HomeMy WebLinkAboutAttachment No. 2 Defeasance MemoPF �.
The PFM Group
Public Financial Management, Inc.
PFM Asset Management LLC
PFM Advisors
Memorandum
Attachment No. 2
633 West Fifth Street
Suite 6700
Los Angeles, CA 90071
June 11, 2010
To: Jeanette Ladrido, Director of Finance, City of National City
From: Julio Morales, Senior Managing Consultant, Public Financial Management, Inc.
Re: HUD 108 Loan, Series 2003 A — Defeasance
213 489-4075
213 489-4085 fax
www.pfm.com
Per your request, Public Financial Management, Inc. ("PFM") has provided a summary of the
loan defeasance process for the HUD 108 Loan, Series 2003A ("HUD 108 Loan or the Loan").
The City intends to apply unspent CDBG proceeds toward the payment of debt service on the
HUD 108 Loan.
The City has approximately $1,642,549.92 in monies available, which will be applied as follows:
1. The City will reprogram $542,269.75 to make the next two scheduled debt service
payments in full on August 1, 2010 and February 1, 2011, respectively.
• 8/1/2010 - $396,176.25
• 2/1/2011 - $146,093.50
2. After setting aside monies to make the next two scheduled debt service payments, the
City will have $1,100,280.17 in monies available.
3. Bank of New York Mellon (the "Trustee") will establish a separate account to deposit
such monies. The City will wire $1,100,280.17 to the following account:
Bank of New York Mellon
ABA 021000018
FFC 441858
Acct Name: HUD 108 National City Defeasance Escrow
Attn: John Hoffman
(412) 236-1439
4. The Trustee will pay $6,250.00 to PFM for financial and investment advisory services
related to this transaction, leaving $1,094,030.17 available to defease the HUD 108
Loan.
5. The Trustee will establish a new account and deposit $1,094,030.17, in the following
account:
Attachment No. 2
ABA 021000018
Account # 8900101474
Account Name BNY Mellon 441858
City of National City
HUD 108 Loan Defeasance
June 11, 2010 - Page 2
6. The City will direct PFM to purchase $1,094,028.00 in State and Local Government
Securities ("SLGS"), plus $2.17 in cash.
Maturity Type of
Date SGLS Par Amount Coupon
6/11/210 Cash
8/1/2011 Note
2/1/2012 Note
8/1/2012 Note
2/1/2013 Note
8/1/2013 Note
2. 17
271, 809.00
10,910.00
290, 939.00
5,491.00
514, 879.00
0.34%
0.53%
0.74%
0.97%
1.19%
$1,094,030.17
The Trustee will segregate the SGLS into two sub -portfolios.
7. Sub -portfolio 1: The trustee will set aside $889,667.00 in SGLS plus $0.59 in cash, as
summarized in the chart below:
Maturity Type of
Date SGLS Par Amount Coupon
6/11/210 Cash
8/1/2011 Note
2/1/2012 Note
8/1/2012 Note
2/1/2013 Note
8/1/2013 Note
0.59
271, 809.00
10,910.00
290, 939.00
5,491.00
310, 518.00
$ 889,667.00
0.34%
0.53%
0.74%
0.97%
1.19%
This amount will be sufficient to make $907,172.75 in scheduled debt service payments
required to "defease" the 2011, 2012, and 2103 principal maturities and related interest
as summarized listed below:
8/1/2011
2/1/2012
8/1/2012
2/1/2013
8/1/2013
Principal Interest Principal Interest Principal Interest TOTAL
7,365.75 6,524.00 260,000.00 4.44% 5,772.00 279,661.75
7,365.75 6,524.00 13, 889.75
7,365.75 280,000.00 4.66% 6,524.00 293,889.75
7,365.75 7,365.75
305,000.00 4.83% 7,365.75 312,365.75
$907,172.75
Attachment No. 2
City of National City
HUD 108 Loan Defeasance
June 11, 2010 - Page 3
8. Sub -portfolio 2: The remaining balance $204,361.00 (8/1/2013 SGLS maturity) plus a
$1.58 cash deposit, will be used to redeem bonds on August 1, 2013.
Maturity Type of
Date SGLS Par Amount Coupon
6/11/210 Cash
1/0/1900 Note
1.58
204, 361.00 1.19%
$ 204,362.58
9. The excess cash remaining in the portfolio will have a balance of $211,999.32 when it
matures on August 1, 2013, which will be used to redeem $210,000 of the HUD 108
Loan outstanding on a pro-rata basis, as summarized below:
Outstanding % Amount After
Principal Allocation Redeemed Redemption
8/1/2014 $ 325,000 6.97% $ 15,000 $ 310,000
8/1/2015 350,000 7.51% 15,000 335,000
8/1/2016 380,000 8.15% 15,000 365,000
8/1/2017 410,000 8.80% 20,000 390,000
8/1/2018 440,000 9.44% 20,000 420,000
8/1/2019 475,000 10.19% 20,000 455,000
8/1/2020 510,000 10.94% 25,000 485,000
8/ 1 /2021 545,000 11.70% 25,000 520,000
8/1/2022 590,000 12.66% 25,000 565,000
8/1/2023 635,000 13.63% 30,000 605,000
$ 4,660,000 100% $ 210,000 $ 4,450,000
10. The debt service on the HUD 108 Loan is after the redemption of $210,000 in principal
on August 1, 2013 is summarized illustrated below.
Attachment No. 2
Debt
Date Principal Coupon Interest Service
City of National City
HUD 108 Loan Defeasance
June 11, 2010 - Page 4
2/ 1 /2014 120,730 120,730
8/1/2014 310,000 4.93% 120,730 430,730
2/ 1 /2015 113,089 113,089
8/1/2015 335,000 5.07% 113,089 448,089
2/ 1 /2016 104,596 104,596
8/ 1 /2016 365,000 5.19% 104,596 469,596
2/1/2017 95,125 95,125
8/ 1 /2017 390,000 5.29% 95,125 485,125
2/ 1 /2018 84,809 84,809
8/1/2018 420,000 5.38% 84,809 504,809
2/1/2019 73,511 73,511
8/ 1 /2019 455,000 5.46% 73,511 528,511
2/1/2020 61,090 61,090
8/ 1 /2020 485,000 5.53% 61,090 546,090
2/1/2021 47,679 47,679
8/1/2021 520,000 5.59% 47,679 567,679
2/ 1 /2022 33,145 33,145
8/ 1 /2022 565,000 5.64 % 33,145 598,145
2/1/2023 17,212 17,212
8/1/2023 605,000 5.69% 17,212 622,212
$ 4,450,000 $ 1,501,971 $ 5,951,971
11. Upon redemption of $210,000 in principal on August 1, 2013, the defeasance portfolio
should have $2,000.90 in excess monies available to pay fees or remit back to the City.
* The City will make the following interest payments on the portion of the HUD 108 Loan that
remains outstanding from 8/1/2011 to 8/1/2013:
Interest
8/1/2011 126,430.75
2/ 1 /2012 126, 430.75
8/ 1 /2012 126, 430.75
2/1/2013 126,430.75
8/1/2013 126, 430.75
$ 632,153.75