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RFP No. 21-025 <br />EXHIBIT B <br />Evaluating the Opportunity Cost requires you to decide whether to continue to fund/increase <br />reserves or to pay down the UAI . Currently, the City's pension liability is accruing at 7.00% rate, <br />while the City's investments are earning 1.016% as of October 2020. Under these investment <br />parameters, the City should seek to pre -pay its UAL when excess reserves or 1-time monies <br />become available. <br />Fhe GLy shocitd+:rrrrsicfermakim? '31 3.5 nullhun Frrayincitts (AEIF's) <br />to CoUlf /V>. Ifw Wawr 6 rDrirrprisi ;brace o/ the urrflrrrded habliny fs . l ;.S rmllion rims is <br />,.M.ffed by ocnr !"nrorrD pe t mone/. 'Fa rnuxirrrr.w oveiall I avin(V, the ADP sJruvld torget <br />A/liscellrse�rous F3ra,r- il1b (avrrnr'tiz�r'f rwrrZ7yEe7rJ -,; PL4 rrDrBlovn. <br />By making $13.5 million in ADPs (tram Water Fund reserves) and selecting Base N16 the City <br />would eliminate $31 million in UAL payments (Net savings = $17.5 Million)and would fully fund <br />the Water Enterprise's current UAL. <br />54,500,000 <br />..}3,404D,rt16DLD <br />$3,00,11,600 <br />ti.J','s SDQD,rtJ....fPCP <br />$2,Lo o,1dm <br />{n �.,.EGDb'D, 61GDeD <br />{ta, a,Pt.ADP.414'P4A <br />5500,0001 <br />r1,0, <br />ADIPI (Base 916 • $1 G,'.I: Milllio n Water IPiand <br />■ Original INiyrn-r!nts <br />x+d nY+8- !4 tf.'r I`� Ot➢ lye Q:A d+l vp t:f rh •.iY I"w M! <A !h W 1`� YHl <br />I'+➢ .1Y <br />11 .1 ID 11 Q13 IT, C, hl tn➢ pY dv4 dv4 'v) r., fj iI5 ^:A k ^:A 4:A �,j' ag- •y ':p +p- <br />I"'A I"A f+A f+A M1A fM 1"'4 1"'4 1"'4 Y"d Y d 1"'4 PA PA PA PJ PJ YV Y"J 11 r•1 r•1 Y'd IN I"A 1"A f+, <br />• Pro-Rata reduction in balance & payments <br />• $31 Million Total Savings / $17.5 million Net Savings <br />Leveraged Refunding <br />The City will be presented with opportunity to refund its outstanding bonds periodically. In such <br />instances, the City should consider a "leveraged Refunding". A leveraged refunding structures <br />the refunding bonds with "up -front" savings in the first few years, then applies these savings to <br />pay for a portion of the City's UAL. When applied to a long-term base, the saving from the bond <br />refunding could be leveraged in 2.0 — 2.5X times greater pension cost savings. <br />City Council 23 — 48 5/18/2021 <br />