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From YouTube: San Bruno City Council Meeting June 26, 2012 10a.
Description
San Bruno City Council Meeting June 26, 2012
10a. Authorize the Issuance of Pension Obligation Bonds
A
Continuing
with
cognitive
business
out
of
10
a
which
is
our
last
item,
received
report
and
adopt
resolution
authorizing
the
issuance
of
pension
obligation,
bonds
to
refinance
the
outstanding
side
fund,
obligation
of
the
city
to
the
California
Public
Employees,
Retirement,
Fund
and
authorizing
the
institution
of
judicial
validation.
Proceedings.
B
Thingy
bit
of
a
mouthful
there,
honorable
mayor
members
of
the
City
Council
I
I,
touched
on
this
topic
back
at
the
second
budget
study
session,
so
I'm
just
going
to
review
some
of
what
I
discussed
at
that
time.
So
as
you'll
recall
back
in
2003,
CalPERS
combined
retirement
plans
for
those
agencies
that
had
fewer
than
100
employees
in
a
unit
in
two
groups
into
risk
pools
in
an
attempt
to
reduce
the
volatility
of
employer
contribution
rates.
B
Our
safety
pool
our
police
and
fire
was
one
of
those
groups
that
was
merged
into
a
risk
pool
at
the
time
that
that
that
the
police
and
fire
the
safety
unit
was
merged
into
the
risk
pool
a
what
was
called
an
unfunded
liability
was
assessed
at
that
point
in
time,
which
essentially
is
amortized
over
a
25-year
period
to
the
city
for
repayment.
So
at
that
point
in
time
that
the
city
joined
that
risk
pool,
there
was
the
outstanding
amount
that
was
owed,
and
that
is
going
to
be
amortized.
That
has
been
advertised
over
25
years.
B
As
of
our
most
recent
pers,
actually
evaluation
report
in
october,
two
thousand
eleven
that
outstanding
side
of
funds
stands
at
just
over
13
point:
1
million
that
accounts
for
eleven
point.
Eight
percent
of
our
total
at
the
employer's
contribution
rate,
basically
one-third
the
employer
contribution
rate
for
the
safety
employees
is
just
over
thirty
six
point.
Six
percent
currently
and
of
that
36.6
percent.
11.8
of
that
consists
of
the
repayment
of
the
side
fund,
the
rate
of
interest
that
the
city
is
charged
on
the
side
fund
and
seven
point:
seven:
five
percent.
B
We
do
know
that
that
rate
will
be
lowered,
come
july,
two
thousand
thirteen
to
seven
point
five
percent.
However,
staff
believes
that
even
at
this
reduced
rate
of
return
at
that
there
are
significant
potential:
significant
savings
from
refunding
the
side
fund
through
the
issuance
of
bonds
or
another
form
of
debt
out
of
much
lower
interest
rate.
B
We're
not
going
out
an
issuing
new
debt
that
this
is
a
debt
that
already
exists
and
that
we
are
essentially
just
refinancing
refunding
that
existing
debt,
so
the
action
that
is
being
presented
before
you
tonight
authorizes
the
beginning
of
the
judicial
validation
proceedings
and
it
signifies
the
city's
intent
to
pursue
the
issuance
of
pension
obligation
bonds.
It
does
not
authorize
the
actual
issuance
of
bonds,
that's
not
something
we
were
prepared
to
do
at
this
time.
B
It
essentially
just
gets
the
clock
running
on
obtaining
this
validation,
as
that
process
alone
is
anticipated
to
take
somewhere
in
the
neighborhood
of
90
to
120
days
and
during
this
time.
While
that
validation
process
is
occurring,
the
city
can
work
with
its
outside
financial
advisor,
to
put
together
a
proposed
financing
plan
that
will
be
brought
back
to
the
City
Council
for
further
review.
If
the
city
does
move
forward
with
the
issuance
of
pension
obligation
bonds
at
a
later
date,
all
costs
associated
with
the
issuance
of
that
transaction
would
be
incorporated
into
the
financing.
B
However,
if
the
city
chooses
was
to
choose
not
to
pursue
the
issuance
of
bonds,
the
the
judicial
validation
process,
there
is
a
cost
of
7,500
dollars
involved
with
this
process
that
we
would
have
to
pay.
Should
we
choose
not
to
move
forward
with
the
issuance
of
the
bonds.
So
that
concludes
my
presentation.