1. Rose Bowl Refunding Bonds Series 2018 A&B
October 22, 2018

2. Recommendation 1. Find the proposed action is not a project to CEQA as
defined in Section of CEQA, and as such, no environmental document pursuant to CEQA is required for the project; and
2. Hold a TEFRA hearing pursuant to Section 147(f) of the Internal Revenue Code of 1986; and
3. Adopt a resolution of the City Council of the City of Pasadena
approving the issuance of not to exceed $50 million and authorizing
the execution and delivery of a second amendment to amended and restated lease, third amendment to amended and restate sublease, purchase agreement, continuing disclosure agreement, preliminary official statement and final official statement in connection therewith,
and authorizing the taking of certain actions in connection therewith;

3. Recommendation (continued)
4. Approve the termination of the swap with Deutsche bank. It is recommended that the Pasadena Public Financing Authority: 5. Hold a public hearing pursuant to section (a)(2) of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California. At the public hearing the Authority will consider benefits. “Significant public benefits” include, among others, demonstrable savings in effective interest rate, bond preparation, bond underwriting or bond issuance costs

4. Recommendation (continued)
6. Adopt a resolution authorizing the issuance of lease revenue bonds in an amount not to exceed $50 million and the execution and delivery of a second amendment to amended and restated lease, third amendment to amended and restated sublease,
purchase agreement, escrow agreement, preliminary official statement and final official statement, and authorizing the taking of certain actions in connections therewith.

5. Background
In 2006, PPFA issued variable rate demand lease revenue bonds in the aggregate amount of $47.3 million.
Concurrently with the bonds, the City synthetically fixed the rate by entering into an interest rate swap agreement with Deutsche Bank.
In 2011, the bonds were privately placed with MUFG Union Bank with an initial term until 2015.
In 2013, the bonds were restructured and partially refunded to raise additional $30 million by issuing the 2013 A&B Series in the amounts of $34 million and $ million respectively.
The 2013 A&B bonds had an initial mandatory tender date of January 2, 2018 and were remarketed with a new mandatory tender date of January 2, 2019

6. Refunding Plan
Given the shape of the taxable and tax exempt yield curves, it is most advantageous to refund the outstanding 2013A&B series at a fixed rate with conventional fixed rate bonds.
Terminate the interest rate swap agreement with Deutsche bank.
Estimated interest cost is currently at 3.83% for the tax-exempt Series A bonds.
Estimated interest rate cost is currently 3.80% for the Series B taxable bonds.

7. Benefits This strategy will eliminate:
Interest rate risk – As short-term rates are expected to increase;
Eliminates the counterparty risk associated with the swap;
Eliminates the basis risk;
Eliminates the tax risk;
Refunds the hedged portion with the swap (4.02% synthetic rate) at a lower 3.83% rate;
Eliminates the debt service spike in 2024 by restructuring the principal amortization of the 2018B taxable bonds.

8. Debt Service Payments

9. Fiscal Impact Current After refunding Total D/S 2019 10,886,138
10,978,298
92,160
2020
11,068,735
11,377,559
308,824
2021
11,259,953
11,780,737
520,784
2022
11,522,893
12,183,363
660,470
2023
11,686,012
12,588,172
902,160
2024
13,627,073
12,993,683
-633,390
2025
13,828,443
13,392,219
-436,224
2026
14,028,523
13,795,338
-233,185
2027
14,224,984
14,200,877
-24,107
2028
14,711,680
14,605,102
-106,578

10. (Negative Indicates Savings)
Sensitivity Analysis
Summary of Options
Structure
EXISTING
OPTION 1
OPTION 2
OPTION 3
OPTION 4
DESCRIPTION
Existing Structure
Smooth-Out FY 2024
Constant $
Constant %
All Taxable
RESTRUCTURING ECONOMICS
Total Payments
$72,426,254
$72,851,912
$73,478,413
$75,018,981
$78,743,802
Nominal Delta from Existing --
$425,658
$1,052,162
$2,592,730
$6,317,549
Present Value (PV) of Delta
$559,602
$680,833
$941,472
$3,936,801
Rate Sensitivity of PV Delta
EXISTING Rates +0.25%
($680,367)
($555,792)
($290,487)
$2,772,794
EXISTING Rates +0.50%
($1,920,334)
($1,792,414)
($1,522,443)
$1,608,789
EXISTING Rates +1.00%
($4,400,273)
($4,265,665)
($3,986,360)
($719,226)
(Negative Indicates Savings)

11. Fiscal Impact – Difference in the Net Annual Increase
Current
Refunding
Est D/S FY
Increase
Difference
2020
182,597
399,261
216,664
2021
191,218
403,178
211,960
2022
262,941
402,627
139,686
2023
163,119
404,809
241,690
2024
1,941,061
405,511
-1,535,550
2025
201,370
398,537
197,167
2026
200,080
403,118
203,038
2027
196,461
405,539
209,079
2028
486,696
404,225
-82,471
2029
244,374
377,277
132,903
2030
177,975
182,250
4,275
2031
186,488
189,125
2,638

12. Rates – 2YRT

13. Fiscal Impact (continued)
Estimated True Interest Cost
2018A Tax-Exempt – 3.83%
2018B Taxable – 3.80%

14. Sources and Uses of Funds
Sources Bond Proceeds: -Par amount 44,715,000 -Net Premiums 2,902,099 Other sources -Swap termination payment 800,000 -Interest set-aside (max rate 12%) 488,198 -rounding 35 Total 48,905,332 Uses Refunding Escrow deposit 47,733,198 Delivery date Expenses - Cost of Issuance 259,250 - Underwriter’s Discount 109,603 Other Uses -Swap Termination fee 800,000 -Contingency 3,281

15. Schedule October 18 – Ratings presentation
October 22- Council presentation
Week of Nov 5 – Obtain ratings and Print POS
Week of Nov 5 – Marketing of Bonds
Nov 13 – Pre-pricing
Nov 14 – Pricing the Bonds
December 6 – Close the financing