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Refunding of the 1999 Certificates Page 2 of 3 March 16, 2007 Therefore, the total nominal dollars savings from the refunding of the Prior Certificates would be approximately $3,442,074. The present value of these future savings is estimated to be $2,105,108 for a net present value savings as a percentage of the outstanding Certificates of 8.92%. The industry rule of thumb is that anytime the net present value exceeds 3% the City should undertake the refunding. The refunding would be an advance refunding because the first call date for the Certificates is November 1, 2009. A bond issue is only allowed one advance refunding. Therefore, after this advance refunding, under current law, the City must wait until the refunding certificates (the "Refunding Certificates") can be current refunded before the City can undertake a refunding of the Refunding Certificates. This would more than likely be at least ten years before the Refunding Certificates could be refinanced assuming future interest rates warranted it. The refunding is a current refunding if it is issued no more than 90 days prior to the call date of the refunded obligations. Financin2 Structure In 1999, the City pledged the Library and Fire Stations 9, 12, and 13 as collateral for the Certificates. At that time all four projects were required because the transaction required additional collateral. Today, the plan is to remove the three fire stations from the collateral for the Certificates and to only pledge the Library Community Center as collateral for the Certificates. Staff and the consultants think this will be possible as a result of the Library Community Center having a current appraised value of approximately $26 million and the amount ofthe Refunding Certificates should be approximately $25.345 million. The transaction is being structured as a 21-year fixed rate certificate issue. As mentioned earlier, the Refunding Certificates will be sold through a competitive bid process with the Refunding Certificates being awarded to the underwriter with the lowest total interest cost. In order to proceed with the financing, it is necessary that the City Council approve the execution of certain legal documents induding a Lease Agreement, a Trust Agreement, and an Escrow Agreement, authorizing the competitive sale of the certificates and directing the Direction of Finance to accept the lowest bid, approving the Official Statement in substantially final form, and authorizing other related actions in connection with the financing. It is also necessary for the San Leandro Public Financing Authority (the "Authority") to adopt a resolution directing the execution of certain legal documents. These documents will be prepared by Staff and the necessary consultants. The current schedule calls for these documents to be presented to Council for their approval at their May 7, 2007 meeting. Financin2 Team Participants City Staff received bids from three different firms to underwrite the bonds and serve as financial advisor to the City. The firms include Citigroup, Sutter Securities and E. Wagner and Associates. Based on a review of these proposals, fees and experience with the City and their prior experience with the 1999 Certificate issue, Staff is recommending that the City work with the following firms in the following capacities: