Official Statement Airport Commission City and County of San ...

Pooled Reserve Account
The 1991 Master Indenture established the “Issue 1 Reserve Account” (the “Pooled Reserve Account”) in
the Reserve Fund as security for each series of Bonds (the “Participating Series”) that is designated by Supplemental
Resolution as being secured by the Pooled Reserve Account. All Bonds currently Outstanding under the 1991
Master Resolution have been designated as Participating Series except for the Issue 36A, Issue 36B, Issue 36D and
Issue 37D Bonds, the Series 2008A and Series 2008B Notes and the Series 2009A, Series 2009B and Series 2009E
Bonds. Separate reserve accounts were established for the Issue 36D, Issue 37D Bonds, the Series 2008A and Series
2008B Notes and the Series 2009A and Series 2009B Bonds and, as permitted under the 1991 Master Resolution,
the Commission determined that it would not establish a reserve account for the Issue 36A Bonds or the Issue 36B
Bonds. The Issue 36A Bonds and Issue 36B Bonds are each secured by separate irrevocable direct-pay letters of
credit.
The reserve requirement for the Pooled Reserve Account (the “Pooled Reserve Requirement”) is an amount
equal to Aggregate Maximum Annual Debt Service with respect to all Outstanding Participating Series of Bonds.
The 1991 Master Resolution authorizes the Commission to obtain Credit Facilities, including surety bonds, in place
of funding the Pooled Reserve Account with cash and Permitted Investments. Accordingly, the Commission
previously obtained surety bonds issued by Ambac Assurance Corporation (“Ambac”), Financial Security Assurance
Inc. (now known as Assured Guaranty Municipal Corp.) (“Assured”), Financial Guaranty Insurance Company,
doing business in California as FGIC Insurance Corporation (which policies are reinsured by MBIA Insurance
Corporation, now known as National Public Finance Guarantee Corporation (“National”) and formerly, MBIA
Insurance Corporation of Illinois), MBIA Insurance Corporation (now known as National Public Finance Guarantee
Corporation) and Syncora Guarantee Inc. (“Syncora”), formerly XL Capital Assurance Inc., in the aggregate amount
of $96.2 million for deposit in the Pooled Reserve Account. There is no requirement under the 1991 Master
Resolution that the rating on any Credit Facility deposited in the Pooled Reserve Account be maintained after
the date of such deposit. See APPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE 1991 MASTER
RESOLUTION–Debt Service and Reserve Funds.”
For additional information regarding Ambac, Assured, FGIC, National and Syncora and the surety bonds
issued by each, see APPENDIX F–“INFORMATION REGARDING THE RESERVE ACCOUNT SURETY BONDS.”
As of January 15, 2010, the Pooled Reserve Requirement was $304.7 million and the balance in the Pooled
Reserve Account, which includes cash and securities in the amount of $240.6 million and surety bonds in the
aggregate amount of $144.9 million, was $385.5 million. Following the issuance of the 2010A Bonds and the
refunding of the Refunded Bonds, the Pooled Reserve Requirement will be $284.3 million.
Each of Moody’s, Standard & Poor’s and Fitch (collectively, the “Rating Agencies”) has downgraded the
claims-paying ability and financial strength ratings of the nation’s monoline bond insurance companies that issued
the surety bonds on deposit in the Pooled Reserve Account. The Commission has supplemented surety bonds from
Ambac and Syncora, whose claims-paying ability ratings are below investment grade and the long-term ratings of
the Airport with cash. Excluding surety bonds issued by Ambac and Syncora, which have long-term ratings below
investment grade and the long-term ratings of the Airport, the balance in the Pooled Reserve Account is $306.5
million, and excluding the FGIC and MBIA surety bonds that are guaranteed by National, the balance in the Pooled
Reserve Account is $249.6 million.
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† Table does not total due to rounding.
Pooled Reserve Account Balance †
As January 15, 2010
Cash and Permitted Investments $240.6 million
Surety Policies
Ambac Surety Bonds
Assured (FSA) Surety Bonds
National (FGIC) Surety Bonds
National (MBIA) Surety Bonds
Syncora (XL Capital) Surety Bonds
SUBTOTAL SURETY BONDS
39.3 million
9.0 million
15.1 million
41.8 million
39.8 million
$144.9 million
TOTAL $385.5 million
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