|
II. FINANCING, CREDIT AND MARKETING APPROACH
<br />A. Savings Analysis
<br />Present a.retvings analysis fir reftn iding the ontsianding bonds through a negotiated bond safe,
<br />Refunding Summary. As discussed below, we believe the refunding program may garner an "AA -" rating. We have
<br />therefore presented a pair of refunding analyses reflecting an "A" rated base case (corresponding to the rating of the
<br />2011 Bonds) with bond insurance and a reserve surety, and the "AA-" upgrade scenario. The table below suumarizes
<br />these outcomes:
<br />"A" Rated $158396 $2,27355 7.96% Yes Yes lime
<br />015tucd savings
<br />"AA =" Rated $187,715 $2,681,168 9.58% No Yes Level
<br />Savutgs
<br />As an alternative, the Agency can pursue an "upfront" savings
<br />structure to increase cash flow directed to the taxing entities in the
<br />near term. In this scenario, the refunding would demonstrate
<br />approximately $2.3 million of savings through 2017, thereafter
<br />cash flow savings would be minimal,
<br />2015: $1587,616
<br />W' Raced 2016: 5628:105 Up6ont
<br />Insured 2017: 575,905 78:191 814% Yes Yes SaveWn
<br />2018 -2031: $3,206
<br />2015: 5060.483
<br />7016. $637,505 Uprmnt
<br />"AA,'yintoS 20 17: 8320,305 V.691 -150 9.62 ^% No Yes avor gs
<br />S
<br />2018 -2031: 91206
<br />J.00f6
<br />9.154:
<br />a949i
<br />4.9Md
<br />0.1Cfl6
<br />0.3496
<br />toll
<br />035%
<br />063%
<br />44ffll
<br />0.12 n
<br />U3�6
<br />4,043°6
<br />035%
<br />oar.
<br />-W.
<br />035%
<br />07r,
<br />5S000
<br />0.30%
<br />um
<br />SVs
<br />0.lsl'
<br />Les's
<br />sip.
<br />0.32%
<br />tAr.
<br />3.w%
<br />0209.
<br />135%
<br />9.694
<br />033?+
<br />151011.
<br />519s
<br />U' 6
<br />1.664:
<br />iW9:
<br />040%
<br />214%
<br />S.W;
<br />11251.
<br />1936.
<br />JIM Sofia,
<br />040%
<br />43 %
<br />5A0'A'
<br />a3twb
<br />IM 9.11
<br />04tes
<br />24794
<br />5.0696
<br />om
<br />231%
<br />5.WP6
<br />045%
<br />ikl%
<br />sm
<br />615%
<br />25:6
<br />JIM 5b7,.
<br />09096
<br />278%
<br />3_oas,
<br />09W5
<br />26".
<br />5A0°m
<br />0-55%
<br />293%
<br />s.IX
<br />OS5%
<br />2&1%
<br />5m
<br />ow0
<br />3p59.
<br />S.Ovs
<br />om&
<br />Z'u%
<br />sms
<br />055%
<br />3.1596
<br />S.wf
<br />USSva
<br />3.0.5%
<br />5.wi
<br />0.70',6
<br />3.'596
<br />5tll
<br />UMP=
<br />mss.
<br />IBM 3.0:
<br />070%
<br />330%
<br />SWIs
<br />06(i'l-
<br />3?096
<br />smq
<br />0.7U,,
<br />335'6
<br />sms
<br />A5094
<br />3'5 °'e
<br />PWmvr nulu: RuIYmAlnprvsWluvu M�xl
<br />ml:nlW Iwol1111
<br />$Rllly wltlah,,,
<br />la all 'AM "
<br />un "ilttinsrinh,nenng,reaa
<br />nun Ixwmhtmnwan
<br />nL
<br />MAll
<br />�Nn6'Y, eon snnlelnam loons.
<br />RvGn ?inn Mntlyawmmannmltlaicn
<br />a Aanala
<br />014rsl
<br />f3W2n I5. All
<br />ni ax0
<br />mm�M+xurc
<br />... llmumry mA.,biwl,o
<br />dmnye.
<br />The table to the right contains the scale used to reach these savings figures.
<br />A Finmrcing and CG'edit Approacli
<br />Oattine your financing and credit approach as well as your rnarketing streliegy for the City's proposed financing in it of VilllVot market
<br />conditions.
<br />Stifel's financing and credit approach is geared toward developing the most efficient financing structure possible
<br />thereby enabling the Agency to capture the lowest borrowing cost possible. To this end, we have developed the
<br />following ideas regarding the financing program:
<br />Getting the Financing Structure Right. In our review, under the bond documents and AB 1484 we believe the
<br />Agency has three theoretical options in structuring the refunding of the 2003 Bonds -1) a refunding on the same basis
<br />as the existing bonds, 2) a subordinate pledge after the 20 t 1 Bonds, utilizing the RPTTF and 3) a parity pledge to the
<br />2011. We recommend the Agency choose the last option for the following reasons:
<br />Rr funding oil the same basis as the 2003 Bonds — Based on our reading of the 2011 Bond documents, this approach
<br />was closed off when that latter issue was sold. As a practical matter, this approach would continue the already
<br />complex current structure, maintaining the 2011 Bonds' subordinate claim on the South Main Component.
<br />Refunding on a subordinate basis to the 2011 Bonds — We have utilized this approach in a number of transactions to
<br />take advantage of the pledge of revenues into the RPTTF allowed under AB 1.484, This allows for a de facto merger of
<br />project areas, a strategy the Riverside utilized to achieve a higher rating ( "AA - ") for its subordinate bonds than its
<br />senior bonds. In Santa Ana's case, however, the original project areas are already merged, which eliminates much of
<br />the upside of this approach.
<br />Parity pledge to the 2011 Bonds — We recommend this approach as our Goldilocks strategy —"just right" for the
<br />Agency, With this, the refunding captures a first lien on all of the Merged Project, losing the senior claim on the South
<br />Main Project, but picking up a claim on all the other components. Further, as discussed below, coverage will be
<br />enhanced with the elimination of the Housing Set - Aside. With a simpler, more compelling story, we will argue with
<br />Standard & Poor's that the appropriate rating for the 2011/2015 Bonds should be "AA - ", rather than the current "A"
<br />CITY OR SANTA ANA 3 -142 Page 5
<br />
|