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STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST. Vic Erganian Deputy Finance Director/City Treasurer Finance Committee/City Council September 8, 2014. BACKGROUND. In 2000, the City issued $32.385 Million bonds – Paseo Colorado Bonds.

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standby bond purchase agreement with bank of the west

STANDBY BOND PURCHASE AGREEMENT WITH BANK OF THE WEST

Vic Erganian

Deputy Finance Director/City Treasurer

Finance Committee/City Council

September 8, 2014

background
BACKGROUND
  • In 2000, the City issued $32.385 Million bonds – Paseo Colorado Bonds.
  • Bonds were issued as Taxable Variable Rate Demand Lease Revenue Bonds (VRDBs) and refunded in 2008.
  • VRDBs legally require a liquidity facility such as a standby bond purchase agreement or a letter of credit.
  • In 2000, the City entered into a SBPA with KBC Bank. The SBPA expires on 9/15/2014.
  • Staff extended the SBPA to March 2015 and concurrently issued an RFP for a new SBPA.
slide3

BACKGROUND

  • The City issued the RFP to 28 banks including several banks located and/or headquartered in Pasadena.
  • The City received two responses:
    • Bank of the West
    • Mitsubishi UFJ Financial Group (MUFG)
  • Both banks have presence in Pasadena.
slide4
Staff recommends entering into a new SBPA with Bank of the West for a term of five years.
  • Annual SBPA fee will be 0.30% versus the current fee of 0.58%
slide5

FISCAL IMPACT

  • The City will save $48,000 in FY2015 and $292,500 during the remaining term of the contract.
  • The City’s cost of the borrowing will be:
    • SBPA fee 0.30%
    • Current interest 0.35%
    • Remarketing fee 0.08%

Total: 0.73%

  • One-time cost of reissuing the bonds will be approximately $164,000.
slide6

RATINGS

  • S&P affirmed its rating of AA+/A-1 for the bonds.
  • Fitch affirmed its short-term rating of F1 for the bonds.
recommendation
RECOMMENDATION

Joint Action: City Council and PPFA

Adopt a resolution approving the form of and authorizing the execution and delivery of a standby bond purchase agreement with Bank of the West; approving the form of and authorizing the distribution of a reoffering memorandum; and authorizing the execution and delivery of other related documents and approval of other documents and actions in connection therewith

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