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SUMMARY ANALYSIS OF FINANCING OPTIONS Background 06/18/2012 Attachment 2 May 30, 2012 At the Commission's March 14 meeting the Port's financial advisor, William Euphrat Municipal Finance (WEMF), updated the Commission on the status of the various financing options being considered by staff. These options are summarized below: 1. Commercial banks contacted by the Port are not willing to extend credit to the Port. 2. A public offering of the Port's bonds is a viable option. 3. The State's I -Bank was a pending option, but the I -Bank has since declined to lend to the Port, citing it's mission as a lender of last resort and staff's determination that the Port has adequate alternative access to the market. 4. GE Capital submitted a loan proposal that staff had not yet had time to evaluate. GE proposed both an adjustable rate and a fixed rate loan, each fully amortized over 20 years. Commissioner Claire requested that staff evaluate the cost savings that might accrue if the City "wrapped" its credit around the Port's bonds (City guaranteed bonds). This could be accomplished through the City's public financing authority with the City offering investors a lease revenue bond secured by its general fund and the Port selling to the authority a revenue bond, the payments on which would reimburse the City for its lease payments. Analysis WEMF compared five financing alternatives: • The 20 -year GE loan proposal received by the Port, • A 20 -year BBB -rated Port revenue bond, • A 20 -year AA -rated City lease revenue bond, • A 30 -year AA -rated City lease revenue bond, and • A 30 -year BBB -rated Port revenue bond. WEMF evaluated these options comparing among them the all -in True Interest Cost (TIC) a present value measure of interest cost that reflects the time -value of money and treats the underwriter's discount and other costs of issuance as prepaid interest, the amount of annual debt service and total debt service, and the ability of the Port to 1 RESO. # 15199 MUFF # 505