HomeMy WebLinkAboutPublic Hearing under the Tax and Equity Fiscal Responsibilit Dept. ID ED 17-28 Page 1 of 2
Meeting Date: 11/6/2017
,
_ CITY OF HUNTINGTON BEACH
., � REQUEST FOR. CITY COUNCIL ACTION
MEETING DATE: 11/6/2017
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Kellee Fritzal, Deputy Director, Business Development
SUBJECT: Public Hearing under the Tax and Equity Fiscal Responsibility Act (TEFRA) and
the Internal Revenue Code of 1986, to adopt Resolution No. 2017-53 approving
a Tax Exempt Bond Financing to be undertaken by the Public Finance Authority
of Wisconsin with respect to certain projects of Prime Healthcare Huntington
Beach, LLC located in the City of Huntington Beach, California (Huntington
Beach Hospital)
Statement of Issue:
The City Council is asked to conduct a public hearing under the Tax and Equity Fiscal
Responsibility Act (TEFRA) and the Internal Revenue Code of 1986, as amended (Code) in
connection with the proposed tax-exempt Bond by the Public Finance Authority (PFA) in an amount
not to exceed $20,000,000, to assist in the finance of the acquisition, construction, equipping, and
improvement of the Prime Healthcare Huntington Beach, LLC (Huntington Beach Hospital). The
Public Finance Authority is a joint exercise of powers authority and is the responsible fiscal agent
for the bonds.
Financial Impact: There is no fiscal impact to the City. The City will receive an issuance fee of
$7,500, which will be applied to the General Fund.
Recommended Action:
A) Conduct the Public Hearing under the requirements of TEFRA and the Internal Revenue Code
of 1986, as amended (Code) to Approve a Tax Exempt Bond Financing by the Public Finance
Authority for Prime Healthcare Huntington Beach, LLC (Huntington Beach Hospital); and,
B) Adopt Resolution No. 2017-53, "Resolution of City of Huntington Beach, California Approving a
Tax Exempt Bond Financing to be Undertaken by the Public Finance Authority with Respect to
Certain Projects of Prime Healthcare Huntington Beach, LLC Located in the City of Huntington
Beach California."
Alternative Action(s): Do not approve the Resolution and direct staff as necessary.
Analysis: Huntington Beach Hospital is located 17772 Beach Boulevard and has been serving the
residents of Huntington Beach since 1967. Huntington Beach Hospital is a 131-bed facility with
over 500 employees and 300 doctors. In 2012, Prime Healthcare Foundation converted the
hospital into a nonprofit organization. As stated, Prime Healthcare Huntington Beach, LLC,
(Borrower) is a nonprofit corporation, organized under the laws of Delaware, and tax-exempt under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The Borrower is the sole
ftem 22. - 1 HB -380-
Dept. ID ED 17-28 Page 2 of 2
Meeting Date: 11/6/2017
corporate member of Prime Healthcare Huntington Beach, LLC, a Delaware limited liability
company, which owns certain hospital, healthcare, and related facilities located in the City of
Huntington Beach, California.
Based on the age of the building and the need to update facilities and equipment, Prime Healthcare
is looking to finance the upgrades though a bond. The proceeds from the sale of the Bonds will be
loaned to the Borrower, in the amount not to exceed $20,000,000 for Huntington Beach Hospital, to
finance, refinance and/or reimburse the costs of the acquisition, construction, equipping, and
improvement of the hospitals, other healthcare facilities, and their related facilities, including land
("Projects"). The Bond will specifically finance the following for Huntington Beach Hospital:
Mammography Replacements
New Nurse Call System
Upgrade three (3) elevators
Lobby remodel
Replace four (4) air handlers (Radiology, Surgery, Isolation)
Remodel Pharmacy
Replace HVAC system controllers, chiller barrel, and exterior signage
Upgrade parking lot lighting to LED
Replace/Install first floor fixtures for mental health fast track area
The remainder of the proceeds of the Bonds will be used by other affiliates of the Borrower for
projects located in other jurisdictions in the State of California, as well as the states of Georgia,
Ohio and Texas.
Public Finance Authority
The Authority is a political subdivision of the State of Wisconsin created for the purpose of issuing
tax-exempt and taxable conduit bonds for public and private entities nationwide. The Authority is
sponsored by the National Association of Counties, the National League of Cities, the Wisconsin
Counties Association, and the League of Wisconsin Municipalities. The Authority partners with
local governments to assist in the financing of public benefit projects that create temporary and
permanent jobs, affordable housing, community infrastructure, and improve the overall quality of life
in local communities. The Authority is authorized to issue bonds in all 50 states providing
economies of scale for multi-jurisdictional projects. Prime Healthcare is doing a multiple state bond
which the Public Finance Authority can accomplish.
The Bonds will be special limited obligations of the Issuer payable solely from the loan repayments
to be made by the Borrower to the Issuer, and certain funds and accounts established by the bond
indenture for the Bonds.
Environmental Status: Not Applicable
Strategic Plan Goal: Strengthen economic and financial sustainability
Attachment(s):
1. Resolution No. 2017-53 "Resolution of City of Huntington Beach, California Approving a Tax
Exempt Bond Financing to be Undertaken by the Public Finance Authority with Respect to
Certain Projects of Prime Healthcare Huntington Beach, LLC Located in the City of
Huntington Beach California"
2. PowerPoint
H B -3 8 1- Item 22. - 2
RESOLUTION NO. 2017-53
RESOLUTION OF CITY OF HUNTINGTON BEACH, CALIFORNIA APPROVING A
TAX EXEMPT BOND FINANCING TO BE UNDERTAKEN BY THE PUBLIC
FINANCE AUTHORITY WITH RESPECT TO CERTAIN PROJECTS OF
PRIME HEALTHCARE HUNTINGTON BEACH, LLC
LOCATED IN THE CITY OF HUNTINGTON BEACH, CALIFORNIA
WHEREAS, Prime Healthcare Foundation, Inc., a Delaware nonprofit, nonstock
corporation (the "Borrower"), has requested the Public Finance Authority (the "Issuer"), a
Wisconsin bond issuing commission created under Sections 66.0301, 66.0303 and 66.0304 of the
Wisconsin Statutes to issue revenue bonds to pay for the costs of certain projects of the Borrower
and/or certain of the Borrower's affiliates, located in the states of California, Georgia, Ohio and
Texas; and
Pursuant to Section 66.0304(11)(a) of the Wisconsin Statutes, prior to their issuance,
bonds issued by the Issuer must be approved by the governing body or highest ranking executive
or admirJstrator of the political jurisdiction within whose boundaries the project is to be located;
and
The Borrower is the sole corporate member of Prime Healthcare Huntington Beach, LLC,
a Delaware limited liability company, which owns certain hospital, healthcare and related
facilities located in the City of Huntington Beach, California(the "City"); and
The Borrower has requested the assistance of the Issuer to finance and/or refinance
(including reimburse) eligible costs of the acquisition, construction, equipping and improvement
of certain. hospitals, other healthcare facilities, and their related facilities, including land, located
within the geographical boundaries of the City and owned by Prime Healthcare Huntington
Beach, LLC (the "Projects"); and
Th-- Borrower has requested the Issuer to issue revenue bonds (the "Bonds"), in an
aggregate principal amount of not to exceed $387,000,000 to finance and refinance projects in
California, Georgia, Ohio and Texas, of which not to exceed $20,000,000 is expected to be used
to finance and/or refinance the Projects in the City; and
The Borrower has requested that the City approve the financing and/or refinancing of the
Projects and the issuance of the Bonds in order to satisfy the requirements of Section 4 of the
Amended and Restatea Joint Exercise of Powers Agreement Relating to the Issuer, dated as of
September 28, 2010 (the "Joint Exercise Agreement"), and Section 66.0304(11)(a) of the
Wisconsin Statutes; and
Furthermore, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (tree
"Code"), the issuance of the Bonds requires approval, following a public hearing, by the
applicable elected representative of the governmental unit having jurisdiction over the area in
which the Projects are .located; and
17-6065/167504/mv 1
RESOLUTION NO. 2017-53
A notice of public hearing with respect to the proposed issuance of the Bonds and
meeting the requirements of Section i47(f) of the Code was published in a newspaper of general
circulation in the City and a copy of such notice is attach-d hereto as Exhibit A; and
The City Council conducted the public hearing, at which time an opportunity was
provided to present arguments both for and against the issuance of the Bonds and the nature and
location of the Projects to be financed and refinanced; and
The City Council now desires to approve the financing and/or refinancing and the
issuance of the Bonds,
NOW, THEREFORE, BE IT RESOLVED by the City Council, as follows:
Section 1. The City Council hereby approves the issuance of the Bonds by the Issuer
for the Borrower in a total amount not to exceed $387,000,000, and approves an amount not to
exceed $20,000,000 which is expected to be used to finance and/or refinance the Projects in the
City. It is the purpose and intent of the City Council that this Resolution constitutes approval of
the financing and/or refinancing and the issuance of the Bonds for that portion of the Bonds
which is expected to be used to finance and/or refinance Projects in the City for the purposes of
Section 147(f) of the Code by the applicable elected representative of the governmental unit
having jurisdiction over the area in which the Projects are located, in accordance with said
Section 147(f) of the Code. It is also the purpose and intent of the City Council that this
Resolution constitute approval of the issuance of the Bonds by the City, which is the (or one of
the) governmental unit(s) having jurisdiction over the area in which the Projects are located, in
accordance with Section 66.0304(11)(a) of the Wisconsin Statutes and Section 4 of the Joint
Exercise Agreement.
Section 2. The Mayor and all other officials of the City are hereby authorized and
directed, jointly and severally, to do any and all things and to prepare or cause to be prepared,
negotiate, execute and deliver any and all documents which they deem necessary or advisable in
order to carry out, give effect to and comply with the terms and intent of this Resolution and the
financing transaction approved hereby.
Section 3. Nothing in this Resolution shall be construed to create any obligations of
the City or any City officials or employees with respect to the repayment of the Bonds. Neither
the Bonds nor the interest thereon shall ever constitute an indebtedness or a charge against the
general credit or taxing powers of the City within the meaning of any constitutional or charter
provision or statutory limitation and neither shall ever give rise to any pecuniary liability of the
City. The owners of the Bonds shall never be paid in whole or in part out of any funds raised or
to be raised by taxation or any other revenues of the City.
Section 4. This Resolution shall take effect immediately upon its passage.
17-6065/167504/mv 2
RESOLUTION NO. 2017-53
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular
meeting thereof held on the day of _ , 2017.
Mayor tj
REVIEWED AND APPROVED: APPROVED AS T -19"ORM:
i Manager —� City Attorney tw
DUTIATED AND APPROVED:
Deputy Director ofZ� conomic Development
17-6065/167504/mv 3
RESOLUTION NO. 2017-53
EXHIBIT A
NOTICE OF PUBLIC HEARING
[Attached]
17-6065/167504/mv 4
Exhibit "A"
AFFIDAVIT OF PUBLICATION
STATE OF CALIFORNIA, ) PROOF OF PUB.LICAT:ION
)ss.
County of Orange )
I am a citizen of the United States and a resident
of the County aforesaid; I am over the age of
eighteen years,and not a party to or interested in
the above entitled matter. I am the principal clerk
lshec kg,w U rtr e 3 7� ' , i 95�:c
% s rn&d by e 9 * �e 2 s r Cak ee 1 36,
of The Orange Count Register. ^r t�sr�s<�C{,f's 't"z'` Y-s 'Ts•i3c.� `� 3yr u's ft';}ri �ttt'� s
e }• er. a f t it3crf ''�w f8� e3, }tO. by the N'blic
G.�iv ndi h Or, 4 Y5Ypr'$-
of general circulation, published in the city of 1` a "he' c r�u35 tr �� 77 fP°
f'+a s + a-r e rig_ 6�m its 3 �. -c�?TYri'sfe IYtG'firr :
x,-rn k.h r a 1 ,!a'hA
Santa Ana, County of Orange, and which news- r° Frrr� x cr
E et e >¢e r ^i t o Skr"..fz e i}9
paper has been adjudged to be a newspaper of
b.�:M '°.
r a r n €rs x ed s.tna.
general circulation by the Superior Court of the }r fin; vt tt z t 'rt °i Prime 4^ntlhc°r"
r rcc c� r ° s r r cc [ r a an and,ar
r s a rt.r. .� - ,,, Cc-+e t I�'0irrraaw•
County of Orange; State of California, under the 4s d t _
rer r§ h cas t
date of November 19, 1905, Case No. A-21046, ,iFrr e e�h�
.t of ! `to c r i s Pr m eau t rrtrea r nh s c�
L Gr a k, rf r csrra�rrt na a� atty ct c n h Pa ,
that the notice, of which the annexed is a true C Edrr 5 1T"r ac-6ch aetl e'°ram
F r- rt t,hc xikanr� z� n1 ti to ar rr$*�s �casr .
printed copy, has been published in each regular
€ rr t 3 r ro f 'a rr £js a�r.;,Ji rf her i s�a nsar
and entire issue of said newspaper and not in any
supplement thereof on the fallowing dates, to rr ,n Wie
Ott!tTa n ^n ru errs e n lM,r)Cur u to she
a dre r f d a de is f-Gt s ��a an-
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October 20,2017
,,r �t ai D s r GirC+'t£ SLlSt a< ii9S+'Ec?-
"I certify (or declare) under the penalty of 3cr a rE al Y r4.- Jf masi- r?
perjury under the laws of the State of California v , 20
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that the foregoing is true and correct':
€r e �,-jra^ H r bra uc nFt s t I7L°r
Executed at Santa Ana, Orange County,
California,on
Date: October 20.,2017
t .,
r
Signature
The Orange County Register
625 N. Grand Ave.
Santa Ana,CA 92701
(714)796-2209
Res. No. 2017-53
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU the duly elected, qualified City Clerk
of the City of Huntington Beach, and ex-officio Clerk of the City Council of
said City, do hereby certify that the whole number of members of the City
Council of the City of Huntington Beach is seven; that the foregoing resolution
was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council at an Regular meeting thereof held on
November 6, 2017 by the following vote:
AYES: O'Connell, Semeta, Posey, Delgleize, Hardy, Brenden, Peterson
NOES: None
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
TEFRA Public Hearing
Prime Healthcare Huntington
Beach LLC
N o ue m belr 6 Zo17 t' nl
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Summary
■ There is no fiscal impact to the City — the City is a
conduit to allow for the tax exempt financing
• Bonds are limited obligations of the Public
Finance Authority
• Paid solely by Prime Healthcare Huntington
Beach LLC (owner)
o No direct obligation of the City
�r
■ Prime Healthcare Huntington Beach LLC is the
Huntington Beach Hospital
(ll�i
�),it H
i
Public Finance Authority
■ Public Finance Authority was formed in 2010
■ The Public Finance Authority is a political
subdivision of the State of Wisconsin with the
authority to issue bonds in all 50
states. Membership is not a requirement.
■ Issues taxable and tax-exempt bonds for
financing economic, cultural and community
development
■ Works with local governments, non-profit
t organiizationsfFand businessesG,,�
4i
Huntington Beach Hospital
Proceeds will be used to reimburse the costs of the
acquisition, construction, equipping and improvement
of the hospital, including , such as:
■ Mammography Replacements
■ New Nurse Call System
■ Upgrade 3 elevators
■ Lobby remodel , Upgrade Parking Lot Lighting to LED
■ Replace air handlers (Radiology, Surgery, Isolation)
■ Remodel Pharmacy
■ Replace HVAC system controllers, chiller barrel and
exterior signage
Replace/Install 1st floorfixturesfor mental health fasgL
ft
track a re:a m ,
w
Public Hearing
To satisfy the Federal and State tax code, the City
is required to:
■ Conduct tonight's public hearing under the
requirements of TEFRA and the Internal Revenue
Code of j.986;
3
■ Adopt the Resolution approving the issuance of
the Bonds by the Public Finance Authority for
fHuntinB'the benefit o h Hot
, pal
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City of Huntington Beach
2000 Main Street ♦ Huntington Beach, CA 92648
(714) 536-5227 • www.huntingtonbeachca.gov
jgq9 Office of the City Clerk
.Robin Estanislau, City Clerk
November 9, 2017
Prime Healthcare Huntington Beach, LLC
17772 Beach Boulevard
Huntington Beach, CA 92647
To Whom It May Concern:
Enclosed is a copy of the fully executed copy of"Resolution No. 2017-53 —A Resolution of
City of Huntington Beach, California Approving a Tax Exempt Bond Financing to be
Undertaken by the Public Finance Authority With Respect to Certain Projects of Prime
Healthcare Huntington Beach, LLC Located in the City of Huntington Beach, California."
Sincerely,
�&�dnm,&J
Robin Estanislau, CIVIC
City Clerk
RE:ds
Enclosure
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