Official Statement Airport Commission City and County of San ...
Official Statement Airport Commission City and County of San ...
Official Statement Airport Commission City and County of San ...
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Pooled Reserve Account<br />
The 1991 Master Indenture established the “Issue 1 Reserve Account” (the “Pooled Reserve Account”) in<br />
the Reserve Fund as security for each series <strong>of</strong> Bonds (the “Participating Series”) that is designated by Supplemental<br />
Resolution as being secured by the Pooled Reserve Account. All Bonds currently Outst<strong>and</strong>ing under the 1991<br />
Master Resolution have been designated as Participating Series except for the Issue 36A, Issue 36B, Issue 36D <strong>and</strong><br />
Issue 37D Bonds, the Series 2008A <strong>and</strong> Series 2008B Notes <strong>and</strong> the Series 2009A, Series 2009B <strong>and</strong> Series 2009E<br />
Bonds. Separate reserve accounts were established for the Issue 36D, Issue 37D Bonds, the Series 2008A <strong>and</strong> Series<br />
2008B Notes <strong>and</strong> the Series 2009A <strong>and</strong> Series 2009B Bonds <strong>and</strong>, as permitted under the 1991 Master Resolution,<br />
the <strong>Commission</strong> determined that it would not establish a reserve account for the Issue 36A Bonds or the Issue 36B<br />
Bonds. The Issue 36A Bonds <strong>and</strong> Issue 36B Bonds are each secured by separate irrevocable direct-pay letters <strong>of</strong><br />
credit.<br />
The reserve requirement for the Pooled Reserve Account (the “Pooled Reserve Requirement”) is an amount<br />
equal to Aggregate Maximum Annual Debt Service with respect to all Outst<strong>and</strong>ing Participating Series <strong>of</strong> Bonds.<br />
The 1991 Master Resolution authorizes the <strong>Commission</strong> to obtain Credit Facilities, including surety bonds, in place<br />
<strong>of</strong> funding the Pooled Reserve Account with cash <strong>and</strong> Permitted Investments. Accordingly, the <strong>Commission</strong><br />
previously obtained surety bonds issued by Ambac Assurance Corporation (“Ambac”), Financial Security Assurance<br />
Inc. (now known as Assured Guaranty Municipal Corp.) (“Assured”), Financial Guaranty Insurance Company,<br />
doing business in California as FGIC Insurance Corporation (which policies are reinsured by MBIA Insurance<br />
Corporation, now known as National Public Finance Guarantee Corporation (“National”) <strong>and</strong> formerly, MBIA<br />
Insurance Corporation <strong>of</strong> Illinois), MBIA Insurance Corporation (now known as National Public Finance Guarantee<br />
Corporation) <strong>and</strong> Syncora Guarantee Inc. (“Syncora”), formerly XL Capital Assurance Inc., in the aggregate amount<br />
<strong>of</strong> $96.2 million for deposit in the Pooled Reserve Account. There is no requirement under the 1991 Master<br />
Resolution that the rating on any Credit Facility deposited in the Pooled Reserve Account be maintained after<br />
the date <strong>of</strong> such deposit. See APPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE 1991 MASTER<br />
RESOLUTION–Debt Service <strong>and</strong> Reserve Funds.”<br />
For additional information regarding Ambac, Assured, FGIC, National <strong>and</strong> Syncora <strong>and</strong> the surety bonds<br />
issued by each, see APPENDIX F–“INFORMATION REGARDING THE RESERVE ACCOUNT SURETY BONDS.”<br />
As <strong>of</strong> January 15, 2010, the Pooled Reserve Requirement was $304.7 million <strong>and</strong> the balance in the Pooled<br />
Reserve Account, which includes cash <strong>and</strong> securities in the amount <strong>of</strong> $240.6 million <strong>and</strong> surety bonds in the<br />
aggregate amount <strong>of</strong> $144.9 million, was $385.5 million. Following the issuance <strong>of</strong> the 2010A Bonds <strong>and</strong> the<br />
refunding <strong>of</strong> the Refunded Bonds, the Pooled Reserve Requirement will be $284.3 million.<br />
Each <strong>of</strong> Moody’s, St<strong>and</strong>ard & Poor’s <strong>and</strong> Fitch (collectively, the “Rating Agencies”) has downgraded the<br />
claims-paying ability <strong>and</strong> financial strength ratings <strong>of</strong> the nation’s monoline bond insurance companies that issued<br />
the surety bonds on deposit in the Pooled Reserve Account. The <strong>Commission</strong> has supplemented surety bonds from<br />
Ambac <strong>and</strong> Syncora, whose claims-paying ability ratings are below investment grade <strong>and</strong> the long-term ratings <strong>of</strong><br />
the <strong>Airport</strong> with cash. Excluding surety bonds issued by Ambac <strong>and</strong> Syncora, which have long-term ratings below<br />
investment grade <strong>and</strong> the long-term ratings <strong>of</strong> the <strong>Airport</strong>, the balance in the Pooled Reserve Account is $306.5<br />
million, <strong>and</strong> excluding the FGIC <strong>and</strong> MBIA surety bonds that are guaranteed by National, the balance in the Pooled<br />
Reserve Account is $249.6 million.<br />
_____________<br />
† Table does not total due to rounding.<br />
Pooled Reserve Account Balance †<br />
As January 15, 2010<br />
Cash <strong>and</strong> Permitted Investments $240.6 million<br />
Surety Policies<br />
Ambac Surety Bonds<br />
Assured (FSA) Surety Bonds<br />
National (FGIC) Surety Bonds<br />
National (MBIA) Surety Bonds<br />
Syncora (XL Capital) Surety Bonds<br />
SUBTOTAL SURETY BONDS<br />
39.3 million<br />
9.0 million<br />
15.1 million<br />
41.8 million<br />
39.8 million<br />
$144.9 million<br />
TOTAL $385.5 million<br />
20