REPORT TO COUNCIL
SUBJECT
Title
Approval of Second Amendment to the Reimbursement Agreement and Fee Letter Relating to City of Sunnyvale's 2009 Variable Rate Demand Refunding Certificates of Participation (COPs)
Report
BACKGROUND
The Variable Rate Demand Refunding Certificates of Participation, Series 2009A (Government Center Site Acquisition Project) (the "2009 COPs") were issued in June 2009 to refund Certificates of Participation, Series 2001A (Government Center Site Acquisition Project) issued in 2001 to fund the purchase of the Sunnyvale Office Center property located at 505 West Olive Avenue. The 2009 COPs are backed by a direct draw letter of credit (the "Letter of Credit") from the Bank. The Letter of Credit was issued pursuant to a Reimbursement Agreement, dated as of June 1, 2009 between the City and Union Bank, N.A., now MUFG Union Bank, N.A. (the "Bank").
The Letter of Credit had an initial expiration date of June 1, 2012 and was issued for an annual fee of 1.00% times the outstanding Letter of Credit amount. The Letter of Credit was extended to June 1, 2015 pursuant to a First Amendment to Reimbursement Agreement and for a reduced annual fee of 0.90% times the outstanding Letter of Credit amount. The outstanding balance on the 2009 COPs is $12,795,000.
The Letter of Credit has allowed the City to experience extraordinarily low borrowing costs. The interest rates on the 2009 COPs for each of the past five years are as follows:
Year
Average Rate
2010
0.28%
2011
0.19%
2012
0.17%
2013
0.09%
2014
0.04%
2015 (YTD)
0.03%
EXISTING POLICY
Council Fiscal Policy 7.1F.2 Debt Management Policies - Debt Issuance:
F.2.3 An internal feasibility analysis will be prepared for each long-term financing which analyzes the impact on current and future budgets.
F.2.10 Fixed or variable rate financing may be used, depending on the cost benefit to the City of each option.
ENVIRONMENTAL REVIEW
N/A
DISCUSSION
The current Letter of Credit...
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