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File Number: 17-700 <br />minimum NPV savings should be at least 3-5% of refunded par. Those savings would then be <br />realized by the various taxing entities that receives shares of the property tax inclome that was <br />previously allocated to the Redevelopment Agency, which includes the City of San Leandro. <br />City staff emphasizes that these savings are estimates based on the current market and <br />other issuance assumptions such as assumed rating, and will not be certain until the <br />Refunding Bonds are priced in March 2018. Interest rates can rise or fall significantly in just a <br />matter of weeks and there is no way to predict accurately what the municipal market will look like <br />months from now. But if municipal yields rise by an average of 50 basis points (.50%, or one-half <br />of 1%), total nominal savings will fall to $7.1 million, which is total PV savings of $3.2 million. This <br />translates to NPV savings of 14.3% of refunded par, which would still be an excellent refunding <br />result. <br />Table 1 in Attachment 1 compares debt service on the 2008 TABs compared to estimated <br />refunding debt service and shows both nominal and PV debt service savings, on an annual and <br />aggregate basis. The $1,878,857 in “prior funds” that are subtracted from gross PV savings <br />upfront mostly represents the 2008 debt service reserve fund, which represents prior bond <br />proceeds and therefore not savings. The Refunding Bonds assume purchase of a surety in place <br />of a funded reserve. <br />The City will directly realize only a modest portion of the debt service savings from this refunding. <br />Table 2 shows that the City receives 12% of the property tax revenues from the project area, with <br />other public agencies receiving the rest of the revenues and therefore the same proportion of <br />nominal and PV savings. <br />Financing Structure and Process <br />State law now allows only for the issuance of refunding tax allocation bonds and does not allow for <br />funding new projects. After the Council acting as the Successor Agency Board approves the <br />initial financing documents for the Refunding Bonds, the County Oversight Board must approve <br />and then the State Department of Finance has 60 days after receipt of these approvals to give its <br />authorization. This long approval process is why pricing is not expected until March 2018. <br />This refunding is structured as an “advance” refunding, meaning the closing date is anticipated to <br />be more than 90 days in advance of the first optional call date of 9/1/18 on the 2008 TABs. <br />Congressional tax reform efforts include proposals to prohibit advance refundings, which means <br />local agencies throughout the country would be limited to “current” refundings where the refunding <br />closing date is within 90 days of the first optional call date on the debt to be refunded. There is a <br />possibility that we may have to delay pricing to May 2018 so that we can close in early June to be <br />within the 90-day current refunding window. There is no way to accurately predict what will happen <br />to interest rates during this period. <br />The Financing Team <br />Staff has been working with the firms listed below to bring this financing transaction to the Council <br />acting as the Successor Agency Board for approval. Therefore, the resolution of issuance to be <br />adopted by the Council acting as the Successor Agency Board directs staff to enter into <br />agreements for consulting services with the following firms in the following capacities: <br />Page 2 City of San Leandro Printed on 12/12/2017 <br />409