That the City Council:
A. Receive and file the POB report and presentation;
B. Authorize staff to initiate a Court Validation process at a cost of approximately $30,000; and
C. Direct staff to proceed with the additional evaluation of potential POB for City Council consideration once the Court Validation process is complete.

Due to historically low interest rates that financial markets are currently experiencing, the City has an opportunity to potentially generate future budgetary savings and reduce long-term pension costs. The City can accomplish this goal by issuing Pension Obligation Bonds (POBs) that refinance the City's Unfunded Accrued Liability (UAL) with the California Public Employees Retirement System (CalPERS).  The attached presentation evaluating Pension Obligation Bonds as a potential tool to address the City's pension liabilities will elaborate on:

1.History of City of La Habra pensions
2. Review of Pension Obligation Bond structures
3. Primer on Risks/Benefits of Pension Obligation Bonds
4. Staff recommendation

Also attached to this report (attachments 1 through 5) are reference documents from various sources that further discuss the pros and cons of Pension Obligation Bonds as a financing tool for municipal governments.

City Council authorization to initiate the Court Validation process will cost approximately $30,000 from the General Fund.  Validation does not obligate the City to issue bonds; however, this is the first step in the evaluation of whether or not this type of financing is feasible.  There are sufficient budgeted funds in the General Fund Non-Departmental account to cover these costs; therefore, no additional appropriation of funds will be necessary.  Should the City Council decide to move forward with a POB issuance at a future date, staff will return to Council with an updated, more accurate assessment of the potential savings such an issuance could generate, along with the cost estimates to issue the financing.

D 9 Fiscal Strength-Stability