $6,304.60 RA = Raul Amezcua; MM= Michael Mejia; FG=Fernando Guerra; PM=Patty McGrorry Proposers shall provide a brief summary of their firm's fixed income marketing and distribution capabilities, specifically taxable municipal bonds. Description of firm's corporate bond sales and trading capabilities shall include, but not be limited to the following: i.Number of sales and trading personnel ii. League tables/rankings iii. Personnel assigned to sell taxable municipal bonds Fixed Income Marketing and Distribution Capabilities. Developed over 50 years, Ramirez & Co.'s taxable bond distribution capabilities rival any firm on Wall Street, based on the number of sales people and experience. Led by our lead underwriter, Patty McGrorry, who underwrote the City's last two transactions (Gas Tax and TAB refundings), Ramirez & Co. utilizes 3 distribution channels when pricing California POBs: R ■ 17 member taxable municipal sales specialists with an average 20 years of municipal bond sales experience. ■ 16 member investment grade/corporate Ronald Banaszek bond sales group that will expand the StevenBuquicchio investor base with cross over buyers and William Cantelli non-traditional investors. Tristram Deery Philip Denicola ■ 3 member sales group, with 70+ years Christopher Gallic combined experience, targeting pension RobertFuhr funds and municipal governments. Brad Gemelli The Ramirez & Co. Advantage: Timothy Houston Robert Kelly • Municipal Focus. The City's POB will be Peter Koch the most important assignment for Linda Martin Ramirez & Co. Since 80% of our Firm's Timothy Muller revenues are generated by Public Eileen Obermann Finance, the firm's entire sales force, Kevin O'Connor both municipal and corporate, will focus Mark Wallace on the City's POBs. We commit not to Robin Marchand senior manage any other municipal transaction on the day we price Santa Ana POBs. AnthonyChiaro, Mgr. Eric Kurschus Joseph Smith Robin Taylor Richard Abramowitz Aaron Brighenti Ricardo Camil❑ Angelo DiCaro Philip Duddy Richard Gordon James Kearney Kevin Lind Seth Martin James Meyer Lonnie Schaffer William Kimball T. Ryan Greenawalt Christopher Trinkus Thomas Chi nery RAMIRE2 t The information flow to and from investors is coordinated and managed by the lead underwriter ■ Available Capital. Ramirez & Co. has sufficient capital to underwrite a $3.15 billion issue, as sole manager. 100% of our capital will be available to the City on the day of pricing. Ramirez & Co.: A top ranked underwriter of taxable municipal bonds. Since 2017, Ramirez & Co. has underwritten 241 taxable municipal bond issues totaling $50.6 billion; 21% of all taxable municipal bonds sold in the municipal market nationally. Appendix G lists all taxable municipal bond transactions. Senior Managed Co -Managed Total Par Amount $6.4 billion $44.2 billion $50.6 billion Number of Transactions 44 197 241 Corporate Sales and Trading - Taxable Bond Distribution Capabilities. The Firm employs 39 institutional salespeople; including 16 corporate fixed income salespeople covering 350 corporate fixed income investors, comprised of large money managers and pension funds, as well as middle market investors. Recent Joint -Lead Manager assignments showcase our corporate taxable bond distribution capabilities. $ 400,000,000 Afflac® SustainabllltV Bonds 1.125% due 2026 Ramirez & Co. JointBookrunner March 2021 i' $ 1.200.000.000 Allstate. 5 and 10-year sr. notes Ramirez & Co. Joint 800krunner November 2020 $750,000,000 PEPSICO 0.400% Sr Notes due 2023 Ramirez & Co. Joint 800krunner October 2020 7 $700,000,000 (' DUKE ENERGY L+18 due 2022 Rami►ez & Co. Joint 800krunner August 2020 $750,000,000 0.450% due 2022 Ramirez & Co. Joint 800krunner July 2020 RAMIREL i' Provide a brief summary of your specific structuring ideas including the assumptions of which CalPERS UAL bases to fund the maximize savings based on the two scenarios described above. Describe how proposer would lead the transaction as a senior manager. Specifically, provide your strategies and approaches to help ensure the transaction is executed efficiently. A Word on Credit. Prior to the COVID-19 shutdown, the City's financial profile was on an upward trajectory. General Fund revenues were increasing with the approval of the Measure X sales tax, new cannabis related tax revenues and online sales revenues (Bradley -Burns). Then, COVID-19 brought significant financial uncertainty. However, due to the City's proactive management and conservative budgeting, the financial impacts were not as severe as originally anticipated. The City's FY2020 audit shows that strong liquidity was maintained with an unassigned General Fund balance of $74 million or 24% of expenditures. These factors will be a critical component of the rating process. The City's approved FY2021 budget projected a structural deficit in the "Ten -Year General Fund Financial Outlook" and significant revenue decreases in FY2021 resulting from COVID-19. However, the City's Mid - Year Budget Update (February 16, 2021) indicated the City's financial results are stronger than anticipated by $13.1 million. Downward adjustments, to the Hotel Visitors Tax, Utility Users Tax, Paramedics Service Charge and Parks and Recreation revenues, were mitigated by stronger than expected Sales Tax revenues ($12.5 million higher than prior estimates) that included Bradley -Burns online sales taxes and Measure X. One very significant new revenue source is the Score Rating City's Adult -Use Retail Cannabis tax, which is projected to produce $16.9 1.00-1.64 AAA million in revenue ($7.25 million increase from approved budget). One 1.95 - 2.34 AA 2.35 - 2.84 AA - additional credit positive is the 3% decrease in General Fund expenditures. 2.85 - 3.24 A+ The Ramirez & Co. team includes Peter Block, a former 14-year S&P State & 3.25-3.64 3.65 - 3.94 A A - Local Gov't Rating Analyst. With Peter's help, we developed a credit model to 3.95 - 4.24 BBB+ provide an indicative rating for the City's upcoming POB transaction. 4.25 - 4.54 BBB 4.55 - 4.74 BBB - The adjacent tables detail S&P's Local Government Score Card, which 4.75-4.94 BB we used to calculate an indicative 'AA' category rating. 4.95-5.00 B Weight Category Score Comments 30% Economy 2.5 Weak per capita income, strong MSA 20% Management 2 Financial policies & budget monitoring/reporting 10% Budgetary Flexibility 1 Available GF Balance is 25% of expenditures 10% Budgetary Performance 1 Operating surplus in the GF and total gov't funds level 10% Liquidity 1 Available Cash well above 15% of Gov't Fund Expenditures Net direct debt below 3%, but high as a percentage of total 10% Debt & Contingent Liability 5 governmental funds revs; driven by pensions and OPEB 10% Institutional Framework 3 Standard score for all California cities Notably, we assign the highest rating to the City's Budgetary Flexibility, Budgetary Performance and Liquidity. However, like most California cities, the City's debt and contingency liability is weak due to large unfunded pension/OPEB liabilities. Institutional Framework is based on the legal environment of the issuer and cannot be controlled by the City. Given this, our focus will be to articulate the strengths of the City's Management Team and the local/regional Economy. K RAMIREL z z Ln U_ O i' Management Team: The City's robust financial policies, that include a formal budget and reserve policy, debt management policy and a pension funding policy, are strong. Notably, the pension funding policy is very thoughtful and includes a strategy to address both the UAL and OPEB liabilities. In addition to emphasizing conservative budgeting results, we recommend including a substantial discussion of the specific actions taken to contain costs during the COVID shutdown. Providing this level of detail helps articulate the sophistication of the City's management team. Economy: As senior manager for the City's last two financings, we helped earn two and three notch rating upgrades to the coveted "AA" category. In part, this success was due to our ability to position the Santa Ana economy as the backbone of its Metropolitan Statistical Area (MSA). Its vitality at the intersection of Orange, LA and Riverside Counties provides the City with unique opportunities. For its general fund credit, it will be important to detail the City's transformational period fueled by substantial new development, opportunities and revenues. For the City's 2019 rating presentation, our team spent a lot of time discussing the following projects: 3rd & Broadway, Willowick, YMCA, Tapestry Hotel by Hilton, Central Pointe, The Bowery, First American Title Company, The Heritage (Park and Paseo) and the Main Place Mall Transformation. These developments were and are critical to the City's credit rating because of potential sales taxes and AV increases. In the POB rating presentation, we will detail the progress that has been made. Based on our recent rating successes, we firmly expect that the City should earn a strong 'AA' category POB rating. Additional Thoughts on Rating Strategy. Ramirez & Co. recommends utilizing an S&P rating only. S&P rates POBs based on an issuer's GO rating due to an acknowledgement that revenue used to pay for POB debt service is not limited in scope and is not distinct or separate from the issuer's General Fund. Moody's and Fitch rate POBs one to two notches lower and recent POB performance indicates a single S&P rating will not impact pricing. Additionally, S&P is credit neutral on the issuance of POBs and therefore the proposed transaction will not negatively impact the City's credit rating. Structuring Ideas: Ramirez & Co.'s analysis is a multi -step process based on the following: Pension liability shape (including POB) Amortization Base by Amortization Base CaIPERS UAL refunding model POB size optimization; an incremental approach Notably, our pension optimization model is dynamic and we have evaluated a refinancing of all possible UAL base combinations. The structuring recommendation included below is based on current interest rates and a progressive approach that adds incrementally less efficient UAL bases to reach the optimal solution. As we approach pricing, our quantitative support team will continue to monitor the market and we can revise the combination of UAL bases on the day of pricing based on investor demand and real-time interest rate movements. Our quantitative support team includes Arthur Chan, Managing Director, who has a Bachelor's degree in Computer Science with a focus on Artificial Intelligence from the University of RAMIREZ: i' Wisconsin at Madison and a Master's in Finance and Management from the University of Chicago. Arthur will be critical in managing our pension optimization model through the engagement and at pricing. Pension Liability Shape: The City's strategy to refinance between 50%-90% of its outstanding UAL, coupled with projected budget challenges, allow it to restructure its current pension liability with a more long-term sustainable repayment schedule. Below are three structuring approaches, commonly used by California POB issuers. Each structure has a specific savings target. Uniform Level Hybrid Target Equal annual savings Level predictable debt service Combination of Level and Uniform structures Benefits Highest overall savings; no negative savings Lower cash flow relief than Disadvantages level debt service in in early to mid -amortization period Highest cash flow savings in early Level predicable debt service in to mid -amortization period; early to mid -amortization and no negative savings in later years negative savings Negative long-term savings Lower aggregate savings than the uniform option We recommend a "Hybrid" approach because it provides a balanced solution that addresses the City's short and long-term objectives. Key factors supporting this recommendation include the following: Level debt service in the "front-end" creates a more manageable liability for the City in the short to medium term. This approach also creates 'capacity' to absorb future UALs, if they arise. • Hybrid structure option improves overall savings from the level debt service approach; and, greater savings improves the 'probability of success' for the overall transaction. ■ No negative savings relative to the City's current UAL amortization; this is an important policy objective for every public agency contemplating the issuance of POBs. Base -by -Base CaIPERS UAL Refunding Model. Once the strategy for the City's overall pension liability structure is decided, our Pension Optimization Model evaluates each individual amortization base. Refinancing the City's UAL is similar to refinancing a portfolio of outstanding loans. The Ramirez & Co. Pension Optimization Model evaluates and ranks each individual amortization base based on cash flow and PV savings. Importantly, because each UAL base has a different amortization period, our Pension Optimization Model also incorporates the average annual savings per par amount as metric to evaluate and "optimize' the selection of amortization bases to refinance. Preliminary results are summarized below. The far right column indicates the "Savings Ranking" of each amortization base. The UAL bases highlighted in blue identify the UAL bases we recommend to refinance, based on current interest rates. UAL Base Reason Year Ramp Amort Period Balance 6/30/2021 Savings PV ($) PV (%) Cash Flow Avg. Ann Savings Ranking PV CF a. Miscellaneous Fresh Start 2006 None 17 (1,507,124) - - - - b. Benefit Change 2007 None 7 27,869,276 5,466,886 19.6% 5,782,902 826,129 32 20 C. Benefit Change 2007 None 8 130,319 24,073 18.5% 25,721 3,215 33 34 d. Assump Change 2009 None 10 28,921,692 7,492,002 25.9% 8,301,799 830,180 30 16 e. Sp (Gain)/Loss 2009 None 20 29,368,098 12,596,219 42.9% 16,717,958 835,898 14 12 f. Sp (Gain)/Loss 2010 None 21 10,805,290 4,801,175 44.4% 6,492,003 309,143 12 19 9. Assump Change 2011 None 12 12,883,043 3,830,028 29.7% 4,389,472 365,789 28 23 h. Sp (Gain)/Loss 2011 None 22 (7,380,480) - - - - - - i. Pymt (Gain)/Loss 2012 None 23 5,629,785 2,681,453 47.6% 3,759,058 163,437 7 25 j. (Gain)/Loss 2012 None 23 (264,265) - - - - - - k. (Gain)/Loss 2013 100% 24 100,344,691 46,771,862 46.6% 65,858,728 2,744,114 9 2 I. Assump Change 2014 100% 15 45,039,235 14,492,788 32.2% 17,231,837 1,148,789 27 11 M. (Gain)/Loss 2014 100% 25 (63,668,260) - - - - - - 10 RAMIRE2 UAL Amort Balance Savings Avg. Ann Ranking Base Reason Year Ramp Period 6/30/2021 PV ($) PV (%) Cash Flow Savings PV CIF n. (Gain)/Loss 2015 100% 26 32,611,483 16,250,386 49.8% 23,709,074 911,887 3 7 0. Assump Change 2016 80% 17 16,268,114 5,887,188 36.2% 7,267,246 427,485 23 17 P. (Gain)/Loss 2016 80% 27 37,941,296 19,751,548 52.1% 29,328,504 1,086,241 1 6 q. Assump Change 2017 60% 18 13,723,657 5,328,054 38.8% 6,711,977 372,888 21 18 r. (Gain)/Loss 2017 60% 28 (21,124,364) - - - - - - s. Method Change 2018 40% 19 6,357,217 2,660,981 41.9% 3,434,492 180,763 17 26 t. Assump Change 2018 40% 19 30,754,017 12,880,343 41.9% 16,623,473 874,920 15 13 U. (Gain)/Loss 2018 40% 29 (12,919,487) - - - - - - v. AL SIG INC 2019 None 20 145,398 52,214 35.9% 66,233 3,312 25 33 W. (Gain)/Loss 2019 None 20 3,048,449 1,202,280 39.4% 1,577,908 78,895 20 31 X. (Gain)/Loss 2019 20%** 20 3,822,184 1,735,387 45.4% 2,333,055 116,653 10 30 Y. Fresh Start 2005 None 16 (2,854,990) - - - - - - z. Benefit Change 2006 None 6 1,718,764 293,127 17% 305,933 50,989 34 32 aa. Assump Change 2009 None 10 14,943,657 3,870,796 26% 4,288,783 428,878 31 24 ab. Sp (Gain)/Loss 2009 None 20 31,977,596 13,716,228 43% 18,206,019 910,301 13 30 ac. Sp(Gain)/Loss 2010 None 21 (11,794,554) - - - - - - ad. Assump Change 2011 None 12 16,001,458 4,753,065 30% 5,447,402 453,950 29 22 ae. Sp (Gain)/Loss 2011 None 22 (4,374,826) - - - - - - af. Pymt (Gain)/Loss 2012 None 23 8,240,551 3,926,172 48% 5,499,297 239,100 6 21 ag. (Gain)/Loss 2012 None 23 74,450,415 35,485,171 48% 49,716,864 2,161,603 5 3 ah. (Gain)/Loss 2013 100% 24 140,663,232 65,565,678 47% 92,321,103 3,846,713 8 1 al. Assump Change 2014 100% 15 53,834,472 17,324,402 32% 20,598,573 1,373,238 26 9 aj. (Gain)/Loss 2014 100% 25 (84,294,374) - - - - - - ak. (Gain)/Loss 2015 100% 26 59,710,283 29,752,401 50% 43,402,881 1,669,342 4 4 al. Assump Change 2016 80% 17 19,877,718 7,193,291 36% 8,880,592 522,388 24 15 am. (Gain)/Loss 2016 80% 27 50,404,089 26,236,343 52% 38,955,563 1,442,799 2 5 an. Assump Change 2017 60% 18 22,905,190 8,892,503 39% 11,202,422 622,357 20 14 ao. (Gain)/Loss 2017 60% 28 (32,653,354) - - - - - - ap. Method Change 2018 40% 19 5,325,258 2,227,626 42% 2,875,010 151,316 18 27 aq. Assump Change 2018 40% 19 38,800,765 16,249,631 42% 20,969,967 1,103,682 16 8 ar. (Gain)/Loss 2018 40% 29 (1,474,209) - - - - - - as. (Gain)/Loss 2019 None 20 5,185,187 2,047,661 39% 2,685,965 134,298 19 29 at. (Gain)/Loss 2019 20% 20 4,463,871 2,026,470 45% 2,725,042 136,252 11 28 Optimal POB Size and Bases. Based on the City's current credit profile, the priority at the moment is to maximize cash flow savings and minimize interest cost (particularly in the "front-end" of the amortization structure). To accomplish this goal, and also best meet the City's needs, we prioritize UAL bases with the highest cash flow savings that have fully amortized (i.e. no additional "Ramp -Up"). An example of this is that our model replaced UAL base "am" (ranked 5) in favor of bases "aa and ab" (ranked 24 and 10). Similarly, our model replaced UAL base "p" (ranked 6) in favor of bases "d and e" (ranked 16 and 12). The results of our optimized model recommend a UAL payoff amount of $627 million or approximately 88.4% of the City's outstanding CalPERS UAL. Ramirez & Co. Recommended POB Structure (Detailed Cash Flow Savings Provided in Appendix H) Q $80 z .o $70 Q 2 $60 Q $50 1­— 1 $40 Z $30 Q $ to 20 $10 LL 0 $0 H U N V to 00 O N V W 00 O N V to 00 O N N N N m m rn ro M V V V V V M O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N Safety Misc 88.4% POBs Current UAL Total Sources $629,845,000 UAL Payoff Amount $627,866,312 Costs of Issuance $1,978,688 ��� POB Debt Service $863,288,000 Cash Flow Savings $275,403,941 PV Savings ($) $221,316,986 PV Savings (%) 35.25% All -in TIC 2.89% TIC 2.88% 11 i' RAM!! EZ Additional Structuring Alternatives, Options and Benefits of Proposed Structure Water System CalPERS UAL. 62% of the proposed UAL payoff amount ($391.5 million) is attributable to the City's Safety plan. This is beneficial because the City's water enterprise is responsible for a portion of the miscellaneous plan and the City is considering utilizing a "tax-exempt exchange" to payoff a potion for the Miscellaneous UAL attributable to the water system's employees. In this option, the City uses (PAYG) cash on hand to payoff a portion of a UAL base and, subsequently, funds capital improvements with lower cost tax-exempt bonds. Additional Upfront Cash Flow Relief. The proposed structure optimizes the base case Hybrid structure discussed above. However, various adjustments can be made to deliver even greater cash flow savings. If budget needs require immediate relief, the City may consider structuring ascending debt service in the earlier maturities, thereby moving principal to later maturities. Depending on the amount of deferred principal, this option could marginally increase the borrowing cost of the overall transaction. Smaller Transaction — Dynamic UAL Selection Model. Our proposal is designed to deliver the highest cash flow savings possible and lowest interest rate under the 50% - 90% UAL payoff amounts, however, we understand the City may consider a smaller par amount. The model we designed for the City can be optimized in real time to evaluate alternative options and our team is committed to working with the City and its financing team throughout the engagement to assess alternative options that account for changes in interest rates and/or budget needs. Bond Insurance Could Reduce Borrowing Cost and Reduce Risk. Given our activity in the California City POB space, our team has conducted extensive discussions with Build America Mutual (BAM) and Assured Guarantee (AGM) and we are confident in our ability to secure bond insurance for at least a portion of the City's POBs. The value of bond insurance today is approximately 10 bps in tighter spreads. However, each insurer has a unique view and appetite for POBs. BAM will be our primary focus based on their willingness to insure 'unsecured' POBs for the cities of Chula Vista (AA) and Orange (AA). However, BAM will only insure cities which they believe have zero risk of default and have a minimum rating of 'AA/ based on their internal credit metrics (note: BAM's rating assessment does not always agree with S&P's). Two very important factors in BAM's decision to insure POBs are 1) the size of the City (i.e. general fund size, population, AV, etc.) and 2) strength of the issuer's pension funding/management policies. They believe credits for larger cities, such as Santa Ana, are more favorable to insure because of the broader tax base and access to resources/liquidity. BAM is also very focused on the nuances of each issuer's pension policies. With the help of UFI, the City has developed a thoughtful pension management policy that includes additional discretionary payments to CalPERS from excess reserves and a 'tax-exempt exchange' for additional savings. We will reach out to AGM as well, however, they have not insured an unsecured POB since 2017 based on a commitment from their CEO to not insure "unsecured" municipal bonds. All California POBs insured by AGM have included a pledged of pension tax revenues. Private Placements recommended for smaller financings with a short final maturity where the All -in - TIC is lower than a Public Offering. Ramirez & Co. would recommend a private placement for a financing with a par amount under $5 million and a final maturity under 15 years. The pros to utilizing a private placement are lower issuance cost and lower due diligence requirements. The cons are restrictive credit and structuring requirements (note: very few banks provide loans for POBs). Scale. Below is our indicative scale for the City's upcoming POBs as of March 5, 2021, based on comparable transactions including recent POBs issued by the cities of Orange, Chula Vista and Downey. 12 RAMIRE2 Sale Date PROPOSED Issuer City of Santa Ana City of Orange Issue 2021 Taxable P013s•: •: •: Par Call Date Ratin Year Par Yield UST Spread Par Yield UST Spread Par Yield UST Spread Par Yield UST Spread 2022 0.293% 2-yr 0.15% $7,695 0.291% 1-yr 0.15% $6,505 0.151% 1-yr 0.04% 2023 0.39% 2-yr 0.25% $10,120 0.39% 2-yr 0.25% $8,795 0.241% 2-yr 0.13% $3,685 0.317% 2-yr 0.20% 2024 0.470% 3-yr 0.30% $11,155 0.587% 3-yr 0.30% $9,005 0.419% 3-yr 0.24% $3,675 0.487% 3-yr 0.30% 2025 1.050% 5-yr 0.25% $11,225 0.974% 5-yr 0.25% $9,215 0.660% 5-yr 0.20% $4,220 0.772% 5-yr 0.30% 2026 1.300% 5- r 0.50% $11,330 1.224% 5- r 0.50% $9,475 0.840% 5- r 0.38% $4 250 0.972% 5- r 0.50% 2027 1.688% 7-yr 0.45% $11,470 1.587% 7-yr 0.45% $9,715 1.164% 7-yr 0.36% $4,290 1.367% 7-yr 0.55% 2028 1.888% 7-yr 0.65% $11,650 1.787% 7-yr 0.65% $10,030 1.414% 7-yr 0.61% $4,340 1.567% 7-yr 0.75% 2029 2.170% 10-yr 0.60% $11,860 2.070% 10-yr 0.60% $10,375 1.628% 10-yr 0.49% $4,400 1.750% 10-yr 0.60% 2030 2.320% 10-yr 0.75% $12,105 2.220% 10-yr 0.75% $10,735 1.728% 10-yr 0.59% $4,460 1.850% 10-yr 0.70% 2031 2.370% 10- r 0.80% $12,375 2.270% 10- r 0.80% $11,125 1.828% 10- r 0.69% $4,530 1.950% 10- r 0.80% 2032 2.570% 10-yr 1.00% $12,655 2.450% 10-yr 0.98% $11,890 1.938% 10-yr 0.80% $4,605 2.050% 10-yr 0.90% 2033 2.670% 10-yr 1.10% $12,965 2.550% 10-yr 1.08% $12,330 2.048% 10-yr 0.91% $4,655 2.150% 10-yr 1.00% 2034 2.770% 10-yr 1.20% $13,295 2.650% 10-yr 1.18% $15,100 2.138% 10-yr 1.00% $4,690 2.250% 10-yr 1.10% 2035 2.870% 10-yr 1.30% $13,650 2.750% 10-yr 1.28% $15,950 2.298% 10-yr 1.16% $6,015 2.350% 10-yr 1.20% 2036 2.920% 10- r 1.35% $14,025 2.820% 10- r 1.35% $16,530 2.398% 10- r 1.26% 2037 $17,360 2.488% 10-yr 1.35% 2040 $59,445 3.015% 30-yr 0.75%* $30,605 2.845% 30-yr 0.90% 2041 3.163% 30- r 0.85% $76,525 2.705%/2.805% 30- r 0.75%*/0.85% 2044 $49,465 3.115% 30-yr 0.85%* $25,160 2.995% 30-yr 1.05% 2045 $89,365 2.8059/o/2.9059% 30-yr 0.85%*/0.95% I o.co oV-y' V.DD>o I I Dollar in thoamounts sands. *Insured maturities Marketing Strategy. Ramirez & Co.'s lead underwriter Patty McGrorry, lead underwriter on 26% of all California City POBs since 2017, and lead underwriter for the City's last two financings (2019 Gas Tax Refunding Bonds and 2018 Tax Allocation Refunding Bonds), will lead our marketing effort. Our Six -Step Marketing Process is designed to maximize demand for Santa Ana POBs: Pre -Issuance Credit and Structuring- Due to our work P.: investor database. identify on the City's last two transactions, we know how to tell pa the Santa Ana story in a way that, thus far, has earnedCross-Over two "AA"" category ratings. Our rating presentation, Leverage our POB experience to revisit prior POS and Investor Roadshow will highlight the strength accounts that have not participated in the past of the City's management team by 1) detailing the a, but expressed appetite for the product. response to COVID-19, 2) conservative budgeting 5. Aggressive Scale and Willingness to Underwrite process which has produced better than anticipated Unsold Bonds: results for the last two years and 3) create a narrative 6. Complete Transparency to the City and UFI: of economic growth. We will, once again, reframe the City's outlook as one of robust growth and economic expansion. Anchor Investors: Since 2017, Ramirez & Co. has been a leader in the POB market and responsible for expanding the depth of California POB investors. We continuously monitor all POB investors in the primary and secondary markets. Today's 15 most active buyers of California City POBs are listed below. Appendix I lists the top 211 buyers of California POBs in the primary and secondary market; a level of insight and institutional knowledge of California POB investors that Ramirez & Co. brings to the City. 13 i' RAMIREL Ramirez & Co. Investor Model - California City O: Transactions 2017 to Present ? i f0 N C L C f6 O a1U N C C "a . O N y d = d i 10 i= m d d O O C O lag L � 3 > tO i N Rank Investor o w v t7 a a u w z c 2 O a = m 2 c m` 1 Wells Cap Mgmt - - -lm - - - - -JIM - 12 2 Delphi Cap Mgmt - - - - - - - - - 9 3 Earnest Partners - - - - - - - - - - 9 4 Invesco - - - - - - - - - - - - 9 5 JP Morgan - _ - _ - _ - - - - - - - - - 9 6 New Eng Asset Mgmt - - - - - - - - - 9 7 Wellington Mgmt - - - - 9 8 40/86 Advisors 8 9 ACORE Capital - - - - 8 10 Acres Capital - - - - - - - - - 8 11 Bain Capital - - - - - 8 12 Berkshire Hathaway - - - - 8 13 BlackRock 8 14 Flaherty & Crumrine 8 15 GSAM - - - - - - - 8 Expand Investor Demand: Our proprietary database has identified 186 investors that have only purchased one or two POB transaction in the primary or secondary market. We will conduct an aggressive marketing campaign to generate demand from this investor base. Key investors include: AIG, Allianz, Northern Trust, Nuveen, PineBridge, Whitehaven, Eaton Vance, Federated, among others. New Cross -Over and Non -Traditional Buyers: The resurgence of California POBs started with our 2017 Brawley POB, primarily sold to hedge funds and cross -over investors, such as Hopwood Lane, Multi -Bank, Spring Lake Asset Management and Wall Street Access. The POB market has evolved and today, the largest buyers are large bond funds and insurance companies such as Wells Capital and Allstate. As the market has matured, Hedge Funds, SMAs, professional retail investors, pension funds and local governments have become the non-traditional buyers that could expand demand for the City's transaction. Below we list key cross -over buyers within these sectors. The list is not exhaustive and represents only specific cross- over buyers identified in our proprietary POB investor model. ■ Hedge Funds and Proprietary Trading Desks: Manteio Capital LLC, Maritime Capital, Merrill Lynch Prop Trading Desk, Bluefin Trading, Centiva Capital, Morgan Stanley Arb, among others. ■ SMAs and Professional Retail: Santa Barbara Asset Management ■ Pension Funds and Local Gov: Ventura County and Los Angeles DWP (purchased Pomona POBs) Aggressive Scale and Willingness to Underwrite Unsold Bonds: It is critical to enter the market with an aggressive scale after a thoughtful and comprehensive premarketing effort. This approach has produced better than expected results in every POB transaction our team has lead. Additionally, we took this approach on the City's last two transactions to deliver superior results. Our willingness to underwrite was also evident in the City's Gas Tax Refunding Bonds, Series 2019 where our team underwrote unsold bonds without any changes to the scale. We consistently put capital at risk to support the most aggressive pricing and this approach delivers exceptional results for our issuer clients. Complete Transparency to the City and UFI: We commit to provide full disclosure and a transparent process. We will provide (i) access to Ipreo Gameday on the pricing day to ensure access to real time investor order information, and (ii) ongoing market feedback through the structuring process and pricing. POB Marketing Challenges. The most important marketing challenges for POBs in the current market are 1) identifying active POB buyers and 2) articulating the credit strengths of the specific issuer to investors. Leveraging our leadership in the POB space, we have identified the top POB investors above and based on our history with the City, we can articulate the Santa Ana story better than any competitor. Our team is uniquely qualified to address the most critical challenges and lead the City's upcoming POBs. 14 RAMIRE2 z ¢ z Ln LL O i' Provide an estimate of your total, not to exceed, underwriting costs associated with serving as senior manager to the City on a not -to -exceed approximately $671 million issue of fixed rate POBs. Please note that any payment to the underwriter is contingent on the closing of the bonds. Proposed Underwriter Fee. $1.75/bond for all maturities plus standard underwriting expenses. We note that a low underwriting fee does not always result in the best deal or lowest borrowing cost. An example of low underwriting fee bids with negative impacts: two recent POBs priced with a make -whole -call option will have negative lasting impacts on the two cities and indicative of how fee is not the most important component when selecting an underwriter. We can negotiate our fee, if it does not meet the City's expectations. Proposed Underwriter's Counsel: Kutak Rock - Albert Reyes; Jones Hall —Juan Galvan; Norton Rose Fulbright - Russell C. Trice Proposed Underwriter $/Bond Fee Total Underwriters' Discount Takedown $1.750 $1,174,250.00 Management Fee $0.000 $0.00 Expenses $0.178 $119,304.47 Total Discount $1.928 $1,293,554.47 Estimated Expenses UW Counsel $0.037 $25,000.00 CDC Review $0.003 $1,800.00 IPREO $0.068 $45,295.05 IPREOGameday $0.033 $21,916.54 CDIAC $0.007 $5,000.00 DTC $0.001 $800.00 CUSIP $0.001 $854.00 Day Loan $0.028 $18,638.89 Total Expenses $0.178 $119,304.47 Par Amount $671,000,000 The following forms, included in this RFP, shall be signed and included as part of the proposal submittal package: Attachment A: References; Attachment B: Proposers Statement; Attachment C: Non -Collusion Affidavit; Attachment D: Non - Lobbying Certification; Attachment E: Non -Discrimination Certification Please find the requested attachments (A — E) in Appendix A of our RFP response. Contractor shall provide three (3) references from public agency customers for which actuarial work similar to services specified [in.this RFP have been performed, including contact names and telephone numbers, and types of services yourfirm has provided. e Attachment A — References. The respondent grants permission for the City to contact any individuals listed as references. Please find the requested references in Attachment A in Appendix A of our RFP response. F oposer may be requested to submit its most recent auditedfinancial statement, evidencing Proposer's financial capacity tofully erform the required services, including provision of equipment and personnel expenses over a ninety (90) day period. Among Highest Capitalized Privately -Owned Firms in the Municipal Bond Industry. Ramirez & Co. operates as a privately -held corporation and has grown its capital organically (from its profitability) over 50 years. Nearly all of the Firm's capital is dedicated toward municipal underwriting and is routinely deployed to support our municipal clients in the primary and secondary markets. As of September 30, 2020, Ramirez & Co.'s capital is sufficient to sole manage a $3.15 billion single municipal transaction, assuming a 7% regulatory haircut. We are happy to provide our most recent Focus report upon request. The selected Proposer shall provide the required evidence of insurance coverage as set forth in the standard agreement within ten (10) business days after receipt of Notice of Intent to Award. Contractor must maintain, for the duration of its contract, insurance coverages as required by the City. Ramirez & Co. understands the contract is contingent on complying the required evidence of insurance coverage and provide evidence within the 10 business days after the receipt of Notice of Intent to Award. 15 RAM!! EZ `�, (9) CITY OF SANTA ANA ATTACHMENT A REFERENCES List and describe fully the contracts performed by your firm which demonstrate your ability to provide the supplies, equipment or services included in the scope of the proposal specifications. Attach additional pages if required. The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications. Reference Customer Name: City of Monterey Park Address: 320 West Nemwark Ave. Monterev Park, CA 91754 Contract Amount: $106.3 million Description of supplies, equipment, or services provided: Contact Individual: Martha Garcia Phone Number: 626-307-1349 Facsimile Number: N/A Year: 2021 Senior Managed Taxable Pension Obligation Bonds, 2021 Series A Reference Customer Name: City of El Monte Address: 11333 Valley Boulevard El Monte, CA 91731 Contract Amount: $118.7 million Description of supplies, equipment, or services provided: Contact Individual: Bruce Foltz Phone Number: 626-580-2075 Facsimile Number: N/A Year: 2020 Senior Managed Taxable Pension Obligation Bonds, Series 2020 Reference Customer Name: City of Hawthorne Address: 4455 West 126th Street Hawthorne, CA 90250 Contract Amount: $121.9 million Contact Individual: Felice Lopez Phone Number: 310-349-2923 Facsimile Number: N/A Year: 2019 Description of supplies, equipment, or services provided: Senior Managed Taxable Pension Obligation Bonds, Series 2019 THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwriting Services for Pension Refinancing Bonds Page 19 of 24 CITY OF SANTA ANA ATTACHMENT B PROPOSERNS STATEMENT Proposer understands and agrees that this written RFP (or any part thereof specifically designated and accepted by the City of Santa Aria, hereinaftr City) shall constitute the entire agreement between proposer and the City only after it has been accepted by the City Council, endorsed by the Clerk of the Council with her signature and official seal rioting hereon the action of approval of the Council, signed by the Executive Di or or his duly authorized agent, and signed by the City Attormy, denobng his approval Of #1e farm of this document, and b execution, and when R or an exact Dopy of ft has been either delivered to proposer or &posAed Wth the United States Postal Service pfopedy addressed to the proposes with the catxect postage aTfixed thereto,,. Proposer furltw agrees that upon delivery (as defined above) of the accepted agreement Wshe wif! furnish City all required bands and certficate of liability insurance within ten (10) days (excluding Saturdays, Sundays and Cites legal holidays), or the lands, check, daft, or proposers bond substituted in lieu thereof accompanying this proposal shall become the property of the City and shall be considered as payment of damages due to the delay and other causes suffered by City because of the failure to famish the necessary bonds and because it is distinctly agreed that the proof of damages actually suffered by City is difficult to ascertain; oftrMse said funds, check drafts, or proposWs bond substituted in lieu thereof shall be returned to the undersigned. proposer understands that a proposal is ui far the entire work, that the estimated quantifies set forth in the RFP schedule are solely for the purpose of comparing proposals, and that final compensation under the contract will be cased upon the actual quantifies of wof1c satisfactorily completed_ All teams contaiin the specifications, certification of nondiscrimination by contracc�ors ned , and the required insurance cecates are to be incorporated by neaerenoe into this agr+ee[nent and are made specifically as part of this RFP. Firm Samuel A. Ramirez 8 Cov,mmmmmmr� Inc. w Signed and Printed Name: Tiltb Senior Man Dace 3110/2021 EMEEEW� Raul Amenua ( Ong Director THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 UndL*rwl*ing Services for Pension Rerinancing Bonds Page 20 W 24 CITY OF SANTA ANA ATTACHMENT C NON -COLLUSION AFFIDAVIT (Title 23 United States Code Secfion 112 and Public Contract Code Section 7106) To the CITY of SANTA ANA In acxordance with True 23 United States Code SechOn 112 and public Contract Code 7106 the proposer declares that the proposal is not made in the interest of, or on behalf of, any undisclosed person, partnership, company, assvciatian, organization, or corporation; that the proposal is genuine and not collusive or shorn; that the proposer has not directly or indirecUyinduced or solicited any other proposer to put in a false or sham proposal, and has not directly or indirectly colluded, aonspired� connived or agreed with any proposer or anyone else to put in a sham proposal, or that anyone shall refrain from bidding.; that the proposer has not in any manner, directly or indirectly, sought by agreement, communication: or conference with anyone to fix the proposal price of the proposer or any proposer, or to fix any overhead, profft, or cast element of the proposal price, or of that of any other proposer, or to secure any advantage against the public body awarding the contract of anyone irrterested in the proposed contract; that all statements contained in the proposal are true; and, further, that the proposer has not, directly or indirectly, submitted his or her proposal price or any breakdown thereof, or the contents thereof, or divulged information or data relative Thereto, or paid, and will not pay, any fee to any corporation, partnership, company association, organizatian, bid depository, or to any member or agent thereof to effectuate a collusive or sham proposal., Nate: The above nancoilusian affidavit is part of the proposal- Signing this proposal on the signature portion thereof shall also constitute signature aF this nancoilu$ion affidavit. Proposers are cautioned that making a false certification may subject the rertifer to criminal prosecution. Signed State of California, County of Subscribed and swum to far affirmed) before me on this day of �n� to ��� a Y Raul AmezcuaMMWEWW� , proved to me on the bass of satrsfactory e►nperson(s) who appeared before me. SEE ATTACHED CERTIF'CA TE Notary Public Signature Notary Public Seal THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 2 1-o025 Underwriting Services for Pension Refinancing Bands Page 21 of 24 JURAT A notary public or other officer completing this certificate verifies only the Identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of 6 Subscribed and sworn to (or affirmed) before me on this S& day of rr ~1 200 by proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. (Seal) OPTIONAL INFORMATION INSTRUCTIONS I The wvrft of a# Jures oo *fed In Cakfomia after Jwwary 1, 2015 must be in ft as set talk ftn s Jural. Rwe am no excepts. if a Jural to be conrleted does not Ws form, Me notary rust cofrect the verbiage by Ong a jurat containing the cow wording or affaching a separate jurd form such as this o does co teirx the pmPer wording. In add0ionr the notary must mquke an oath or DESCRIPTION OTHE ATTACHED DOCUMENT a afton ftm the dwument signer mgarding the Ir hfutr , s of fba contents of ft A. do umerg. The docvnvnl must be si*gned AFTER ft oath or efflmvUon, If ft dwunmt L4 was pravs4ned, 9 mvsf be m-signed in fit of the notes pubk Mng the JuW e or 00n of ate moment ass. State and county information must be the state and county where the mr document signer(s) personally appeared before the notary public, rye or d cri ors of attached do t rainue Date of notarization must be this date the signer(s) p appeared which must also be the same date the jurat process is completed. Number of Pages Document Date Print the name (s) of the document signers) who personally appear at the time of notarization. Signature of the notary public must match the signature on file Wth the Addfinal i rma office of the county clerk. The notary seal impression must be clear and photographically reproducible. Impression must not cover text or limes. If seal impression smudges, reseal i a sufficient area permits, otherwise complete a different ju rat fog. Additional information Is not required but could help to ensure this jurat is not misused or attached to a different document. Indicate We or type of attached document, number of pages and date. 2015 Version www. Notar l s es. corn 800-87 - 8 5 Securely attach this document to the signed document nth a staple. CITY OF SANTA ANA ATTACHMENT D NON -LOBBYING CERTIFICATION The prospective participant certifies, by signing and submitting this bid or proposal, to the best of his or her knowledge and belief, that: (1) Na Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any ccaoperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, Loan* or cooperative agreement. (2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any Federal agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, "Disclosure of Lobbying Activities," in conformance with its instructions. This oertifica�on is a material representation of fad upon which reliance was paced when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, U.S. Code. Any person Who fails to file the required oertfication shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. The prospective participant also agrees by submitting his or her bid or proposal that he or she shall Iequire tha# the language of this certification be incAuded in all lawyer tier subcontracts, which exceed $100 000 and that all such subrecipients shah certify and disclose accordingly. Signed: Title: Senior Managing Director Firmp Samuel A. Ramirez & Co., Inc. Date: 3/1012021 THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No. 21-025 Underwiiting Services for Pension Refinancing Bonds Page 22 of 24 CITY OF SANTA ANA ATTACHMENT E NON-DISCRIMINATION CERTIFICATION The undersigned consultant or corporate ver, during the perfoffnance of this contract, oertmes as MIMS: 1. The Consultant shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Consultant shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without, regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the fbltcWng: employment, upgrading, demotion, or transfer; recruitrnent or recrurtment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Consultant agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nandiscnminativn cause. 2. The Consultant shall, in all solicitations of advertisements for employees placed by or on behalf of the Consultant, state that all qualified applicants will receive consideration for employment without regal to rave, color, religion, sex, or national origin. 3. The Consultant shall send to each Tabor union or representative of workers with which he/she has a collective bargaining agreement or other contract or understanding, a notice to be provided advising thesaid labor union or workers' representatives of the Consultant's commitments under this section, and shall past copies of the native in conspicuous places available to employees and applicants for employment. 4. The Consuftant shall comply with all provisions of Executive Order 11246 of September 24, 19659 and of the rules, regulations, and relevant orders of the Secretary of Labor. 5_ The Consuftant shall famish all infcmation and reports required by Executive Order 11246 of September 24, 1965, and by rues, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his/her books, records, and accounts by the administering agency and the Secretary of Libor for purposes of investigation, to ascertain compliance with such rules, regula#ions, and orders. 8. In the m►ent of the Consuftanirs non-compliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, the contract may be canceled, terminated, or suspended in whole or in part and the Consultant may be declared ineligible for further Govemment contracts or federally assisted construction contracts in accordance with procedures authorized in Execution order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulations, or urder of the Secretary of Labor, or as otherwise provided by taw. RFP No. 21-025 Underwriting Services for Pension Refin a n cing Bands Page 23 of 24 CITY OF SANTA ANA 7. The Consultant shall include the portion of the sentence immediately pmceding paragraph (1) and the provisions of paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary at Labor -issued pursuant to Section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontract or purchase order as the administering agency may direct as means of enforcing such provisions, including sanctions for noncompliance; provided, however, that in the event the Consultant becomes involved in, or is threatened with, litigation with a subconsultant at vendor as a Jesuit of such direction by the administering agency, the Consultant may request that the Unified States enter into such litigation to protect the interests of the United States_ 8. Pursuant to Galffomia Labor Code Section 1735, as added by Chapter 643 Stats. 1939., and as amended, no discrimination shall be made in the employment of persons upon public works because of rare, religious creed, color, national on -gin, ancestry, physical handicaps. mental condition, marital status, or sex of such persons, except as provided in Section 1420, and any consultant of public works violating this Section is subject to all the pen-afties imposed for a violation of the Chapter. Signed: l s—' I:E�. Title: Senior Manninq Director Firm: Samuel A. Ramirez & Co.,Jnc. Data: 311012021 THIS FORM MUST BE COMPLETED AND INCLUDED WITH THE PROPOSAL. PROPOSALS THAT DO NOT CONTAIN THIS FORM WILL BE CONSIDERED NONRESPONSIVE. RFP No_ 29-025 Underw1iting Services for Pension Refinancing Bonds Page 24 of 24 RAM!! EZ APPENDIXPROPOSER A. Within the past 36 months, has your firm and/or any of its principals been the subject of any investigation relating to the municipal securities industry by the SEC, FINRA, NYSE, or any other State or Federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry? Neither the Firm nor any partner or employee of the Firm, have been the subject of any investigation, litigation, arbitration, disciplinary or other actions by the SEC, FINRA, IRS, MSRB, or any other state or federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry within the past 12 months. B. Within the past 36 months, has your firm and/or any of its principals been involved in any litigation, arbitration, disciplinary or other actions arising from the firm's underwriting, management or handling of municipal securities? Neither the Firm nor any partner or employee of the Firm, have been the subject of any investigation, arbitration, disciplinary or other actions by the SEC, FINRA, IRS, MSRB, or any other state or federal organization that oversees, regulates, licenses or is otherwise responsible for the municipal securities industry within the past 36 months. C. Does there exist any relationship between your firm and any other non-affiliated firm(s) or individuals involving any compensation arrangement that may be associated with your possible engagement to assist with the City's proposed debt issue? Ramirez & Co. does not have any such relationship or arrangement, with any other non-affiliated firm(s); with respect to any compensation arrangement that may be associated with this proposed engagement with the City's debt issuance program. z z Ln U_ 0 i' RAMIREZ Sale Date Issuer Issue Description Series Par Amount (millions) State Ramirez Role 03/04/21 New York City -New York General Obligation Bonds Series F Subser F-1 $900.0 NY CO-MGR 02/04/21 New Orleans City -Louisiana Sewerage Svc Rev Ref Bonds Series 2021 $178.2 LA CO-MGR 02/04/21 New Orleans City -Louisiana Water Revenue Refunding Bonds Series 2021 $194.3 LA CO-MGR 12/17/20 New York City -New York General Obligation Bonds Series D & E $1,500.0 NY CO-MGR 11/17/20 New Orleans City -Louisiana Sewage Service Revenue Bonds Series 2020 B $64.8 LA CO-MGR 10/20/20 Austin City -Texas Wtr & Wstwtr Sys Rev Ref Bonds Series 2020 C $203.5 TX CO-MGR 10/15/20 Denver City and Co -Colorado Airport System Rev Bonds Series 2020 B2 $24.1 CO CO-MGR 10/15/20 Denver City and Co -Colorado Airport System Rev Bonds Series 2020 B1 $37.5 CO CO-MGR 10/15/20 Denver City and Co -Colorado Airport System Rev Bonds Series 2020 Al & A2 $155.8 CO CO-MGR 10/15/20 Denver City and Co -Colorado Airport System Rev Bonds Series 2020 C $411.5 CO CO-MGR 10/08/20 New York City -New York General Obligation Bonds 2021 Series C $900.0 NY CO-MGR 09/24/20 Chicago City -Illinois Gen Airport Sr Ln Rev Ref Bonds Series 2020 D $466.8 IL CO-MGR 09/24/20 Chicago City -Illinois Gen Airport Sr Ln Rev & Ref Bonds Series 2020 A-C & E $753.3 IL CO-MGR 09/11/20 Charlotte City -North Carolina Water & Sewer Sys Ref Ref Bonds Series 2020 $333.4 NC CO-MGR 09/01/20 Philadelphia City- TRANs Series A of 2020-21 $300.0 PA CO-MGR Pennsylvania 08/27/20 New York City -New York General Obligation Bonds Ser A&BSubser $440.2 NY CO-MGR Al&B1 08/27/20 New York City -New York General Obligation Bonds Ser A&BSubser $660.3 NY CO-MGR Al&B1 08/25/20 San Antonio City -Texas Comb Tax & Rev Cert of Obligation Series 2020 $7.7 TX LEAD 08/25/20 San Antonio City -Texas Comb Tax & Rev Cart of Obligation Series 2020 $7.7 TX LEAD 08/25/20 San Antonio City -Texas Gen Imp & Comb Tax Rev Cert of Series 2020 $114.9 TX LEAD Ob 08/25/20 San Antonio City -Texas Gen Imp & Comb Tax Rev Cert of Series 2020 $114.9 TX LEAD Ob 08/18/20 Jacksonville City -Florida Special Revenue & Ref Bonds Series 2020 C $105.5 FL CO-MGR 08/18/20 Jacksonville City -Florida Special Revenue & Ref Bonds Series 2020 A & B $139.3 FL CO-MGR 08/05/20 Pittsburgh City -Pennsylvania GO Refunding Bonds Series A of 2020 $32.6 PA CO-MGR 08/05/20 Pittsburgh City -Pennsylvania GO Refunding Bonds Series B of 2020 $121.5 PA CO-MGR 07/16/20 Cleveland City -Ohio Various Purpose GO Bonds Series 2020 A $60.7 OH CO-MGR 07/01/20 Indianapolis City -Indiana Gas Util Dist Sys 2nd Ln Ref Bond Series 2020 A $52.4 IN CO-MGR 06/30/20 Corpus Christi City -Texas Util Sys Jr Ln Rev Imp & Ref Bond Series 2020 A $133.8 TX CO-MGR 06/30/20 Corpus Christi City -Texas Util Sys Jr Ln Rev Imp Ref Bond Series 2020 B $183.6 TX CO-MGR 06/10/20 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds Series 2020 C $140.9 TX CO-MGR 06/10/20 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds Series 2020 C $140.9 TX CO-MGR 06/10/20 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds Series 2020 D $181.8 TX CO-MGR 06/10/20 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds Series 2020 D $181.8 TX CO-MGR 06/10/20 Kansas City -Missouri Water Revenue Bonds Series 2020 A $64.7 MO CO-MGR 04/30/20 San Francisco City/Co- GO Refunding Bonds Series 2020-Rl $195.3 CA CO-MGR California 03/05/20 Houston City -Texas Comb Util Sys 1st Lien Rev Bonds Series 2020 B $46.2 TX SOLE 03/05/20 New York City -New York General Obligation Bonds 20 Ser D Subser D-1 $800.0 NY CO-MGR 02/13/20 New York City -New York General Obligation Bonds Subser C-1 $1,081.4 NY CO-MGR 02/12/20 El Paso City -Texas Airport Revenue Ref Bonds Series 2020 $10.9 TX LEAD 02/11/20 El Paso City -Texas GO Refunding Bonds Series 2020 B $23.0 TX CO-MGR 02/11/20 El Paso City -Texas Comb Tx & Rev Certs of Obligation Series 2020 $84.9 TX CO-MGR 02/11/20 El Paso City -Texas GO Refunding & Improvement Series 2020 A $113.9 TX CO-MGR Bonds 01/08/20 Philadelphia City- GO Refunding Bonds Series 2020 A $118.0 PA CO-MGR Pennsylvania 11/21/19 Santa Ana City -California Gas Tax Revenue Ref Bonds Series 2019 $44.7 CA SOLE 11/20/19 San Antonio City -Texas Sub Ln Airport Sys Rev Ref Bond Series 2019 B $31.5 TX CO-MGR 11/20/19 San Antonio City -Texas Airport Sys Rev Ref Bond Series 2019 B $36.3 TX CO-MGR 11/20/19 San Antonio City -Texas Airport Sys Rev Ref Bond Series 2019 A $47.3 TX CO-MGR 11/20/19 San Antonio City -Texas Sub Ln Airport Sys Rev Ref Bond Series 2019 A $63.4 TX CO-MGR 11/06/19 Denver City and Co -Colorado Airport System Revenue Bonds Series 2019 D $83.7 CO CO-MGR 11/06/19 Denver City and Co -Colorado Airport System Revenue Bonds Series 2019 C $120.0 CO CO-MGR 10/21/19 San Antonio City -Texas Electric & Gas Sys Jr Ln Ref Bond Series 2019 $252.6 TX CO-MGR 10/04/19 New York City -New York General Obligation Bonds Series B Sub B-1 $340.0 NY CO-MGR 10/04/19 New York City -New York General Obligation Bonds Series B Sub B-1 $510.0 NY CO-MGR 09/12/19 San Antonio City -Texas Water Sys Jr Ln Rev Ref Bonds Series 2019 C $82.6 TX LEAD 09/10/19 Austin City -Texas Pub Imp Bonds & Certs of Oblig Series 2019 $55.5 TX LEAD 09/10/19 Austin City -Texas Pub Imp & Ref & Certs of Oblig & Series 2019 $176.9 TX LEAD 08/28/19 Atlanta City -Georgia Sub Ln Airport Gen & Rev Bonds Series 2019 A & C $232.8 GA CO-MGR 08/28/19 Atlanta City -Georgia Sub Ln & Airport Gen Rev Bonds Series 2019 B & D $474.3 GA CO-MGR 08/28/19 Jacksonville City -Florida Special Revenue Ref Bonds Series 2019 B $45.5 FL CO-MGR 08/28/19 Jacksonville City -Florida Special Revenue Ref Bonds Series 2019 A $151.6 FL CO-MGR 08/22/19 Houston City -Texas Public Improvement Ref Bonds Series 2019 C $23.3 TX LEAD A RAMIREZ Par Sale Amount Ramirez Date Issuer Issue Description Series (millions) State Role 08/22/19 Houston City -Texas Public Improvement Ref Bonds Series 2019 B $214.6 TX LEAD 08/22/19 Houston City -Texas Public Improvement Ref Bonds Series 2019 A $255.4 TX LEAD 08/13/19 San Antonio City -Texas Tax Notes Series 2019 $34.5 TX CO-MGR 08/13/19 San Antonio City -Texas Comb Tax & Rev Certs of Ob Series 2019 $36.4 TX CO-MGR Bonds 08/13/19 San Antonio City -Texas General Imp & Ref Bonds Series 2019 $383.9 TX CO-MGR 07/30/19 Philadelphia City- General Obligation Bonds Series 2019 B $293.4 PA CO-MGR Pennsylvania 07/24/19 Kansas City -Missouri Water Refunding Revenue Bonds Series 2019 A $72.9 MO CO-MGR 07/24/19 New York City -New York General Obligation Bonds Series A Subser A-1 $800.0 NY LEAD 04/23/19 Austin City -Texas Airport System Rev Ref Bonds Series 2019 $151.7 TX CO-MGR 04/09/19 Houston City -Texas Hotel Occupancy Tx&Spec Ref Series 2019 $106.3 TX CO-MGR Bonds 03/26/19 Chicago City -Illinois General Obligation Bonds Series 2019 A $722.0 IL CO-MGR 03/07/19 New York City -New York General Obligation Bonds Series E & F-1 $915.2 NY CO-MGR 02/06/19 El Paso City -Texas General Obligation Bonds Series 2019 B $17.0 TX CO-MGR 02/06/19 El Paso City -Texas GO Refunding & Improvement Series 2019 A $81.4 TX CO-MGR Bonds 02/06/19 El Paso City -Texas Comb Tax & Revenue Cents of Series 2019 $93.5 TX CO-MGR Oblig 01/08/19 San Antonio City -Texas General Improvement Ref Bonds Series 2019 $24.6 TX CO-MGR 12/19/18 Chicago City -Illinois Multi -Family Housing Rev Bonds Series 2018 $27.3 IL CO-MGR 11/30/18 New York City -New York General Obligation Bonds Ser J Sub J-3 & J-11 $154.5 NY CO-MGR 11/30/18 New York City -New York General Obligation Bonds 19 Ser D Subser D-1 $700.0 NY CO-MGR 11/09/18 Orlando City -Florida Capital Imp Special Rev Bonds Series 2018 B $105.1 FL LEAD 10/24/18 Atlanta City -Georgia Water & Wastewater Rev Ref Series 2018 C $288.9 GA CO-MGR Bonds 09/27/18 San Antonio City -Texas Wtr Sys Commercial Paper Notes Subser A-1 & Ser B $500.0 TX CO-MGR 09/12/18 Indianapolis City -Indiana Wtr Sys First Lien Ref Rev Bonds Series 2018 A $361.1 IN CO-MGR 08/14/18 Denver City and Co -Colorado Subordinate Revene Bonds Series 2018 B $184.4 CO CO-MGR 08/14/18 Denver City and Co -Colorado Subordinate Revenue Bonds Series 2018 A $2,341.7 CO CO-MGR 08/09/18 New York City -New York General Obligation Bonds Series A & B $770.6 NY CO-MGR 04/26/18 San Antonio City -Texas Water Sys Jr Lien Rev & Ref Bonds Series 2018 A $208.8 TX CO-MGR 04/12/18 New York City -New York General Obligation Bonds Series F Subser F-1 $850.0 NY CO-MGR 03/02/18 Houston City -Texas Sub Lien Revenue & Ref Bonds Series 2018 A $130.6 TX CO-MGR 03/02/18 Houston City -Texas Sub Lien Revenue & Ref Bonds Series 2018 B $285.2 TX CO-MGR 02/23/18 New York City -New York General Obligation Bonds SubSer A-6&J-4&F-3 $194.3 NY CO-MGR 02/23/18 New York City -New York General Obligation Bonds Series E Sub E-1 $700.0 NY CO-MGR 02/16/18 Houston City -Texas GO Commercial Paper Series G-1 $75.0 TX CO-MGR 01/16/18 Houston City -Texas Comb Util Sys Comm Paper Notes Series B-3 $75.0 TX LEAD 12/20/17 Houston City -Texas Pension Obligation Bonds Series 2017 $1,005.1 TX CO-MGR 12/06/17 New York City -New York General Obligation Bonds Series C & D $943.5 NY LEAD 11/29/17 Denver City and Co -Colorado Airport System Revenue Bonds Series 2017 B $21.3 CO CO-MGR 11/29/17 Denver City and Co -Colorado Airport System Revenue Bonds Series 2017 A $254.2 CO CO-MGR 11/29/17 Philadelphia City- TRANs Series A of 2017-18 $125.0 PA CO-MGR Pennsylvania 11/21/17 Houston City -Texas GO Commerncial Paper Notes Series G-2 $125.0 TX CO-MGR 09/21/17 El Paso City -Texas Water & Sewer Rev Imp & Ref Series 2017 $83.9 TX CO-MGR Bonds 09/15/17 New York City -New York General Obligation Bonds 2018 Ser B Sub B-1 $550.0 NY CO-MGR 08/10/17 Yonkers City -New York School Refunding Bonds Series 2017 D $17.3 NY CO-MGR 08/10/17 Yonkers City -New York School Serial Bonds Series 2017 B $20.4 NY CO-MGR 08/10/17 Yonkers City -New York GO Serial Bonds Series 2017 A $36.7 NY CO-MGR 08/10/17 Yonkers City -New York GO Refunding Bonds Series 2017 C $72.1 NY CO-MGR 08/04/17 Orlando City -Florida Sr & 2nd Ln Tour Dev Tx Ref Series 2017 A & B $224.4 FL CO-MGR Bonds 08/01/17 Austin City -Texas Water & Wstwtr Sys Rev Ref Bonds Series 2017 $311.1 TX CO-MGR 07/27/17 New York City -New York General Obligation Bonds 2018 Series A $899.0 NY CO-MGR 07/12/17 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds Series 2017 $171.5 TX CO-MGR 07/12/17 Philadelphia City- General Obligation Bonds Series 2017 A $331.6 PA CO-MGR Pennsylvania 06/21/17 Chicago City -Illinois General Airport Sr Lien Rev Bonds Series 2017 D $278.1 IL CO-MGR 06/21/17 Chicago City -Illinois Gen Airport Sr Ln Rev & Ref Bonds Series 2017 A-C $534.4 IL CO-MGR 04/26/17 Atlanta City -Georgia Water & Wastewater Rev Ref Series 2017 A $226.2 GA CO-MGR Bonds 04/05/17 Pittsburgh City -Pennsylvania General Obligation Bonds Series of 2017 $54.6 PA CO-MGR 04/05/17 San Antonio City -Texas Elec & Gas Sys Rev & Ref Bonds New Series 2017 $308.0 TX CO-MGR 02/08/17 New York City -New York General Obligation Bonds Series C & D $900.1 NY CO-MGR 01/18/17 Austin City -Texas Electric Util Sys Rev Ref Bonds Series 2017 $101.6 TX CO-MGR 12/07/16 New York City -New York General Obligation Bonds 2017 Ser B Sub B-1 $650.0 NY CO-MGR 11/30/16 Chicago City -Illinois Gen Airport Sr Lien Rev bonds Series 2016 G $65.3 IL CO-MGR 11/30/16 Chicago City -Illinois Gen Airport Sr Lien Rev bonds Series 2016 D-F $1,052.0 IL CO-MGR i' RAMIREZ Par Sale Amount Ramirez Date Issuer Issue Description Series (millions) State Role 10/05/16 Philadelphia City- TRANs Series A of 2016-17 $175.0 PA CO-MGR Pennsylvania 10/05/16 San Antonio City -Texas Water Sys Jr Lien Rev & Ref Bond Series 2016 C $305.1 TX CO-MGR 08/11/16 Jacksonville City -Florida Special Revenue Refunding Bonds Series 2016 A & B $150.9 FL CO-MGR 08/03/16 New York City -New York General Obligation Bonds 2017 Ser A Sub A-1 $800.0 NY CO-MGR 08/02/16 San Antonio City -Texas Comb Tax & Rev Carts of Oblig Series 2016 $24.8 TX LEAD 08/02/16 San Antonio City -Texas Gen Imp & Comb Tax & Rev Certs Series 2016 $306.4 TX LEAD 06/23/16 Dallas City -Texas Wtrwrks & Sewer Sys Rev Ref Series 2016 B $170.2 TX CO-MGR Bonds 06/23/16 Dallas City -Texas Wtrwrks & Sewer Sys Rev Ref Series 2016 A $370.1 TX CO-MGR Bonds 06/21/16 Los Angeles City -California TRANs 2016 Series A & B $1,447.7 CA CO-MGR 05/19/16 New York City -New York General Obligation Bonds Series E & F $800.5 NY CO-MGR 05/12/16 Chicago City -Illinois Second Lien Water Revenue Bonds Series 2016 A 2 $22.1 IL CO-MGR 05/12/16 Chicago City -Illinois Second Lien Water Revenue Bonds Series 2016 A-1 $59.6 IL CO-MGR 05/12/16 Chicago City -Illinois 2nd Lien Water Rev & Ref Bonds Series 2000 & 2004 $444.6 IL CO-MGR 05/11/16 Austin City -Texas Water & Wstwtr Sys Rev Ref Bonds Series 2016 $247.8 TX LEAD 04/14/16 Buffalo City -New York General Imp Serial & Ref Bonds Series 2016 A & B $47.0 NY LEAD 03/31/16 Orlando City -Florida Capital Imp&Ref Special Rev Series 2016 B & C $85.5 FL CO-MGR Bonds 02/25/16 New York City -New York General Obligation Bonds 2016 Series C & D $800.5 NY CO-MGR 11/03/15 El Paso City -Texas Water & Sewer Rev Ref Bonds Series 2015 C $48.6 TX LEAD 10/14/15 Chicago City -Illinois 2nd Lien Wstwtr Tranmission Series 2015 $87.1 IL LEAD Bonds 10/14/15 Chicago City -Illinois 2nd Ln Wstwtr Transmission Rev Series 2008 C $332.2 IL LEAD 09/10/15 Austin City -Texas Public Prop Fin Contract Oblig Series 2015 $14.5 TX CO-MGR 09/10/15 Austin City -Texas Certificates of Obligation Series 2015 $43.7 TX CO-MGR 09/10/15 Austin City -Texas Public Improvement & Ref Bonds Series 2015 $236.9 TX CO-MGR 07/31/15 New York City -New York General Obligation Bonds Series A & B $750.5 NY CO-MGR 07/15/15 Houston City -Texas GO Commercial Paper Notes Series E-1 $100.0 TX CO-MGR 07/15/15 Houston City -Texas GO Commercial Paper Notes Series E-2 $100.0 TX CO-MGR 07/15/15 San Antonio City -Texas Airport System Revenue Imp Bonds Series 2015 $38.8 TX CO-MGR 07/15/15 San Antonio City -Texas Customer Fac Charge Rev Bonds Series 2015 $123.9 TX CO-MGR 07/15/15 San Antonio City -Texas Electric & Gas Sys Rev Ref Bonds New Series 2015 $320.5 TX CO-MGR 07/15/15 San Antonio City -Texas Water Sys Commercial Paper Series A & B $450.0 TX CO-MGR Notes 06/24/15 Los Angeles City -California TRANs 2015 Series $1,386.2 CA CO-MGR 06/19/15 Houston City -Texas Comb Util Sys 1st Lien Ref Bonds Series 2015 D $62.7 TX CO-MGR 06/03/15 Chicago City -Illinois Sales Tax Revenue Refunding Series 2002 $111.7 IL CO-MGR Bonds 06/03/15 New York City -New York General Obligation Bonds 1995 Ser F Subser $50.0 NY CO-MGR F4 06/03/15 New York City -New York General Obligation Bonds 2015 Ser F Sub F-1 $300.0 NY CO-MGR 06/03/15 New York City -New York General Obligation Bonds 2015 Series 1 $316.7 NY CO-MGR 05/27/15 Chicago City -Illinois GO Refunding Bonds Series 2007 E F G $153.7 IL CO-MGR 05/27/15 Chicago City -Illinois General Obligation Bonds Series 2003 B $170.1 IL CO-MGR 05/27/15 Chicago City -Illinois General Obligation Bonds Series 2005 D $174.0 IL CO-MGR 05/27/15 Chicago City -Illinois General Obligation Bonds Series 2002 B $176.2 IL CO-MGR 05/22/15 Chicago City -Illinois Commercial Paper Notes Series D $75.0 IL LEAD 05/13/15 Austin City -Texas Elec Utility Sys Rev Ref Bonds Series 2015 B $81.0 TX CO-MGR 05/13/15 Austin City -Texas Elec Utility Sys Rev Ref Bonds Series 2015 A $327.8 TX CO-MGR 04/01/15 Philadelphia City- Water & Wastewater Rev Ref Series 2015 B $141.7 PA CO-MGR Pennsylvania Bonds 03/16/15 New York City -New York General Obligation Bonds 2015 Series C & D $799.7 NY CO-MGR 02/20/15 Houston City -Texas GO Commercial Paper Notes Series G-1 & 2 $200.0 TX LEAD 01/22/15 San Antonio City -Texas Water Sys Jr Ln Rev & Ref Bonds Series 2015 B $303.2 TX CO-MGR 12/10/14 Dallas City -Texas GO Refunding & Improvement Series 2014 $529.4 TX CO-MGR Bonds 10/30/14 Jacksonville City -Florida Special Revenue & Refunding Series 2014 $100.2 FL CO-MGR Bonds 10/29/14 Atlanta City -Georgia GO Refunding Bonds Series 2014 A $15.4 GA CO-MGR 10/29/14 Atlanta City -Georgia GO Refunding Bonds Series 2014 B $40.0 GA CO-MGR 10/17/14 Orlando City -Florida Cap Imp Special Rev & Ref Bonds Series 2014 B-D $85.0 FL CO-MGR 09/17/14 Chicago City -Illinois Wastewater Revenue Bonds Series 2014 $292.4 IL CO-MGR 09/09/14 Austin City -Texas Certificates of Obligation Series 2014 $9.6 TX CO-MGR 09/09/14 Austin City -Texas Public Improvement Bonds Series 2014 $10.0 TX CO-MGR 08/14/14 New York City -New York General Obligation Bonds 2015 Series A & B $980.0 NY CO-MGR 08/14/14 Pittsburgh City -Pennsylvania General Obligation Bonds Series of 2014 $44.5 PA CO-MGR 08/12/14 Houston City -Texas Airport Sys Facs Rev Ref Bonds Series 2014 $38.2 TX LEAD 06/26/14 Los Angeles City -California TRANs 2014 Series $1,369.2 CA LEAD 06/13/14 Houston City -Texas Comb Utility Sys 1st Ln Rev & Ref Series 2014 D $548.0 TX CO-MGR 06/13/14 New York City -New York General Obligation Bonds 2014 Series J & K $1,018.0 NY CO-MGR i' RAMIREZ Par Sale Amount Ramirez Date Issuer Issue Description Series (millions) State Role 05/29/14 Chicago City -Illinois 2nd Ln Revenue & Rev Ref Bonds Series 2014 B $287.6 IL CO-MGR 05/29/14 Chicago City -Illinois 2nd Ln Revenue & Rev Ref Bonds Series 2014 A $484.2 IL CO-MGR 03/26/14 Atlanta City -Georgia Airport General Revenue Ref Series 2014 C $181.9 GA CO-MGR Bonds 03/26/14 Atlanta City -Georgia Airport PFC & Gen Rev Ref Bonds Series 2014 A & B $664.6 GA CO-MGR 03/13/14 Chicago City -Illinois GO Project & Refunding Bonds Series 2014 A $432.6 IL CO-MGR 03/13/14 Chicago City -Illinois GO Project & Refunding Bonds Series 2014 B $450.8 IL CO-MGR 03/13/14 Houston City -Texas First Lien Revenue Ref Bonds Series 2014 B $605.2 TX CO-MGR 03/13/14 Memphis City -Tennessee General Improvement Ref Bonds Series 2014 A $104.0 TN CO-MGR 03/06/14 New York City -New York General Obligation Bonds 2014 Ser I Sub 1-1 $650.0 NY CO-MGR 01/15/14 Philadelphia City- Water & Wastewater Revenue Series 2014 A $123.2 PA LEAD Pennsylvania Bonds 01/14/14 El Paso City -Texas Water & Sewer Revenue Ref Bonds Series 2014 $64.9 TX CO-MGR 12/12/13 New York City -New York General Obligation Bonds 2014 Series G & H $800.1 NY CO-MGR 10/03/13 Chicago City -Illinois Gen Airport Sr Lien Rev Ref Bonds Series 2013 A & C $434.7 IL CO-MGR 10/03/13 Chicago City -Illinois Gen Airport Sr Lien Rev Ref Bonds Series 2013 B & D $463.2 IL CO-MGR 09/27/13 New York City -New York General Obligation Bonds 2003 Ser C, Sub C-A $175.7 NY CO-MGR 09/27/13 New York City -New York General Obligation Bonds 2014 Ser D-1, E & F $716.9 NY CO-MGR 09/11/13 Atlanta City -Georgia Water & Wastewater Rev Ref Series 2013 A-1 $178.7 GA CO-MGR Bonds 09/05/13 Jacksonville City -Florida Special Revenue & Ref Bonds Series 2013 B $35.1 FL CO-MGR 09/05/13 Jacksonville City -Florida Special Revenue & Ref Bonds Series 2013 A & C $85.6 FL CO-MGR 08/01/13 New York City -New York General Obligation Bonds Series B & C $372.5 NY CO-MGR 07/25/13 New York City -New York General Obligation Bonds Subseries 1 $134.8 NY CO-MGR 07/25/13 New York City -New York General Obligation Bonds Series A Subser A-1 $375.0 NY CO-MGR 07/16/13 San Antonio City -Texas Gen Imp & Comb Tax & Rev Certs Series 2013 $129.6 TX CO-MGR 07/09/13 Austin City -Texas Wtr & Wstwtr Sys Rev Ref Bonds Series 2013 A $282.5 TX CO-MGR 07/09/13 Dallas City -Texas GO Refunding Bonds Series 2013 B $42.6 TX LEAD 07/09/13 Dallas City -Texas GO Refunding & Improvement Series 2013 A $194.5 TX LEAD Bonds 06/27/13 San Antonio City -Texas Elec & Gas Sys Jr Lien Rev Bond Series 2013 $375.0 TX CO-MGR 06/26/13 Los Angeles City -California TRANs 2013 Series A-C $1,324.6 CA CO-MGR 05/24/13 New York City -New York General Obligation Bonds 2013 Series I & J $948.8 NY CO-MGR 03/01/13 New York City -New York General Obligation Bonds 13 Ser F Sub F-1 $872.5 NY CO-MGR G&H 01/16/13 Orlando City -Florida Wstwtr Sys Ref & Imp Rev Bonds Series 2013 $36.2 FL CO-MGR 12/18/12 Los Angeles City -California Watersystem CP Revenue Notes Series A-1 & 2 $80.0 CA CO-MGR 12/12/12 New York City -New York General Obligation Bonds 2013 Series D & E $1,000.1 NY CO-MGR 11/29/12 Houston City -Texas Comb Util First Lien Rev Ref Bond Series 2012 F $116.1 TX CO-MGR 10/24/12 Philadelphia City- Water & Wastewater Rev Ref Series 2012 $70.4 PA CO-MGR Pennsylvania Bonds 10/04/12 New York City -New York General Obligation Bonds 2013 Ser A-1, B & C $1,125.0 NY CO-MGR 09/07/12 San Antonio City -Texas Water System Revenue & Ref Series 2012 A $163.4 TX CO-MGR Bonds 09/06/12 Chicago City -Illinois 2nd Ln Wstwtr Transmission Bonds Series 2012 $276.5 IL LEAD 08/22/12 Dallas City -Texas Wtrwks & Swr Sys Rev Ref Bonds Series 2012 B $106.7 TX CO-MGR 08/22/12 Dallas City -Texas Wtrwks & Swr Sys Rev Ref Bonds Series 2012 A $259.4 TX CO-MGR 08/02/12 San Antonio City -Texas Comb Tax Rev Crt Ob&Gen Imp Series 2012 $167.9 TX CO-MGR Bonds 07/12/12 Austin City -Texas Wtr & Wstwtr Sys Rev Ref Bonds Series 2012 $336.8 TX CO-MGR 05/24/12 New York City -New York General Obligation Bonds 2012 Series H & 1 $949.7 NY CO-MGR 05/23/12 San Antonio City -Texas Electric & Gas Sys Rev Ref Bonds New Series 2012 $655.4 TX CO-MGR 04/18/12 Atlanta City -Georgia Airport General Revenue Bonds Series 2012 C $225.7 GA CO-MGR 04/18/12 Atlanta City -Georgia Airport General Revenue Bonds Series 2012 A & B $248.4 GA CO-MGR 03/27/12 San Antonio City -Texas General Improvement Ref Bonds Series 2012 $33.4 TX CO-MGR 03/07/12 Houston City -Texas Sub Lien Revenue Ref Bonds Series 2012 B $217.1 TX CO-MGR 03/07/12 Houston City -Texas Sub Lien Revenue Ref Bonds Series 2012 A $286.6 TX CO-MGR 02/24/12 New York City -New York General Obligation Bonds 2012 Series E & F $1,030.6 NY CO-MGR 02/07/12 San Antonio City -Texas Water System Revenue Ref Bonds Series 2012 $225.3 TX CO-MGR 11/29/11 Houston City -Texas General Obligation CP Notes Series G- 1 & 2 $200.0 TX LEAD RA 11/16/11 Austin City -Texas Water & Wstwtr Sys Rev Ref Bonds Series 2011 $237.5 TX CO-MGR 11/09/11 Philadelphia City- Water & Wstwtr Rev & Ref Bonds Series 2011 A & B $184.9 PA LEAD Pennsylvania 10/14/11 Austin City -Texas Public Improvement Ref Bonds Series 2011 B $3.0 TX SOLE 10/14/11 Austin City -Texas Public Improvement Ref Bonds Series 2011 A $68.3 TX LEAD 09/28/11 New York City -New York General Obligation Bonds Subseries E-3 & H-A $145.6 NY CO-MGR 09/28/11 New York City -New York General Obligation Bonds 2012 Ser D Sub D-1 $528.6 NY CO-MGR 08/24/11 Houston City -Texas Comb Util Sys First Lien Rev Ref Series 2011 E $166.7 TX CO-MGR 07/20/11 New York City -New York General Obligation Bonds Series Al, B & C $714.7 NY CO-MGR 04/27/11 Chicago City -Illinois PFC Revenue Refunding Bonds Series 2011 A $12.2 IL CO-MGR 04/27/11 Chicago City -Illinois PFC Revenue Refunding Bonds Series 2011 B $33.8 IL CO-MGR i' RAMIREZ Par Sale Amount Ramirez Date Issuer Issue Description Series (millions) State Role 04/27/11 Chicago City -Illinois Gen Airport Third Lien Rev Bonds Series 2011 A-C $1,000.0 IL CO-MGR 04/07/11 Philadelphia City- General Obligation Bonds Series 2011 $253.7 PA CO-MGR Pennsylvania 04/06/11 San Antonio City -Texas Water System Revenue Ref Bonds Series 2011 $46.6 TX CO-MGR 03/09/11 New York City -New York General Obligation Bonds Ser H Subser H-4 $45.1 NY CO-MGR 03/09/11 New York City -New York General Obligation Bonds 2011 Ser I Sub I-1 $400.0 NY CO-MGR 02/23/11 Houston City -Texas First Lien Rev Refunding Bonds Series 2011 A $273.3 TX CO-MGR 12/15/10 New York City -New York General Obligation Bonds Series G & H $100.0 NY CO-MGR 12/15/10 New York City -New York General Obligation Bonds Series F Subser F-1 $902.0 NY CO-MGR 12/09/10 San Antonio City -Texas Airport System Revenue Ref Bonds Series 2010 B $20.9 TX CO-MGR 12/09/10 San Antonio City -Texas PFC & Airport Sys Rev Imp Ref Series 2010 A $79.6 TX CO-MGR 11/18/10 Austin City -Texas Water & Wstwtr Sys Rev Ref Bonds Series 2010 A $76.9 TX CO-MGR 11/18/10 Austin City -Texas Water & Wstwtr Sys Rev Ref Bonds Series 2010 B $101.0 TX CO-MGR 11/10/10 Dallas City -Texas Equipment Acq Contractual Obliga Series 2010 $17.6 TX CO-MGR 11/10/10 Dallas City -Texas GO Refunding Bonds Series 2010 $77.7 TX CO-MGR 11/10/10 Dallas City -Texas GO Refunding Bonds Series 2010 C $142.0 TX CO-MGR 11/05/10 Atlanta City -Georgia Airport Gen Rev & PFC Sb Ln Series 2010 A & B $587.8 GA CO-MGR Bonds 10/28/10 San Antonio City -Texas Elec & Gas Sys Rev Ref Bonds Series 2010 B $200.0 TX CO-MGR 10/28/10 San Antonio City -Texas Elec & Gas Sys Jr Ln Rev Bonds Series 2010 A $300.0 TX CO-MGR 10/25/10 Chicago City -Illinois Second Lien Revenue Bonds Series 2010 B $84.0 IL CO-MGR 10/25/10 Chicago City -Illinois Second Lien Revenue Bonds Series 2010 D 1-2 $99.1 IL CO-MGR 10/15/10 Chicago City -Illinois Second Lien Revenue Bonds Series 2010 C $63.5 IL CO-MGR 10/07/10 New York City -New York General Obligation Bonds Subseries A- 7 & 8 $88.5 NY CO-MGR 10/07/10 New York City -New York General Obligation Bonds Series D & E $300.0 NY CO-MGR 10/07/10 New York City -New York General Obligation Bonds 2011 Ser C Sub C-1 $775.0 NY CO-MGR 10/05/10 El Paso City -Texas Water & Sewer Revenue Ref Bonds Series 2010 A $42.6 TX CO-MGR 09/29/10 Colorado Springs City- Utilities System Imp Rev Bonds Series 2010 B-1 $5.7 CO CO-MGR Colorado 09/29/10 Colorado Springs City- Utilities System Imp Rev Bonds Series 2010 B-2 $174.3 CO CO-MGR Colorado 08/19/10 Chicago City -Illinois General Obligation Bonds Series 2010 B $57.8 IL LEAD 08/19/10 Chicago City -Illinois General Obligation Bonds Series 2010 A $92.3 IL LEAD 08/12/10 Philadelphia City- Gas Works Revenue Bonds Ninth Series $150.0 PA CO-MGR Pennsylvania 07/29/10 Chicago City -Illinois Multi -Family Housing Rev Bonds 2010 Series $33.0 IL CO-MGR 07/28/10 New York City -New York General Obligation Bonds Series A & B $962.5 NY CO-MGR 06/09/10 New York City -New York General Obligation Bonds Series H Subser H-2 $151.5 NY CO-MGR 06/09/10 New York City -New York General Obligation Bonds Series H Subser H-1 $748.6 NY CO-MGR 05/05/10 Chicago City -Illinois Second Lien Revenue Bonds Series 2010 A- 1&2 $80.5 IL CO-MGR 03/18/10 New York City -New York General Obligation Bonds 2010 Ser G Sub G-3 $30.9 NY CO-MGR 03/18/10 New York City -New York General Obligation Bonds 2010 Ser G Sub G-1 $644.1 NY CO-MGR 03/11/10 Dallas City -Texas Comb Tax & Rev Cents of Oblig Series 2010 $21.6 TX CO-MGR 03/11/10 Dallas City -Texas General Obligation Bonds Series 2010 B $85.4 TX CO-MGR 03/11/10 Dallas City -Texas GO Refunding & Improvement Series 2010 A $196.6 TX CO-MGR Bonds Total Par Amount $86,293.5 Total Deals 285 z H z Ln LL 0 I- i' (DL Lead Banker/Project Oversight Raul Amezcua Senior Managing Director M: (213) 605-5120 E: raul.amezcua@ramirezco.com Dav-to-Dav Contact Michael Mejia Senior Vice President M: (510) 364-1423 E: michael.mejia@ramirezco.com Banking Support Dr. Fernando Guerra Managing Director M: (310) 993-1440 E: fernando.guerra@ramirezco.com Banking Support Tiffany Lee Vice President M: (626) 862-8920 E: tiffany.lee@ramirezco.com Analytical Support Esther Feliz Analyst P: (212) 248-3848 E: esther.feliz@ramirezco.com Technical and Quantitative Support Arthur Chan Managing Director P: (212) 248-0509 E: Arthur.chan@ramirezco.com i' ✓ 30+ years of municipal finance experience ✓ Joined Ramirez & Co. in 2021. Most recently, he managed Stifel's California Public Finance Group and served on the Executive Committee from 2014 to 2020 ✓ Completed 250 senior -managed issues exceeding $30 billion ✓ MBA from the Anderson School of Business at UCLA, B.S. USC ✓ 15+ years of municipal finance experience ✓ Structured over 150 municipal financings totaling $4.5 billion ✓ California POB specialist (completed 8 California POB transactions) ✓ B.S. in Environmental Economics and Policy from UC Berkeley ✓ 30+ years of California municipal finance experience ✓ B.A. in International Relations from the University of Southern California and M.A. and Ph.D. in Political Science from the University of Michigan ✓ 4 years of public finance experience ✓ Responsible for large issuer coverage ✓ Structured dozens of transactions totaling more than $500 million ✓ B.A. in Economics from UC San Diego ✓ Transactional and quantitative support (lead support banker for the City of New York, Los Angeles, State of California, etc.) ✓ B.A. in Economics and International Political Economy from Fordham University ✓ Joined Ramirez in April 2018 with over 33+ years of experience ✓ As former Head of the Debt Solutions Group at RBC Capital Markets, Mr. Chan has worked on $101 billion in senior - managed transactions for numerous state and local issuers nationwide ✓ Bachelor's degree in Computer Science - Artificial Intelligence from the University of Wisconsin at Madison and a Master's in Finance and Management from the University of Chicago Lead Underwriter ✓ Underwritten over $40 billion of senior managed financings Patty McGrorry ✓ 19+ years of municipal finance experience Managing Director ✓ B.A. from Villanova University P: (212) 248-3884 E: patty.mcgrorry@ramirezco.com Co -Lead Underwriter ✓ 45+ years of municipal finance underwriting experience John Young ✓ Former MSRB Vice -Chairman and former head of Municipal Managing Director Bond Underwriting at Bear Stearns P: (212) 248-3870 E: john.young@ramirezco.com Chief Credit Strategist ✓ 30+ years of experience as a municipal credit research Peter Block analyst Managing Director ✓ Prior to joining Ramirez Mr. Block was the Head Trading Desk P: (212) 248-3885 Analyst for Morgan Stanley's Institutional Municipal E: peter.block@ramirezco.com Securities Division ✓ Former Director at Standard & Poor's and Sector Leader for Derivatives and Public Pensions z z Ln U_ 0 i' RAM!! EZ Par Amount Sale Date Issuer (millions) Underwriter •San Fernando i 3/15/2021 Orange $286.4 Stifel 2/11/2021 Chula Vista $350.0 Stifel 2/9/2021 Downey $113.6 BofA �1� Monterey Park 1/13/20021 El Cajon $147.2 BofA • OMR,. - M, 11/10/2020 Gardena $101.5 BofA 10/27/2020 Arcadia $90.0 Stifel 9/17/2020 Azusa $70.1 BofA o Weill[ 6/10/2020 Carson $108.0 Cabrera 6/4/2020 Riverside City $432.2 BofA 6/2/2020 Inglewood $101.6 Cabrera 5/27/2020 Montebello $153.4 Cabrera 5/12/2020 Ontario $236.6 Hilltop 4/30/2020 Larkspur $18.3 DA Davidson 2/5/2020 Pasadena $131.8 Stifel 10/9/2019 Pacifica $9.7 US Bancorp on • , . 9/12/2019 Marysville $15.0 Hilltop 8/22/2019 Glendora $64.4 Stifel 3/6/2019 Chowchilla $10.5 Brandis MIRAMAR$ 7/25/2018 La Verne $54.3 Hilltop 11/30/2017 Monrovia $111.6 Hilltop 10/31/2017 Inglewood $52.8 Stern Bros Ramirez & Co.'s Total Par Amount $654.6 Ramirez's Total Deals 7 z z Ln LL 0 i' z z Ln U_ O i' $106,335,000, City of Monterey Park, Taxable Pension Obligation Bonds, Series 2021 Ramirez & Co. Role: Senior Manager ■ Relevance to Santa Ana: Ramirez & Co. successfully introduced Monterey Pork's General Fund rating to S&P similar to the process that the City of Santa Ana will require. The City's economic and demographic profile is very similar to the City of Santa Ana and our team helped them achieve a better credit rating than anticipated. ■ Ramirez & Co. introduced the City's general fund credit to S&P for the first time (no prior general fund rating). Our banking team successfully articulated the City's regional importance and pending economic development, achieving an 'AA' rating despite below average wealth levels. ■ Ramirez & Co. achieved lower rates than all prior POBs, including those with higher credit ratings. $17,590,000, City of Coachella, Taxable Pension Obligation Bonds, Series 2020 Ramirez & Co. Role: Senior Manager Relevance to Santa Ana: Ramirez & Co. guided the City through the rating process in the middle of the COVID-19 shutdown. Despite below average wealth levels and falling revenues our team successfully achieved better than expected rating results. ■ Ramirez & Co. successfully guided the City to secure a 'AA-' (stable) rating, despite falling revenues from COVID-19, and helped develop a bond structure that maximized cash flow savings. ■ On the pricing day, our aggressive marketing helped secure the lowest spreads of any 'AA-' rated California POB in the history of the muni bond market. ` $121,865,000, City of Hawthorne, 2019 Taxable Pension Obligation Bonds Ramirez & Co. Role: Sole Manager ■ Relevance to Santa Ana: Largest California POB of 2019 at a time when few investors had approved POB credits and the product was very challenging to sell. ■ Ramirez & Co. sole managed the largest financing in the history of the City. ■ POBs funded 100% of the City's outstanding CalPERS UAL and were structured with 30-year level debt service to provide long-term pension cost management. ■ Aggressive marketing efforts maximized investor demand and secured orders from buyers that had never purchased California POBs prior to the sale (Wells Capital Management, among others). $54,085,000, City of Baldwin Park, 2019 Taxable Pension Obligation Bonds Ramirez & Co. Role: Sole Manager Relevance to Santa Ana: Ramirez & Co.'s ability to generate strong demand and better than expected pricing in a challenging market environment. ■ With a very aggressive pricing scale, we generated $73.4 million in orders (1.4x oversubscribed). The transaction was priced in a very challenging market and was successful due to a focused marketing effort and Ramirez & Co.'s willingness to underwrite unsold bonds. $16,310,000, City of Brawley, Taxable Pension Obligation Bond, Series 2017 Ramirez & Co. Role: Sole Manager ■ Relevance to Santa Ana: Evidence that Ramirez & Co. was one of the first underwriters of POBs. ■ POBs refinanced the City's existing CalPERS obligation and shortened the overall final maturity from 25 years to 15 years. One of the first California POBs to be structured with a 10-year par call. RAMIRE2 i. On July 24, 2019, the Puerto Rico Federal Financial Oversight Management Board ("PROMESA") filed an adversary complaint against a dozen municipal underwriters including Ramirez, in connection with Puerto Rico bond offering(s). In response to the allegations, the underwriters' defense counsel filed a motion of dismissal, joined with an insurance claim under our professional indemnity policy. The case is re: The Financial Oversight and Management Board for Puerto Rico, Case No. 17-BK-3283 (LTS) (Jointly Administered). This case has been stayed by the court and is in the process of being briefed. Litigation counsel has not yet formed an opinion on the merits of the allegations. Ramirez shall advise on material developments, if any. ii. On February 19, 2020, Ambac Insurance Co. ("AMBAC") served the Underwriters including Ramirez and several other firms. Plaintiffs allege misconduct in debt offerings issued by the Puerto Rico Infrastructure Financing Authority ("PRIFA") and the Puerto Rico Convention Center District Authority ("PRCCDA") in the mid-2000s. The case is called Ambac Complaint & Summons; Re: CV No: SJ2020CV01505 (906) Breach of Duty vs. Samuel A. Ramirez & Co., Inc. et al. The Underwriters have filed for removal, pending scheduling by the court. Litigation counsel has not yet formed an opinion on the merits of the allegations. Ramirez shall advise on material developments, if any and; iii. On November 25, 2020, Financial Guaranty Insurance Company ("FGIC") like the predecessor case (AMBAC, referenced above) served all thirteen underwriters of certain municipal bond offerings issued by Puerto Rico and its instrumentalities. As in the AMBAC pleadings, the company alleges that the underwriters of those bonds failed to conduct appropriate due diligence and should have alerted it to certain misstatements or omissions in the official statements for the bonds. Their complaint alleges that the underwriters are liable to it under the Puerto Rico equitable doctrines of actos propios and unilateral declaration of will. The case was filed in Puerto Rico Court of First Instance No. SJ2020CV06383. The Underwriters are in the process of filing a motion for removal, pending scheduling by the court. Litigation counsel has not yet formed an opinion on the merits of the allegations. Ramirez shall advise on material developments, if any. z z Ln U- 0 i' Sale Date 03/03/21 02/25/21 02/24/21 02/23/21 02/17/21 02/11/21 02/11/21 02/05/21 02/04/21 02/04/21 02/03/21 02/02/21 01/21/21 01/21/21 01/14/21 01/12/21 12/17/20 12/11/20 12/10/20 12/10/20 12/10/20 12/09/20 12/04/20 12/02/20 11/24/20 11/20/20 11/19/20 11/18/20 11/12/20 11/12/20 11/10/20 10/29/20 10/22/20 10/15/20 10/14/20 10/14/20 10/14/20 10/09/20 10/09/20 10/07/20 10/06/20 10/01/20 10/01/20 09/29/20 09/24/20 09/24/20 09/02/20 09/02/20 09/02/20 08/26/20 08/26/20 08/25/20 08/25/20 08/25/20 08/20/20 w' Issuer Burlington City -Vermont Regents of the Univ of California NYC Housing Dev Corp Regents of the Univ of California Wisconsin Connecticut Housing & Fin Auth (CHFA) NYC Industrial Dev Agency Nassau Co Interim Finance Auth New Orleans City -Louisiana New Orleans City -Louisiana Massachusetts Port Authority Monterey Park City -California Houston Co (Crockett) ISD Port Authority of NY & NJ Rhode Island Hsg & Mtg Fin Corp Texas St Univ Sys Bd of Regents New York City -New York Via Metropolitan Transit Authority Miami -Dade Co -Florida Miami -Dade Co -Florida Texas Public Finance Auth (TPFA) Harris Co Cult Ed Facs Fin Corp Massachusetts Housing Fin Agcy Santa Monica Comm College Dt New York Transportation Dev Corp NYC Housing Dev Corp Coachella City -California Massachusetts California Earthquake Auth Pittsburgh Water & Sewer Auth Missouri Env Imp & Energy Res Au Los Angeles Comm College Dt San Jose -Evergreen Comm Coll Dt Denver City and Co -Colorado Kansas City Industrial Dev Au San Bernardino Co (Colton) JUSD San Bernardino Co (Colton) JUSD Michigan Finance Authority Michigan Finance Authority Univ of Massachusetts Bldg Au Rhode Island Hlth & Ed Bldg Corp NYS Energy Research & Dev Auth Michigan Finance Authority Soquel Creek Water Dt Chicago City -Illinois NYC Industrial Dev Agency El Paso Co (Clint) ISD El Paso Co (Clint) ISD NYS Housing Fin -Mortgage Agcy California State Univ Trustees Rhode Island Hsg & Mtg Fin Corp San Antonio City -Texas San Antonio City -Texas Ctl Texas Reg Mobility Au (CTRMA) San Francisco City & Co USD Issue Description Par Amount (millions) State Role Airport Revenue Ref Bonds $5.18 VT Sole Revenue Bonds $392.95 CA Co -Mgr Multi -Family Housing Rev Bonds $212.00 NY Co -Mgr General Revenue Bonds $1,089.33 CA Co -Mgr GO Refunding Bonds $295.24 WI Co -Mgr Housing Mortgage Fin Prog Bonds $70.37 CT Co -Mgr Pilot Refunding Bonds $50.00 NY Co -Mgr Sales Tax Secured Bonds $557.05 NY Co -Mgr Sewerage Svc Rev Ref Bonds $178.20 LA Co -Mgr Water Revenue Refunding Bonds $194.30 LA Co -Mgr Revenue Refunding Bonds $229.74 MA Co -Mgr Pension Obligation Bonds $106.34 CA Lead Refunding Bonds $9.09 TX Sole Consolidated Bonds $400.00 NY Co -Mgr Multi -Family Development Bonds $47.46 RI Co -Mgr System Rev Financing Sys Ref Bond $32.20 TX Co -Mgr General Obligation Bonds $1,500.00 NY Co -Mgr Farebox Revenue Ref Bonds $28.94 TX Co -Mgr Sub Special Obligaition Ref Bonds $253.26 FL Co -Mgr Sub Special Obligaition Ref Bonds $253.26 FL Co -Mgr Lease Revenue & Ref Bonds $400.00 TX Co -Mgr Revenue Bonds $79.44 TX Co -Mgr Housing Bonds $50.56 MA Co -Mgr GO Refunding Bonds $201.50 CA Co -Mgr Special Facility Rev Bonds $49.59 NY Co -Mgr Housing Impact Bonds $31.53 NY Co -Mgr Pension Obligation Bonds $17.59 CA Sole GO Refunding Bonds $444.12 MA Co -Mgr Revenue Bonds $300.00 CA Co -Mgr Wtr & Swr Sys 1st Ln Rev Bonds $0.89 PA Co -Mgr Wtr Poll Ctrl & Drinking Ref Bond $100.76 MO Co -Mgr GO Refunding Bonds $1,793.81 CA Lead GO Refunding Bonds $190.05 CA Co -Mgr Airport System Rev Bonds $411.54 CO Co -Mgr Airport Special Ob Ref Bonds $70.38 MO Co -Mgr General Obligation Bonds $1.00 CA Co -Mgr GO Refunding Bonds $44.55 CA Co -Mgr Revenue Bonds $56.91 MI Co -Mgr Revenue Bonds $230.00 MI Co -Mgr Refunding Revenue Bonds $329.93 MA Co -Mgr Program Revenue Refunding Bonds $29.66 RI Co -Mgr Green Revenue Bonds $16.69 NY Sole State Revolving Fund Rev Ref Bond $66.57 MI Co -Mgr Water Revenue Refunding Bonds $25.22 CA Sole Gen Airport Sr Ln Rev Ref Bonds $465.79 IL Co -Mgr Pilot Revenue Refunding Bonds $116.02 NY Co -Mgr Refunding Bonds $2.24 TX Co -Mgr Refunding Bonds $76.13 TX Co -Mgr Homeowner Mortgage Rev Bonds $55.00 NY Co -Mgr Systemwide Revenue Bonds $994.59 CA Co -Mgr Multi -Family Development Bonds $44.08 RI Co -Mgr Comb Tax & Rev Cert of Obligation $7.72 TX Lead Comb Tax & Rev Cert of Obligation $7.72 TX Lead Sr Lien Revenue Ref Bonds $238.14 TX Co -Mgr General Obligation Bonds $36.91 CA Co -Mgr RAMIREZ Sale Par Amount Date Issuer Issue Description (millions) State Role 08/18/20 Jacksonville City -Florida Special Revenue & Ref Bonds $105.49 FL Co -Mgr 08/13/20 Pomona City -California Pension Obligation Bonds $219.89 CA Co -Mgr 08/11/20 Los Angeles Co (Centinela Valley) UHSD GO Refunding Bonds $27.39 CA Sole 08/05/20 Long Island Power Authority Electric System Gen Rev Bonds $22.36 NY Co -Mgr 08/05/20 Long Island Power Authority Electric System Gen Rev Bonds $91.62 NY Co -Mgr 08/05/20 Pittsburgh City -Pennsylvania GO Refunding Bonds $121.52 PA Co -Mgr 08/04/20 Ohio Capital Facs Lease Approp Bonds $58.96 OH Co -Mgr 08/04/20 Phoenix City Civic Imp Corp Sub Excise Tax Rev & Ref Bonds $266.69 AZ Co -Mgr 07/29/20 New Jersey Hsg & Mtg Fin Agency Single Family Housing Rev Bonds $55.37 NJ Co -Mgr 07/23/20 Allegheny Co -Pennsylvania GO Refunding Bonds $289.00 PA Co -Mgr 07/23/20 Harris Co Cult Ed Facs Fin Corp Hospital Revenue Ref Bonds $91.43 TX Co -Mgr 07/20/20 Virginia College Building Auth Revenue & Rev Ref Bonds $341.46 VA Co -Mgr 07/17/20 NYS Urban Development Corp State Personal Inc Tax Rev Bonds $72.08 NY Co -Mgr 07/15/20 Connecticut Green Bank Green Liberty Bonds $16.80 CT Lead 07/15/20 Pennsylvania Hghr Ed Facs Auth Revenue Bonds $17.76 PA Co -Mgr 07/14/20 Virginia Resources Auth (VRA) Water & Sewer Sys Rev Ref Bonds $61.35 VA Co -Mgr 07/09/20 District of Columbia Income Tax Secured Rev Ref Bonds $234.92 DC Co -Mgr 07/09/20 Regents of the Univ of California General Revenue Bonds $323.34 CA Co -Mgr 07/09/20 Regents of the Univ of California General Revenue Bonds $400.00 CA Co -Mgr 07/09/20 Regents of the Univ of California General Revenue Bonds $500.00 CA Co -Mgr 07/09/20 Regents of the Univ of California General Revenue Bonds $600.00 CA Co -Mgr 07/08/20 El Paso Co (Canutillo) ISD Refunding Bonds $0.17 TX Lead 07/08/20 El Paso Co (Canutillo) ISD Refunding Bonds $20.29 TX Lead 07/08/20 San Diego Co Water Auth Water Revenue Refunding Bonds $283.47 CA Co -Mgr 07/01/20 Port Authority of NY & NJ Consolidated Notes $1,100.00 NY Co -Mgr 06/30/20 Corpus Christi City -Texas Util Sys Jr Ln Rev Imp Ref Bond $183.64 TX Co -Mgr 06/25/20 El Paso ISD Unlimited Tax Refunding Bonds $2.83 TX Co -Mgr 06/25/20 El Paso ISD Unlimited Tax Refunding Bonds $112.23 TX Co -Mgr 06/24/20 El Paso Co (Ysleta) ISD Refunding Bonds $11.48 TX Co -Mgr 06/24/20 El Paso Co (Ysleta) ISD Refunding Bonds $74.83 TX Co -Mgr 06/24/20 El Paso Co (Ysleta) ISD Refunding Bonds $204.13 TX Co -Mgr 06/24/20 Wisconsin GO Refunding Bonds $163.96 WI Co -Mgr 06/18/20 NYS Urban Development Corp State Personal Inc Tax Rev Bonds $492.01 NY Co -Mgr 06/18/20 New Jersey Educational Facs Au Revenue Refunding Bonds $182.19 NJ Co -Mgr 06/17/20 Texas Transportation Commission Highway Imp GO Refunding Bonds $794.24 TX Lead 06/17/20 Massachusetts Housing Fin Agcy Housing Bonds $21.36 MA Co -Mgr 06/12/20 Texas Dept of Hsg & Comm Affairs Single Family Mtg Rev Ref Bonds $12.40 TX Co -Mgr 06/10/20 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds $181.83 TX Co -Mgr 06/10/20 Dallas City -Texas Wtrwrks & Swr Sys Rev Ref Bonds $181.83 TX Co -Mgr 06/09/20 El Monte City -California Pension Obligation Bonds $118.73 CA Lead 06/04/20 Great Lakes Water Auth (GLWA) Sewage Disposal Sys Sr &2nd Bonds $687.46 MI Co -Mgr 06/02/20 San Jose -Evergreen Comm Coll Dt General Obligation Bonds $200.00 CA Co -Mgr 05/28/20 Connecticut General Obligation Bonds $49.47 CT Co -Mgr 05/28/20 Connecticut General Obligation Bonds $198.04 CT Co -Mgr 05/28/20 Connecticut General Obligation Bonds $252.50 CT Co -Mgr 05/21/20 Univ of Texas Sys Bd of Regents Revenue Financing System Bonds $300.81 TX Co -Mgr 05/14/20 Norristown -Pennsylvania General Obligation Notes $2.05 PA Co -Mgr 05/13/20 Lone Star College System Ltd Tax GO Refunding Bonds $18.93 TX Co -Mgr 05/07/20 Metropolitan Transport Auth (MTA) Transportation Rev Green Bonds $60.00 NY Co -Mgr 05/07/20 Metropolitan Transport Auth (MTA) Transportation Rev Green Bonds $540.00 NY Co -Mgr 04/30/20 Great Lakes Water Auth (GLWA) Water Supply Sys Rev Sr Ln Bonds $377.52 MI Co -Mgr 04/29/20 NYS Power Authority Revenue Bonds $114.02 NY Co -Mgr 04/23/20 Los Angeles USD General Obligation Bonds $113.94 CA Co -Mgr 04/09/20 Virginia Public Building Auth Public Facilties Rev Bonds $100.30 VA Co -Mgr 04/07/20 Texas Public Finance Auth (TPFA) General Obligation Bonds $472.47 TX Co -Mgr 03/05/20 Houston City -Texas Comb Util Sys 1st Lien Rev Bonds $46.19 TX Sole 03/05/20 California Earthquake Auth Revenue Bonds $400.00 CA Co -Mgr w' RAMIREZ Sale Par Amount Date Issuer Issue Description (millions) State Role 02/26/20 Narragansett Bay Commission Wastewater System Ref Rev Bonds $196.36 RI Co -Mgr 02/20/20 Texas Transportation Commission 1st Tier Revenue Refunding Bonds $139.65 TX Co -Mgr 02/20/20 Texas Transportation Commission 1st Tier Revenue Refunding Bonds $139.65 TX Co -Mgr 02/19/20 San Patricio Co (Sinton) ISD Unlimited Tax Refunding Bonds $15.17 TX Co -Mgr 02/11/20 Grand Parkway Transport Corp 1st Tier Toll Revenue Ref Bonds $220.42 TX Co -Mgr 02/11/20 Grand Parkway Transport Corp Sub Tier Toll Revenue Ref Bonds $1,293.26 TX Co -Mgr 02/06/20 Oxnard City -California Gas Tax Revenue Refunding Bonds $16.91 CA Sole 02/05/20 NYC Housing Dev Corp Housing Impact Bonds $78.62 NY Lead 02/05/20 California State Univ Trustees Systemwide Revenue Bonds $243.41 CA Co -Mgr 02/05/20 California State Univ Trustees Systemwide Revenue Bonds $586.02 CA Co -Mgr 02/05/20 Harris Co Metro Trans Auth Sales & Use Tax Refunding Bonds $152.07 TX Co -Mgr 02/05/20 Harris Co Metro Trans Auth Sales & Use Tax Refunding Bonds $152.07 TX Co -Mgr 01/30/20 Travis Co (Pflugerville) ISD Unlimited Tax Refunding Bonds $32.39 TX Lead 01/30/20 Connecticut Housing & Fin Auth (CHFA) Housing Mtg Finance Program Bonds $12.50 CT Co -Mgr O1/22/20 Wisconsin GO Refunding Bonds $218.35 WI Co -Mgr O1/16/20 Pennsylvania Turnpike Commission Turnpike Revenue Ref Bonds $179.10 PA Co -Mgr O1/08/20 Philadelphia City -Pennsylvania GO Refunding Bonds $118.03 PA Co -Mgr O1/08/20 Univ of Massachusetts Bldg Au Project Revenue & Refunding Bonds $449.18 MA Co -Mgr 12/18/19 NYS Dorm Authority State Personal Inc Tax Rev Bonds $1,391.59 NY Lead 12/12/19 Los Angeles Comm College Dt General Obligation Bonds $100.00 CA Lead 12/06/19 NYC Housing Dev Corp Multi -Family Housing Rev Bonds $71.33 NY Co -Mgr 12/05/19 Rhode Island Infrastructure Bank Safe Drinking Water Ref Rev Bonds $39.81 RI Co -Mgr 12/05/19 Rhode Island Infrastructure Bank Water Pollution Control Ref Bonds $112.87 RI Co -Mgr 12/04/19 NYS Housing Fin -Mortgage Agcy Affordable Housing Revenue Bonds $6.00 NY Lead 12/04/19 New Jersey Hsg & Mtg Fin Agency Multi -Family Revenue Bonds $50.14 NJ Co -Mgr 12/04/19 New Jersey Trans Trust Fund Au Transporation System Bonds $946.34 NJ Co -Mgr 11/20/19 Massachusetts Housing Fin Agcy Housing Bonds $13.86 MA Co -Mgr 11/20/19 San Antonio City -Texas Sub Ln Airport Sys Rev Ref Bond $31.54 TX Co -Mgr 11/20/19 San Antonio City -Texas Airport Sys Rev Ref Bond $36.28 TX Co -Mgr 11/19/19 California Health Facs Fin Auth Senior Revenue Bonds $500.00 CA Co -Mgr 11/13/19 District of Columbia Income Tax Secured Rev Bonds $60.00 DC Co -Mgr 11/06/19 Massachusetts School Bldg Auth Subor Dedicated Sales Tax Bonds $715.42 MA Co -Mgr 11/06/19 New Jersey Economic Dev Auth School Facs Con Ref Bonds $246.73 NJ Co -Mgr 10/31/19 Massachusetts St College Bldg Au Refunding Revenue Bonds $233.62 MA Co -Mgr 10/24/19 Miami -Dade Co -Florida Water & Sewer Sys Rev Ref Bonds $548.09 FL Co -Mgr 10/18/19 NYS Thruway Authority General Revenue Bonds $857.63 NY Co -Mgr 10/17/19 Pennsylvania St Pub Sch Bldg Auth School Lease Revenue Ref Bonds $188.29 PA Co -Mgr 10/16/19 Dallas Co (Cedar Hill) ISD Refunding Bonds $3.26 TX Co -Mgr 10/16/19 Dallas Co (Cedar Hill) ISD Refunding Bonds $33.91 TX Co -Mgr 10/09/19 Connecticut Housing & Fin Auth (CHFA) Hsg Mortgage Finance Frog Bonds $15.00 CT Co -Mgr 10/09/19 Massachusetts Water Resources Au General Revenue Bonds $50.00 MA Co -Mgr 10/09/19 Massachusetts Water Resources Au General Revenue Bonds $547.75 MA Co -Mgr 09/26/19 South El Monte Imp Dt Successor Agy Sub Tax Allocation Ref Bonds $5.54 CA Sole 09/24/19 Hawthorne City -California Pension Obligation Bonds $121.87 CA Sole 09/24/19 Texas Water Development Board St Wtr Implementation Fund Bonds $22.99 TX Co -Mgr 09/11/19 NYS Housing Fin -Mortgage Agcy Homeowner Mtg Revenue Bonds $20.00 NY Co -Mgr 09/10/19 Austin City -Texas Pub Imp Bonds & Certs of Oblig $55.47 TX Lead 08/27/19 Massachusetts Housing Fin Agcy Single Family Mortgage Rev Bonds $14.00 MA Co -Mgr 08/23/19 Miami -Dade Co -Florida Aviation Revenue Refunding Bonds $360.50 FL Co -Mgr 08/22/19 Houston City -Texas Public Improvement Ref Bonds $214.63 TX Lead 08/14/19 San Francisco City & Co Airport Comm Revenue Bonds $41.77 CA Co -Mgr 08/07/19 Dallas & Fort Worth Cities -Texas Joint Revenue Refunding Bonds $1,167.06 TX Co -Mgr 08/07/19 Port Authority of NY & NJ Consolidated Bonds $400.00 NY Co -Mgr 07/25/19 Virginia Resources Auth (VRA) StMoralOblig&lnfrastructureBonds $17.36 VA Co -Mgr 07/18/19 Battery Park City Authority Senior Revenue Bonds $3.57 NY Co -Mgr 07/17/19 Connecticut Housing & Fin Auth (CHFA) Housing Mortgage Fin Frog Bonds $15.00 CT Co -Mgr 06/13/19 NYC Housing Dev Corp Multi -Family Housing Rev Bonds $175.00 NY Co -Mgr w' RAMIREZ Sale Par Amount Date Issuer Issue Description (millions) State Role 05/10/19 Miami -Dade Co -Florida Aviation Revenue Ref Bonds $212.75 FL Co -Mgr 05/01/19 Massachusetts Housing Fin Agcy Single Family Housing Rev Bonds $18.00 MA Co -Mgr 04/24/19 Connecticut Housing & Fin Auth (CHFA) Housing Mortgage Fin Prog Bonds $15.00 CT Co -Mgr 03/29/19 Connecticut General Obligation Bonds $1.50 CT Lead 03/29/19 Connecticut General Obligation Bonds $6.91 CT Lead 03/29/19 Connecticut General Obligation Bonds $14.50 CT Lead 03/29/19 Connecticut General Obligation Bonds $67.64 CT Lead 03/29/19 Connecticut General Obligation Bonds $159.46 CT Lead 03/15/19 NYS Energy Research & Dev Auth Residential Solar & Energy Bonds $15.51 NY Sole 02/28/19 NYS Housing Fin -Mortgage Agcy Homrowner Mortgage Rev Bonds $30.00 NY Lead 02/20/19 Baldwin Park City -California Pension Obligation Bonds $54.09 CA Sole 02/13/19 NYS Dorm Authority Revenue Bonds $83.17 NY Co -Mgr 02/13/19 NYS Dorm Authority Revenue Bonds $176.13 NY Co -Mgr 02/06/19 Connecticut Housing & Fin Auth (CHFA) Housing Mortgage Fin Frog Bonds $15.00 CT Co -Mgr Common Sch I'd Advance Purch 01/25/19 Indiana Bond Bank Bonds $87.11 IN Co -Mgr 01/16/19 Sales Tax Securitization Corp Sales Tax Securitization Bonds $605.43 IL Co -Mgr 12/12/18 NYS Dorm Authority State Personal Inc Tax Rev Bonds $103.57 NY Co -Mgr 12/06/18 Massachusetts Housing Fin Agcy Single Family Housing Rev Bonds $12.40 MA Co -Mgr 10/29/18 Massachusetts Housing Fin Agcy Housing Bonds $79.29 MA Co -Mgr 10/18/18 Santa Ana Comm Redev Success Agcy Tax Allocation Refunding Bonds $58.71 CA Sole 10/04/18 NYC Housing Dev Corp Multi -Family Housing Rev Bonds $125.00 NY Co -Mgr 09/18/18 Great Lakes Water Auth (GLWA) Sewage Disposal Sys Rev&Ref Bonds $44.18 MI Co -Mgr 09/14/18 Massachusetts Housing Fin Agcy Single Family Housing Rev Bonds $8.30 MA Co -Mgr 08/29/18 Cudahy Successor Agcy Comm Dev Tax Allocation Refunding Bonds $14.03 CA Sole 08/16/18 Connecticut General Obligation Bonds $45.00 CT Co -Mgr 08/16/18 Connecticut General Obligation Bonds $205.00 CT Co -Mgr 08/16/18 Miami -Dade Co -Florida Aviation Revenue Refunding Bonds $766.82 FL Co -Mgr 08/16/18 Port Authority of NY & NJ Consolidated Bonds $300.00 NY Co -Mgr 08/02/18 New Haven City -Connecticut GO Refunding Bonds $160.00 CT Co -Mgr 06/13/18 NYC Housing Dev Corp Multi -Family Housing Rev Bonds $75.00 NY Co -Mgr 05/31/18 Massachusetts Housing Fin Agcy Single Family Housing Rev Bonds $17.50 MA Co -Mgr 05/23/18 Regents of the Univ of California Revenue Bonds $95.08 CA Co -Mgr 05/22/18 Regents of the Univ of California General Revenue Bonds $281.90 CA Lead 05/08/18 Regional Transportation Auth GO Working Cash Notes $150.00 IL Co -Mgr 05/04/18 NYS Dorm Authority Revenue Bonds $243.71 NY Co -Mgr 04/17/18 California Various GO & Refunding Bonds $2,147.00 CA Co -Mgr 04/04/18 Santa Monica Comm College Dt General Obligation Bonds $69.36 CA Co -Mgr 03/15/18 NYS Energy Research & Dev Auth Residential Solar Fin Green Bonds $18.50 NY Sole 03/15/18 Miami -Dade Co Educational Facs Auth Revenue Bonds $17.29 FL Co -Mgr 02/22/18 Washington Convention & Sports Au Sr Ln Dedicated Tax Rev Ref Bonds $57.52 DC Co -Mgr 01/23/18 Port Authority of NY & NJ Consolidated Bonds $154.48 NY Co -Mgr 01/19/18 Austin Comm Coll Dt Pub Fac Corp Lease Revenue Bonds $15.00 TX Co -Mgr 01/18/18 Los Angeles Municipal Imp Corp Lease Revenue Refunding Bonds $25.63 CA Lead 12/20/17 Houston City -Texas Pension Obligation Bonds $1,005.15 TX Co -Mgr 12/11/17 Massachusetts St College Bldg Au Project Revenue Bonds $7.57 MA Co -Mgr 11/30/17 New Jersey Turnpike Authority Turnpike Revenue Bonds $167.85 NJ Co -Mgr 11/21/17 Rhode Island Convention Ctr Auth Refunding Revenue Bonds $68.72 RI Co -Mgr 11/15/17 New Jersey Educational Facs Au Revenue Refunding Bonds $184.23 NJ Co -Mgr 10/19/17 NYS Environmental Facs Corp State Revolving Funds Rev Bonds $66.45 NY Co -Mgr 10/04/17 NYC Housing Dev Corp Multi -Family Secured Mtg Rev Bond $25.50 NY Lead 10/04/17 NYC Housing Dev Corp Multi -Family Secured Mtg Rev Bond $39.83 NY Lead 09/26/17 Texas Water Development Board Revenue Bonds $18.94 TX Co -Mgr 09/21/17 Atlanta Development Authority Revenue Bonds $25.70 GA Co -Mgr 09/07/17 New Jersey Economic Dev Auth Motor Vehicle Surcharge Rev Bonds $28.43 NJ Co -Mgr 08/11/17 Miami -Dade Co -Florida Aviation Revenue Ref Bonds $314.57 FL Co -Mgr 07/12/17 Brawley City -California Pension Obligation Bonds $16.31 CA Sole i' RAMIREZ Sale Par Amount Date Issuer Issue Description (millions) State Role 06/21/17 New Jersey Educational Facs Au Revenue Bonds $31.92 NJ Co -Mgr 06/08/17 Texas Dept of Hsg & Comm Affairs Single Family Mtg Rev & Ref Bonds $72.40 TX Lead 05/17/17 NYS Dorm Authority Revenue Bonds $227.84 NY Co -Mgr 05/02/17 Wisconsin Gen Fund Ann Appropriation Bonds $402.14 WI Co -Mgr 04/26/17 Port Authority of NY & NJ Consolidated Bonds $300.00 NY Co -Mgr 04/20/17 California High -Speed Passenger Train Bonds $300.00 CA Co -Mgr 04/20/17 California High -Speed Passenger Train Bonds $300.00 CA Co -Mgr 04/20/17 California High -Speed Passenger Train Bonds $648.07 CA Co -Mgr 04/06/17 NYS Environmental Facs Corp Clean & Drinking Wtr Revolv Fund $336.34 NY Co -Mgr 03/30/17 Santa Monica Comm College Dt General Obligation Bonds $15.40 CA Co -Mgr 03/29/17 NYC Housing Dev Corp Multi -Family Housing Rev Bonds $24.50 NY Co -Mgr 03/29/17 NYC Housing Dev Corp Multi -Family Housing Rev Bonds $61.50 NY Co -Mgr 03/07/17 Massachusetts Housing Fin Agcy Housing Bonds $5.32 MA Co -Mgr 03/07/17 Massachusetts Housing Fin Agcy Housing Bonds $10.44 MA Co -Mgr 01/20/17 Univ of Massachusetts Bldg Au Project Revenue Bonds $19.51 MA Co -Mgr 01/12/17 Wisconsin Gen Fund Annual Approp Ref Bonds $427.77 WI Lead Total Par Amount Total Deals z z V) LL 0 R $50,566.07 241 RAM!! EZ Remaining Proposed Total Year Current UAL UAL POBs Pension Liability Savings 2022 $56,216,012 $6,668,236 $41,205,712 $47,873,948 $8,342,064 2023 $61,071,833 $10,161,493 $37,712,939 $47,874,432 $13,197,401 2024 $64,221,345 $11,910,971 $35,960,582 $47,871,553 $16,349,792 2025 $67,531,866 $13,782,954 $34,088,668 $47,871,622 $19,660,244 2026 $69,529,199 $14,302,196 $33,570,984 $47,873,180 $21,656,019 2027 $71,395,319 $14,649,569 $33,225,344 $47,874,913 $23,520,406 2028 $72,927,789 $14,621,538 $33,254,599 $47,876,137 $25,051,652 2029 $69,282,415 $9,372,735 $38,500,597 $47,873,332 $21,409,083 2030 $71,117,722 $9,560,526 $38,312,229 $47,872,755 $23,244,967 2031 $73,027,525 $9,777,504 $38,094,436 $47,871,940 $25,155,585 2032 $67,895,666 $10,000,448 $37,870,883 $47,871,331 $20,024,335 2033 $67,036,957 $10,229,523 $37,642,715 $47,872,238 $19,164,719 2034 $61,813,902 $8,561,720 $39,312,778 $47,874,498 $13,939,404 2035 $59,692,427 $7,805,129 $40,066,643 $47,871,772 $11,820,655 2036 $56,436,917 $6,029,852 $41,843,259 $47,873,112 $8,563,805 2037 $50,733,462 $1,927,276 $45,948,233 $47,875,509 $2,857,953 2038 $48,123,557 - $47,874,480 $47,874,480 $249,077 2039 $45,140,359 - $44,907,358 $44,907,358 $233,001 2040 $42,838,840 - $42,618,533 $42,618,533 $220,307 2041 $41,490,921 - $41,273,235 $41,273,235 $217,686 2042 $27,326,926 - $27,182,682 $27,182,682 $144,244 2043 $25,812,259 - $25,680,416 $25,680,416 $131,843 2044 $21,568,341 - $21,455,827 $21,455,827 $112,514 2045 $4,558,752 - $4,533,486 $4,533,486 $25,266 2046 $1,158,319 - $1,151,382 $1,151,382 $6,937 2047 $104,981 - - - $104,981 z z Ln U- 0 i' Rank Investor �• i C t4 3 s o C m U l7 to N o a o O. O W Gl C a+ (U N c N i c c (.! w OC o , c O C v ° d y L t 3 = ty O. c a (7 m N a o o �. 3 - m 1 2 3 4 5 Wells Cap Mgmt Delphi Cap Mgmt Earnest Partners Invesco JP Morgan - - - - - - m - - - - - mommor- 12 9 9 - - 9 - 9 6 New Eng Asset Mgmt - - - = - 9 7 Wellington Mgmt - - - - - - - 9 8 40/86 Advisors - - - - - - - 8 9 ACORE Capital - - - - - 8 10 Acres Capital - - - - - 8 11 Bain Capital - - - - - 8 12 Berkshire Hathaway 8 13 BlackRock 8 14 Flaherty & Crumrine 8 15 GSAM 8 16 Guggenheim - - - - - 8 17 HPS Invest Partners 8 18 TCW Asset Mgmt - - - - - 8 19 Allstate - - - - - - 7 20 GC Advisors LLC - - - - - - - - 7 21 Kayne Anderson - - - - - - - 7 22 Medley Capital - - - - - - - 7 23 Prudential - - - - 7 24 Tennenbaum Cap - - - - - - - - - - - 7 25 Belle Haven 6 26 Canyon Partners 6 27 CQS LLC - - - - - - - - - - - - - 6 28 Doubleline Capital - - - - - - - - - - - - - 6 29 Eagle Point Mgmt - - - - - - - - - - - - - 6 30 HIG Capital - - - - - - - - - - - - - 6 31 Knights of Columbus - - - - - - - - - - 6 32 Neuberger Berman 6 33 Performance Trust 6 34 PGIM - - - - 6 35 Propheta Capital - - - - - - - - - - - - - 6 36 RCG Longview Mgmt - - - - - - - - - - - - - 6 37 Sit Fixed Income Adv - - - - - - - - - - - - 6 38 WAMCO - - - - - 6 39 Bel Air Invest Adv - - 5 40 Nomura Corp - - - - 5 41 Spring Lake Mgmt - - - - - - 5 42 Barings LLC 4 43 New York Life Ins - - - - - - - - - - - 4 44 Oceanview Mgmt - - - - - - - - - - - - - 4 45 Reams Asset Mgmt - - - - - - - - - - - - - 4 46 Securian Asset Mgmt - - - - - - - 4 47 Verde Asset Mgmt - - - - - - - - 4 48 Aetna - - - - - - - - - - - 3 49 Apollo Global Mgmt - - - - - - - - - - - - 3 50 Ariel Invest - - - - - - - - - - - - - - - - - 3 51 Loews Corp - - - - - m - - - - - - - - - 3 52 MacKay Shields - - - - - - - - - - - - - - - 3 53 MetLife - - - - - - - - - - - - - - - 3 54 Old Orchard M - - - - - - - - - - - - 3 M RAM!! EZ Rank Investor >• i O a c 0 C T M L d m m l!J V (� M 7 O Q o a ate+ o O ov;N `m i 1.1 Y.I O y c c C G O M c 0CL C 'O o° i L 3 = Y d 'O O aai co C > I� N y O N m c c m 55 56 57 58 59 60 61 62 63 64 65 66 67 Paterson Cap PIMCO Schroder Invest Searle Unionbanc Invest 16th Amendment AIG Allianz SE American Family Ins Ashmore Invest Mgmt Barclays Prop Desk Bluefin Trading Cerberus Mgmt - - - - - - - - - - - - - - - - - - - - - - - - - - - M - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - M Z- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3 - - --3 - - - - 3 - - - - 3 - - - - 3 - - - - 2 - - - 2 lff - 2 - - - - 2 - - 2 - - - - 2 - - - - 2 - - - - 2 68 CL King Arb - - - - - - - - - - - - - - - - - - 2 69 Conning Inc - - - - - - - - - - M - - - - - - - 2 70 Cumberland Adv - - - - - - - - - - - - - - - - 2 71 Definitive Mgmt:::_:III- - M - - - - - - - - - - - - - - 2 72 Deutsche Bank - - - - - - - - - - - - - - - - 2 73 Feinberg Stephen - - - - - - - - - - - - - - - - 2 74 First NY Sec - - - - - - - - - - - - - - - - 2 75 Greystone Consulting - - - - - - - - - - - - - - - - - - 2 76 Gulfstream Capital - - - - - - - - - - - - - - - - - 2 77 Hartford Invest Mgmt 2 78 Highbridge Mgmt - - - - - - - - - - - - - - - - - 2 79 Hopwood Lane - - - - - - - - - - - - - - - - - - - 2 80 Indusry Funds Mgmt - - - - - - - - - - - - - - - 2 81 Jefferies & Co. - - - - W - - - - - - - - 2 82 Merrill Prop Desk JW - - - - - - - - - - - - - - - 2 83 Millennium Ptnrs - - - - - - - - - - - 2 84 Northern Trust - - - - - - - - - - - - - 2 85 Nuveen - - - - - - - - - - - - - - 2 86 PineBridge M - - - - - - - - - - - - - - - 2 87 PNC Capital Adv - - - - - - - - - - - - - - - - - 2 88 Shenkman Mgmt - - - - - - - - - - - - - - - - - - 2 89 Teachers Adv - - - - - - - - - - - - - - - - - 2 90 Teachers Insurance - - - - - - - - - - - - - - - - - 2 91 Tortoise Capital - - - - - - - - - - - - - - - - - 2 92 USAA - - - - - - - - - - - - - - - - - - - 2 93 Whitehaven Mgmt - - - - - - - - - - - - - - - - - 2 94 20 Gates Mgmt - - - - - - - - - - - - - - - - - 1 95 Americo Life Ins - - - - - - - - - - - - - - - - - - - - 1 96 Ameriprise - - - - - - - - - - - - - - - - - 1 97 Amerisafe Ins - - - - - - - - - - - - - - - - - - - - 1 98 AMUNDI USA INC - - - - - - - - - - - - - - - - - - - 1 99 Aquiline Holdings - - - - - - - - - - - - - - - - - - 1 100 Ares Capital Mgmt - - - - - - - - - - - - - - - - - - - 1 101 ASB Capital Mgmt M - - - - - - - - - - - - - - - - - - - 1 102 Ausbil Invest Mgmt - - - - - - - - - - - - - - - - - - - 1 103 Auto Club Sery - - - M - - - - - - - - - - - - - - - 1 104 Blackstone - - - - - - - - - - - - - - - - - 1 105 Boston Partners - - - - - - - - - - - - - - - - - - - 1 106 Bridge Harbor Cap - - - - - - - - - - - - - - - - - - - 1 107 Brotherhood Mutual - - - - - - - - - - - - - - - - - - - - 1 108 Build Capital Part - - - - - - - - - - - - - - - - - 1 109 C213 Capital Adv - - - - - - - - - - - - - - - - - - - 1 110 Cantor Fitzgerald M - - - - - - - - - - - - - - - - - - - 1 111 Carlyle Invest Mgmt - - - - - - - - - - - - - - - - - - - 1 i' RAM!! EZ Rank Investor >• i C T O a L c m 0 l!J V m d 7 m Q (� m O o a am+ O o O ov;N y `m i c c 1.1 Y.I C G O m m 'O c um 0a i L 3 = 'O aai Y d O m C > I� N y O N m o c 2 J m 112 113 114 115 116 117 Centiva Capital Churchill Mgmt Citigroup Rel Value Clearlake Capital Cohen & Steers Inc Commerce Bank - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - r - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 1 - - - - 1 - - - - 1 - - - - 1 - - - - 1 118 Conning, Inc - - - - - - - - - - - - - - 1 119 Country Trust Bank - - - - - - - - - - - - - - - - - - 1 120 Credit Agricole SA - - - - - - - - - - - - - - 1 121 Crescent Group - - - - - - - - IN - - - - - - - - - - 1 122 Delaware Invest - - - - - - - - - - - - - - - - - - - 1 123 DV Trading - - - - - - - - - - - - - - - - - - - - 1 124 DWS Invest Mgmt - - - - - - - - W - - - - - - - - - - 1 125 Eaton Vance Mgmt - - - - - - - - - - - - - - - - - 1 126 Family Heritage Life - - - - - - - - - - - - - 1 127 Federated Inv Mgmt - - - - - - - - - - - - - - - - - - - 1 128 Fiduciary Trust NY - - - - - - - - - - - - - - - - - - 1 129 First Bankers Bank - - - - - - - - - - - - - - - - - - - - 1 130 FirstMark Capital - - - - - - - - - - - - - - - - - - - 1 131 Flippin, Bruce & Porter - - - - - - - - - - - - - - - - - - - - 1 132 Fort Washington - - - - - - - - - - - - - - - - - - - - 1 133 Franklin - - - - - - - - - - - - - - - - - - - 1 134 Fundamental Adv - - - - - - - - - - - - - - - - - - - - 1 135 GE Asset Mgmt - - - - - - - - - - - - - - - - - - - - 1 136 GenTrust Mgmt off - - - - - - - - - - - - - - - - - 1 137 Global Investors Svcs - - - - - - - - - - - - - - - - - 1 138 Globe Life Ins - - - - - - - - - - - - - - - - - - - 1 139 GoldenTree Mgmt - - - - - - - - - - - - - - - - - 1 140 GoldPoint Partners - - - - - - - - - - - - - - - - - - 1 141 Gramercy Funds Mgmt - - - - - - - - - - - - - - - - - - - 1 142 Great Lakes Advisor - - - - - - - - - - - - - - - - - - - 1 143 Greenspring Assoc - - - - - - - - - - - - - - 1 144 Halyard Asset Mgmt - - - - - - - - - - - - - - - - - - 1 145 Harrison Street Sec - - - m - - - - - - - - - - - - - - - 1 146 Hexagon Asset Mgmt - - - - - - - - - - - - - - - - - - - 1 147 Inverness Counsel - - - - - - - - - - - - - - - - - - 1 148 Janney Invest Mgmt - - - - - - - - - - - - - - - - - - - 1 149 John Hancock - - - - - - - - W - - - - - - - - - - 1 150 Kline Hill Partners - - - - - - - - - - - - - - - - - - - 1 151 Knighthead Mgmt - - - - - - - - - - - - - - - - - - - 1 152 KKR - - - - - - - - - - - - - - - - - - - - 1 153 Lincoln Invest Adv - - - - - - - - - - - - - - - - - - - - 1 154 Logan Capital Mgmt - - - - - - - - - - - - - - - - - - - 1 155 Los Angeles DWP - - 1 156 LS Investment Adv - - - - - - - - - - - - - - 1 157 Madison Cap Fund - - - - - - - - - - - 7111F - - - - - - - 1 158 Manteio Capital m - - - - - - - - - - - - - - - - - - - 1 159 Manulife Financial - - - - - - - - - - - - - - - - - - - 1 160 Manulife Inv Mgmt - - - - - - - - - - - - - - - - - - - - 1 161 Maritime Capital m - - - - - - - - - - - - - - - - - - - 1 162 Mason Street Adv - - - - - - - - - - - - - - - - - 1 163 Mid Atlantic Cap - - - - - - - - - - - - - - - - - - - 1 164 Milliman Financial - - - - - - - - - - - - - - - - - - - - 1 165 Milliman Inc - - - - - - - - - - - - - - - - - - - - 1 166 Morgan Stanley Arb - - - - - - - - - - - - - - - - - - - 1 167 MTR Municipal Strat - - - - - - - - - - - - - - - - - - 1 168 Multi -Bank - - - - - - - - - - - - - - - - - - - - 1 i' RAMIREZ Rank Investor >• O c p i C T a L m g w v° M d 7 m Q M O N o `m a v a0+ O ov;N i w O y c c O M c O C 'O o° CL i L 3 = 'O a�i Y d O m C > r\ N y O N m c c 2 g Ca 169 170 171 172 173 174 175 176 177 178 Mutual of Omaha NB Alt Adv Nebrodi Partners NFJ Invest Group Northwestern Mutual NYL Investors One Oak Capital PA Capital Parker Hunter Mgmt PPM America Inc - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - — - 1 - - - - 1 - - - - 1 - - - - 1 - - - - 1 - - - - 1 - - - - 1 - - - - 1 - - - - 1 179 Principal Fin Group - - - - - - - - - - - - - - - - - - - - 1 180 Principal Life Ins - - - - - - - - - - - - - - - - - - - - 1 181 Principal Real Estate - - - - - - - - - - - - - - - - - - - 1 182 RE Advisers - - - - - - - - - - - - - - - 1 183 Reich Invest Advisors - - - - - - - - - - - - - - - - - - - 1 184 Samuel Capital Mgt - - - - - - - - - - - - - - - - - - - 1 185 Santa Barbara Mgmt - - - - - - - - - - - - - - - - - - - - 1 186 Schafer Cullen Mgmt - - - - - - - - - - - - - - - - - - - 1 187 Securities America - - - - - - - - - - - - - - - - - - - 1 188 Selected Funeral - - - - - - - - - - - - - - - - - 1 189 Selective Ins of Amer - - - - - - - - - - - - - - - - - - - 1 190 Southern Farm Bureau - - - - - - - - - - - - - - - - - - - 1 191 Standard Insurance - - - - - - - - - - - - - - - - - - - - 1 192 State Street - - - - - - - - - - - - - - - - - 1 193 Stone Point Cap - - - - - - - - - - - - - - - - - - - 1 194 SunTrust DLR - - - - - - - - - - - - - - - - - - - 1 195 SWBC Invest Co - - - - - - - - - - - - - - - - - - - 1 196 TCG Advisors - - - - - - - - - - - - - - - - - - - 1 197 Trustmark Ins - - - - - - - - - - - - - - - - - - 1 198 UBS Asset Mgmt (PR) - - - - - - - - - - - - - - - - - - - 1 199 Union Bank - - - - - - - - - - - - - - - - - 1 200 United American Ins - - - - - - - - - - - - - - - - - - - - 1 201 United Heritage Srvc - - - - - - - - - - - - - - - - - - - - 1 202 Value Credit Partners - - - - - - - - - - - - - - - - - - 1 203 Ventura County CA - - - - - - - - - - - - - - 1 204 Voya Invest Mgmt - - - - - - - - - - - - - - - - - - - 1 205 Wall Street Access - - - - - - - - - - - - - - - - - - - - 1 206 Warburg Pincus - - - - - - - - - - - - - - - - - - - - 1 207 Wasmer & Schroeder - - - - - - - - - - - - - - - - - - 1 208 Whitebox Advisors - - - - - - - - - - - - - - - - - - - - 1 209 Whittier Trust - - - - - - - - - - - - - - - - - - - - 1 210 Winthrop Cap Mgmt - - - - - - - - IMF - - - - - - - - - 1 211 XFUND - - - - - - - - - - - - - - - 1 z z LL 0 i' Q Z a a Z Q LL 0 Al Y' RAMIREZ e wR cc n,ixc ec v Ramirez & Co., Inc. ("Ramirez") has prepared this material and any accompanying information exclusively for the client to whom it is directly addressed and delivered in anticipation of serving as an underwriter to you. As part of our services as underwriter, Ramirez may provide advice concerning the structure, timing, terms, and other similar matters concerning potential financings Ramirez proposed to underwrite. This presentation is not complete and should only be viewed in conjunction with any oral briefing provided and any related subsequent material and/or presentation. This presentation is for discussion purposes only. The information provided is based on information, market conditions, laws, opinions, and forecasts, all of which are subject to change. Ramirez is not obligated to update material to reflect subsequent changes. In preparing this presentation, information contained herein has been obtained from sources considered reliable, but Ramirez has not verified this information and does not represent that this material is accurate, current, or complete and it should not be relied upon as such. This presentation does not constitute a commitment by Ramirez to underwrite, subscribe for or place any securities or to extend or arrange credit or to provide any other services. This material is not research and does not constitute tax or legal advice. Unless otherwise stated, any views or opinions expressed herein are solely the opinions of the author but not necessarily those of Ramirez and such opinions are subject to change without notice. The material contained herein is not a product of a research department and is not a research report. In accordance with IRS Circular Disclosure 230: Ramirez does not provide tax advice. Accordingly, any discussion of U.S. tax matters included herein is not intended or written to be used, and cannot be used, in connection with the promotion, marketing, or recommendation by anyone not affiliated with Ramirez of any of the matters addressed herein or for the purpose of avoiding US tax related penalties. Additionally, Ramirez does not provide legal advice. Questions concerning tax or legal implications of materials should be discussed with your tax advisors and/or legal counsel. Ramirez is not acting as a financial advisor or Municipal Advisor. Ramirez is not acting as your financial advisor or Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended), and will not have a fiduciary duty to you, in connection with the matters contemplated by these materials. You should consult your own financial advisors to the extent you deem it appropriate. Any information and/or analysis contemplated by these materials are provided by Ramirez in our capacity as either an underwriter or potential underwriter of securities. Responsibilities of Ramirez as an underwriter. As an underwriter, Ramirez is required to deal fairly at all times with both municipal issuers and investors. Ramirez must purchase securities with a view to distributing securities in an arm's-length commercial transaction with the issuer and has financial and other interests that differ from those of the issuer. Ramirez has a duty to purchase securities from issuers at a fair and reasonable price, but must balance that duty with its duty to sell them to investors at prices that are fair and reasonable. Finance and Management Services https://www.santa-ana.org/finance Item # 23 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report May 18, 2021 TOPIC: Pension Debt Refinancing Update and Underwriter Selection AGENDA TITLE: Pension Debt Refinancing Update and Underwriter Selection. RECOMMENDED ACTION 1. Receive and File Pension Debt Refinancing Update. 2. Approve the Selection of the following Underwriter(s) to assist the City with refinancing its existing Pension Debt: • Bank of America Securities, Inc.- Senior Manager • Stifel Financial Corp. — Co -Manager Ramirez & Co., Inc. — Co -Manager EXECUTIVE SUMMARY On March 16, the City Council adopted a Resolution authorizing the initiation of Judicial Validation Proceedings (Validation) to refinance the City's employee pension debt. While the Validation is in process, Staff and the City's Financial Advisor, Urban Futures, Inc. (UFI), conducted a competitive procurement process for bond underwriting services. The Underwriter's role is to develop disclosure documents related to the City's potential debt, assist with a presentation to a credit rating agency, market the bonds to investors, and finally sell the bonds. DISCUSSION Subsequent to the March 16, 2021 City Council action, the City's Validation Counsel, Stradling Yocca Carlson & Rauth (Stradling), filed a validation action with the County of Orange Superior Court (Court). The Court has commenced the process to determine the City can refinance its existing employee pension debt. The Court distributed a publication of summons to all interested parties, which include the City's employee bargaining groups. The City is on track to receive a decision (i.e. judgement) from the Court on the legality of issuing debt to refinance its pension debt obligations. Pending any challenges to the summons, Staff anticipates receiving the decision within the next sixty (60) - ninety (90) days. Pension Debt Refinancing Update and Underwriter Selection May 18, 2021 Page 2 Request for Proposal (RFP) — Underwriter Services The City advertised Request for Proposal (RFP) No. 21-025 on February 19, 2021 via PlanetBids. In addition, UFI submitted the RFP directly to ten (10) established underwriting firms serving the municipal sector with experience in refinancing pension debt. A summary of the RFPs and offers received is as follows: 15 Vendors were notified 11 Vendors downloaded the RFP 0 Santa Ana vendors notified 10 Proposals received UFI evaluated all 10 proposals and recommended the City interview 7 of the firms. A Committee reviewed the proposals and conducted the interviews. The Committee included: • City Staff - Executive Director of Finance and Management Services Agency (FMSA) and Assistant Director of FMSA • Stradling Yocca Carlson Rauth — Validation Counsel • Urban Futures Inc. — Financial Advisor The Committee evaluated proposals based on the following factors: • Experience of Firm Personnel • Distribution Capabilities (i.e. ability to identify investors who will purchase the bonds) • Structuring of transaction ideas / Analysis of Transaction / related marketing plan for sale of debt • Proposed Fees The Committee determined the best approach was to select multiple underwriters, referred to as a "Syndicate", with one underwriter acting as the Senior Manager and two additional underwriters serving as Co -Managers. This approach ensures the City sells bonds at the lowest interest rate, to reduce borrowing costs and increase pension debt refinancing savings. After evaluating proposals and conducting interviews, the Committee recommends the following Underwriting Syndicate: • Bank of America Securities, LLC (BofA) , Senior Manager (Los Angeles, CA) • Stifel Financial Corp. (Stifel), Co -Manager (Los Angeles, CA) • Ramirez & Co, Inc. (Ramirez), - Co -Manager (Los Angeles, CA) BofA maintains a significant international presence with capacity to market and sell to both national and international investors; has experience issuing large pension debt refinancings within the State of California; and has experience leading various Underwriting Syndicates. Stifel specializes in municipal bonds, including pension debt Pension Debt Refinancing Update and Underwriter Selection May 18, 2021 Page 3 refinancing for cities located in Orange County (e.g. Huntington Beach and Orange). Ramirez was the City's underwriter for its two most recent debt issuances and is most familiar with the City's credit profile, and has relevant experience with pension debt refinancing. All three underwriters submitted well -researched, creative debt structures and marketing proposals to the City, demonstrating their ability to serve the City's needs. As an additional benefit, the proposed Syndicate of Underwriters have complementary strengths. The City will contract with its Underwriters via the Bond Purchase Agreement, which outlines the terms and conditions of the potential debt issuance along with the proposed underwriting fee of $1.75 per $1,000 bond. The Underwriting Syndicate has agreed to a fee split as follows: Fee Arranaement* • BofA 47.50% • Stifel 26.25% • Ramirez 26.25% Total 100.00% *Note: Subject to change based upon actual sales by each firm Below are the proposed duties for each member of the Syndicate: • BofA o Numerical and Structuring Analysis o Marketing Plan and Investor Outreach Coordination o Communication between the Syndicate o Review of relevant bond documents (i.e. official statement, etc.) o Participate on Market Update and Pricing call with the Financing Team • Stifel o Rating Presentation o Review of relevant bond documents (i.e. official statement, etc.) o Participate on Market Update and Pricing call with the Financing Team • Ramirez o Investor Online Roadshow o Review of relevant bond documents (i.e. official statement, etc.) o Participate on Market Update and Pricing call with the Financing Team Next Steps Assuming the Court makes its determination within sixty (60) - ninety (90) days, the preliminarily timeline for the Pension Debt refinancing follows. 1. Receive updated CalPERS data by July 2021. 2. Develop Bond documents such as the preliminary official statement and bond purchase agreement for City Council Consideration, potentially by September 2021. Pension Debt Refinancing Update and Underwriter Selection May 18, 2021 Page 4 3. Credit Rating Presentation by September 2021. 4. Issue bonds immediately thereafter. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT There is no fiscal impact associated with this action. Underwriters receive their compensation from the proceeds of the bond sales. The City cannot sell any bonds until the Court issues its final Judgment and the City Council approves the preliminary official statement. EXHIBIT(S) 1. Request for Proposal (RFP) # 21-025 — Underwriting Services for Pension Refinancing Bonds 2. Response to RFP # 21-025 — Bank of America Securities, Inc. 3. Response to RFP # 21-025 — Stifel Financial Corp. 4. Response to RFP # 21-025 — Ramirez & Co., Inc. Submitted By: Kathryn Downs, FMSA Executive Director Approved By: Kristine Ridge, City Manager