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<br />Attachment 3 <br />Analysis of Proposition lA "Securitization" Program <br /> <br />3) The City expects the State to pay a higher rate of interest on the $2.9 million than the <br />City could earn through its pooled investment program. The interest rate that the State <br />will pay agencies is scheduled to be announced on September 28, 2009. <br /> <br />8A <br />Page 29 <br /> <br />Recommendation <br />If staff can become confident that the proposed securitization will be a non-recourse financing <br />and that the City will receive substantially all of the $2.9 million being shifted by the State then <br />we recommend that Council authorize participation in this program. Participating will have the <br />affect of fully offsetting the State shifting $2.9 million of property taxes away from the City and <br />preserves much needed liquidity during these uncertain financial times. <br /> <br />Next Steps <br />Concurrent of writing this report we became aware of a webinar that will take place on <br />September 10th that will provide additional information. We will update the City Council the <br />evening of the Council meeting with the new information obtained. We will likely not have <br />answers to the threshold question~ listed above until anticipated clean-up legislation becomes <br />law. Once this happens we will review the legislation and consult with knowledgeable <br />professionals about this program and advise the Council of our findings. Based on the most <br />current information available agencies will need to decide whether to participate in this <br />program by October 28, 2009. <br /> <br />The program's goal is to sell bonds and disburse proceeds to participants before the end of the <br />calendar year. If the City Council does elect to participate in this program we need to keep in <br />mind that the California Communities JPA will need to sell Ml of the bonds in order for <br />participating agencies to receive the entire payment they are requesting. If investors do not <br />purchase all of the bonds then participating agencies will likely only receive a portion of the <br />funds that they are expecting. <br /> <br />;B!f~ <br /> <br />Brian Ponty, Finance Director <br />