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Case Study: City of Susanville- Pension Refinancing

Updated: May 26, 2023

The City of Susanville (the "City") engaged Weist Law in order to prepare for a public offering of taxable debt in order to make a large additional discretionary prepayment to CalPERS for their unfunded accrued liability (the "UAL").

Transaction Highlights

For pension debt to be legally financed, the legal structure must either be "validated" through a judicial validation proceeding or some other alternative legal theory arranged. The team at Weist Law filed a validation judgment in the Superior Court of Lassen County. The validation action was then challenged by the Howard Jarvis Taxpayers Association. To defend the validation action through the judicial process could take a year or longer before funding could be approved. During that same time period, interest rates continued to rise due to the lingering effects of Covid-19, significant inflationary pressures, fed rate hikes, and the outbreak of war in Ukraine. Therefore, the team at Weist Law felt it was their fiduciary duty as Bond Counsel to reconvene with the City Council to discuss the recent market headwinds and generate a strong financing strategy to withstand volatility.

After analyzing all viable options, Weist Law found it would be most advantageous to the City to restructure the financing by utilizing lease arrangements for a private offering. Lease financings have judicial precedence in California, known as the "Offner-Dean-Rider Lease Exception" to the California Constitutional Debt Limitations. The team reached out to several banks that regularly invest in municipal debt obligations to get their indicative rates. One bank in particular that Weist Law works with frequently, was able to offer a competitive rate of 3.5% for a 20-year term. Council approved the switch from a public offering to a private placement process and accepted the bank term sheet for a 20-year term at a 3.50% rate.

Successful Outcome

The team at Weist Law used its experience with lease financing structures to quickly pivot the deal into a dual series borrowing structure in less than two months in order to provide for greater cost of issuance savings and time efficiency for the City operations.

City of Susanville Savings from 2022 Series A & B Offering:

Weist Law was able to create a financing structure similar to the one our team created for the City of Cotati, pioneering a truly innovative structure that allowed the City to accomplish multiple goals at once.

  • The transaction resulted in total projected cash flow savings to the City of approximately $2,338,712

  • Due to an innovative Net Revenue and asset pledge structure, the City was able to achieve a 20-year taxable interest rate of 3.50% (even during a highly inflationary period).

  • The Financing Team was able to achieve a favorable interest rate in the midst of rapidly rising interest rates (rates had increased to over 4.40% at the time) and quickly "pivot" the financing structure in the best interests of the client--all within a span of less than 60 days. This "pivot" resulted in additional savings to the City of approximately $1,000,000 over what would have been achievable through a private placement

For a downloadable version of this Case Study, click here. If you are interested in learning more about this, or any other transaction completed by Weist Law, please feel free to schedule a free consultation with us at


The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact a designated Weist Law representative. This material may be considered advertising under certain rules of professional conduct.

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