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6.1.C. - Page 46
<br />Ca1PERS, and the lower rate paid to bondholders, resulted in $7 million in net present value
<br />savings. 163 However, these bonds did not solve Daly City's pension problems. As of June 30,
<br />2017, Daly City had a remaining unpaid balance of $22.8 million on these bonds, which mature
<br />on August 1, 2022.164 In evaluating Daly City's total Unfunded Liabilities and pension costs in
<br />Appendix A, the reader should take into account that Appendix A does not reflect Daly City's
<br />outstanding balance on the bonds, nor the annual costs of repayments of principal and interest on
<br />the bonds (which totaled approximately $3.54 million in FY 2016-2017).165 If these amounts
<br />were included, then Daly City's FY 2016-2017 Unfunded Liabilities in Appendix A would rise
<br />from $139.86 million to $162.66 million and its annual pension costs would rise from $11.63
<br />million to $15.17 million. Daly City's interest payments on the bonds, however, do remain lower
<br />than the interest it would otherwise have had to pay on Unfunded Liabilities.
<br />In 2013, the City of San Bruno issued $13.2 million in pension obligation bonds. 166 The City of
<br />Brisbane issued $4.7 million in pension obligation bonds in 2006 and took out a $1.6 million
<br />loan in 2013 to pay off certain pension obligations,167 and the City of Burlingame issued $33
<br />million in pension obligation bonds in 2007.161
<br />An analysis of the risks and benefits of pension obligation bonds is beyond the scope of this
<br />report. See the Government Finance Officers Association's analysis of pension obligation bonds
<br />for an analysis of the reasons not to issue such bonds. 169
<br />(6) Shorten Amortization Periods.
<br />The Cities may instruct Ca1PERS to shorten the Amortization Period of their Unfunded
<br />Liabilities. That would increase their contribution costs in the short-term but decrease aggregate
<br />interest costs over the long-term. 170 Such a decision, however, is irrevocable. Once it has
<br />shortened an Amortization Period at the request of an Agency, Ca1PERS will not subsequently
<br />increase it at the request of the Agency. 171 The City of Palo Alto, although outside the borders of
<br />the county, has stated that it is looking at this option. 172 In essence, asking Ca1PERS to shorten
<br />163 City of Daly City, Comprehensive Biennial Operating and Capital Budget, Fiscal Years 2017 and 2018, p. 25,
<br /><htto://www.dalvcity.ora/Assets/Dei)artments/Finance+and+Administration/O_neratinL,+Buda_ et+2017-2018._Ddf>.
<br />161 City of Daly City, 2017 CAFR, p. 15.
<br />161 City of Daly City, 2017 CAFR, p. 53.
<br />166 City of San Bruno, Fiscal Year 2013-14 City Council Adopted General Fund, Enterprise Funds, Internal Service
<br />Funds and Special Revenue Funds Operating Budget, p. K-4,
<br />https: //www. sanbnmo. ca. gov/civicax/filebank/blobdload. aspx?B lobID=23046
<br />161 City of Brisbane, 2014 CAFR, pp. 54, 55 and 59,
<br /><httD://brisbaneca. orgJsites/default/files/brisbane%20cafr%20ocr.Ddf>.
<br />161 City of Burlingame, 2010 CAFR, p. 60,
<br /><httos://www.burlinaame.ora/document center/Finance/Comprehensive%20Annual%20Financial%2ORe_Dorts/CAF
<br />R0/o2009-10.ndf>. City of Burlingame, Fiscal Year 2017-18 Adopted Budget, p. x.
<br />169 League of California Cities, 2018 Retirement System Sustainability Study, pp. 6 and 33.
<br />leo Lin, Bianca and Yam, Wai Man, City of Menlo Park Miscellaneous and Safety Plans, CaIPERSActuarial Issues
<br />— 6130115 Valuation Preliminary Results, Bartel Associates LLC, May 2, 2017, p. 48.
<br />In Interviews by Grand Jury.
<br />172 Keene, James, Palo Alto City Manager, Letter to Tamara L. Davis, Deputy Manager, Jury Services, Santa Clara
<br />County Civil Grand Jury, January 30, 2017, p. 1, (Updated response to 2011-12 Santa Clara County Civil Grand
<br />2017-2018 San Mateo County Civil Grand Jury 32
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