Finance Highlights 2011 1202 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: December 2, 2011 TO: Finance Committee FROM: Lianne Marshall, Interim City Manager BY: Jim O'Leary, Interim Finance Director SUBJECT: Resolution Authorizing the Sale of Pension Obligation Bonds to Refinance Outstanding Side Fund Obligations of the City to the California Public Employees' Retirement System, Approving the Final Form of Related Financing Documents, and Approving Official Actions RECOMMENDATION Staff recommends that the Finance Committee recommend City Council approval of the resolution authorizing issuance of pension obligation bonds, approving the final form of the related financing documents, and approving official actions to refinance the outstanding Public Safety side fund obligations of the City. The bond transaction would refund the existing Ca1PERS side fund obligation over the same term in the same total amount, plus issuance costs (less $6,000,000 to be borrowed from the Water Pollution Plant Fund for the initial pay -down of the side fund obligation) and take advantage of lower bond interest rates. Financing documents include the Indenture of Trust between the City and U.S. Bank National Association, Bond Purchase Agreement, and the Official Statement and Continuing Disclosure Certificate. BACKGROUND The City's Safety Plan in the Ca1PERS retirement system is a cost - sharing multiple - employer plan with pooling (cost- sharing) arrangements for participating employers. All risks, rewards, and costs, including benefit costs, are shared and are not attributable to the individual employers. A single valuation covers plan members and the same contribution rate applies to all employers. A menu of benefit provisions and other requirements are established by state statute within the Public Employees' Retirement Law. The City has contractually selected optional benefit provisions from the benefit menu and adopted these benefits by City Council resolution. At the time the City was required to join the Safety Risk Pool in 2004, a side fund was created to account for the difference between the funded status of the pool and the funded status of the previous City Plan. Today, the City's total outstanding Ca1PERS pension obligation and the required annual employer contribution is determined by the City's share of the Safety Risk Pool and separate amortization of the City's side fund. The proposed transaction would refinance the existing side fund obligation to take advantage of low bond market rates. It would not change benefits owed to existing or prior employees.