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HomeMy WebLinkAboutConduct a Tax and Equity Fiscal Responosibility Act (TEFRA) AP►RDVET� to D-/ ' (DGLOcV29 DUT O F R064) City of Huntington Beach File #: 19-623 MEETING DATE: 6/3/2019 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Lori Ann Farrell Harrison, Interim City Manager PREPARED BY: Kellee Fritzal, Deputy Director of Economic Development Subject: Conduct a Tax and Equity Fiscal Responsibility Act ("TEFRA") public hearing and adopt Resolution No. 2019-41 approving the financing of the construction of improvements to the Pegasus School, located at 19692 Lexington Lane, with no City obligations Statement of Issue: The City Council is asked to conduct a public hearing under the Tax and Equity Fiscal Responsibility Act ("TEFRA") for the purpose of making one or more loans by the California Municipal Finance Authority ("CMFA"), a joint exercise of powers of authority and public entity of the State of California, for the construction of educational site improvements at Pegasus School, located at 19692 Lexington Lane, in an amount not to exceed $13,000,000, (the "Loans"). The Loans would be for the purposes of financing the costs of the construction of a science and technology building, remodeling current middle school classrooms, restructuring a parking lot, and upgrading the middle school quad. It will also include the associated design, engineering and planning costs related thereto, and related capital project costs (the "Facilities") and paying related expenses incurred in connection with the making of the Loans (collectively, the "Project"). Financial Impact: The Loans to be issued by the CMFA for the Project, will be the sole responsibility of the School, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. All financing documents with respect to the issuance of the Loans, will contain clear disclaimers that the Loans are not obligations of the City or the State of California, but are to be paid for solely from funds provided by the School. The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the "Foundation"), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Huntington Beach, it is expected that that a portion of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City. The School will be the beneficiary of the City of Huntington Beach Page 1 of 3 Printed on 5/30/2019 powered by LegistarT'" File #: 19-623 MEETING DATE: 6/3/2019 CMFA's charitable donation through a 25% reduction in issuance fees. Recommended Action: A) Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986, as amended (the "IRS Code"); and, B) Adopt Resolution No. 2019-41, "A Resolution of the City Council of the City of Huntington Beach approving the making of the one or more loans by First Republic Bank to the California Municipal Finance Authority in a Principal Amount not to Exceed $13,000,000, for the Purpose of Financing the Costs of Certain Improvements to a School Commonly Known as the Pegasus School and Certain Other Matters relating thereto." Alternative Action(s): Do not approve the Resolution and direct staff as necessary. Analysis: The Pegasus School requested that the CMFA serve as the municipal issuer of the Loans in an aggregate principal amount not to exceed $13,000,000 of tax-exempt loans. The proceeds of the Loans will be used for the purposes of financing the costs of the construction of a science and technology building, remodeling current middle school classrooms, restructuring a parking lot, and upgrading the middle school quad. It also includes all associated design, engineering and planning costs related thereto, of a school commonly known as The Pegasus School, located at 19692 Lexington Lane, Huntington Beach, California and related capital project costs and paying related expenses incurred in connection with the making of the Loans. In order for all or a portion of the Loans to qualify as tax-exempt bonds, the City of Huntington Beach must conduct a public hearing (the "TEFRA Hearing") providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt loans for the financing of the Project. Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an "applicable elected representative" of the governmental unit hosting the Project must provide its approval of the Bond issuance for the financing of the Project. The CMFA was created on January 1, 2004 pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 310 municipalities have become members of CMFA. The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the "Foundation"), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Huntington Beach, it is expected that that a portion of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City. The School will be the beneficiary of the City of Huntington Beach Page 2 of 3 Printed on 5/30/2019 powered by Legistar- File #: 19-623 MEETING DATE: 6/3/2019 CMFA's charitable donation through a 25% reduction in issuance fees. The CMFA was formed to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax-exempt debt aimed at improving the standard of living in California. The CMFA's representatives and its Board of Directors have considerable experience in bond financings. Environmental Status: Applicant will adhere to all CEQA regulations Strategic Plan Goal: Non-Applicable - Administrative Item Attachment(s): 1. Resolution No. 2019-41, "A Resolution of the City Council of the City of Huntington Beach Approving the making of the one or more loans by First Republic Bank to the California Municipal Finance Authority in a Principal Amount not to Exceed $13,000,000, for the Purpose of Financing the Costs of Certain Improvements to a School Commonly Known as the Pegasus School and Certain Other Matters relating thereto." City of Huntington Beach Page 3 of 3 Printed on 5/30/2019 powered by LeoistarT'1 RESOLUTION NO. 2019-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING THE MAKING OF ONE OR MORE LOANS BY FIRST REPUBLIC BANK TO THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN A PRINCIPAL AMOUNT NOT TO EXCEED $13,000,000 FOR THE PURPOSE OF FINANCING THE.COSTS OF CERTAIN IMPROVEMENTS TO A SCHOOL COMMONLY KNOWN AS THE PEGASUS SCHOOL AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, The Pegasus School (the "School"), a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), has requested that the California Municipal Finance Authority (the "Authority") enter into a loan agreement with First Republic Bank (the "Lender") and the School pursuant to which the Lender will make one or more loans to the Authority in a principal amount not to exceed $13,000,000 (the "Loans") for the purposes of financing the costs of construction of a science and technology building, remodeling current middle school classrooms, restructuring a parking lot, and upgrading the middle school quad, and all associated design, engineering and planning costs related thereto, of the School located at 19692 Lexington Lane, Huntington Beach, California and related capital project costs (the "Facilities") and paying related expenses incurred in connection with the making of the Loans (collectively, the "Project"); and WHEREAS, the Facilities are owned and operated by the School and are located within the City of Huntington Beach(the "City"); and WHEREAS, pursuant to Section 147(f) of the Code, the making of the Loans by the Lender must be approved by the City because the Facilities are located within the territorial limits of the City; and WHEREAS, the City Council of the City (the "Council") is the elected legislative body of the City and is one of the applicable elected representatives required to approve the making of the Loans under Section 147(f) of the Code; and WHEREAS, the Authority has requested that the Council approve the making of the Loans by the Lender in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of June 1, 2004 (the "Agreement"), among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the Council has, following notice duly given, held a public hearing regarding the making of the Loans, and now desires to approve the making of the Loans by the Lender; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Huntington Beach as follows: 19-7645/204214 1 Resolution No. 2019-41 Section 1. The Council hereby approves the making of the Loans by the Lender. It is the purpose and intent of the Council that this resolution constitute approval of the making of the Loans by the Lender, for the purposes of(a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Facilities are located, in accordance with said Section 147(f), and (b) Section 4 of the Agreement. The City shall have no responsibility or liability whatsoever with respect to the Loans. Section 2. The officers of the City are hereby authorized and directed,jointly and severally, to do any and all things and to 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. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 3rd day of June , 2019. Mayor REVIEWED AND APPROVED: INITIATED AND APPROVED: City Manager Deputy Director of,_*nomic Development APPROVED AS TO FORM: Cit Attorney t-kv 19-7645/204214 2 Res. No. 2019-41 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 a Regular meeting thereof held on June 3, 2019 by the following vote: AYES: Brenden, Carr, Semeta, Peterson, Posey, Hardy NOES: None ABSENT: None OUT OF ROOM: Delgleize RECUSE: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California iLas Angdes Times MEDIA GR0UP. PROOF OF PUBLICATION (2015.5 C.C.P.) STATE OF CALIFORNIA County of Los Angeles 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 action for which the attached notice was published. I am a principal clerk of the Los Angeles Times, which was adjudged a newspaper of general circulation on May 21,1952,Cases 598599 for the City of Los Angeles,County of Los Angeles, and State of California. Attached to this Affidavit is a true and complete copy as was printed and published on the following date(s): May 27,2019 1 certify (or declare) under penalty of perjury that the foregoing is true and correct. Dated at Fountain Valley, California on this 28th day of May,2019. Aaron Kalman 1050 Talbert Avenue,Suite 300 W. Fountain Valley,CA 92708 6304546-Los Angeles Times Page 1 of 2 Eos Aunties Times E D I A GROUP Sold To: Hawkins Delafield 8r Wood LLP(San Francisco CA) -C000055112 1 Embarcadero Ctr Ste 3820 San Francisco,CA 94111-3732 Bill To: Hawkins Delafield 8t Wood LLP(San Francisco CA) -C000055112 1 Embarcadero Ctr Ste 3820 San Francisco,CA 94111-3732 NOTICE of PUM.IC HEARING PURSUANT TO SECTION"147(f)OF THE. I:N-M.R.NA# REVENUE CODY. OF 1"65,.AS ANIUNDED�FOR THE FIN&NCENG 'OF CERTAIN IMPROVEMENTS TO FAULITI:ES FROM THE ISSUAACE OF r X-E317<-wT 081AIG 4TIOiNyi: NOTICE 13 tIERI:RY Cr73<`LN that at 6:40 p.m_on :lure i,Z60€n dwKityf ounvil.,Cbatubat of the:City Of Itunti€utrin lteaott?f a311aitt 5€#x22.tdnntingion "cach.c ilor tia.Ir-b4 3;the Cn}.Genre it of ti e City of Runlingttm B46 (die -City'"l. dl conduct-'a. public hearing t€hii trubhs Iteariii�),ot which the- viry wili hear aitd-coil idix a€tftarritiatasun concernta;: the pr6prised"sax-cxeirpi€tams(the"trans'"?by FEria kepiublie Bank I(the'"`xuAcv') in the California .tunicipal Finance Anthority file':Authority"l-:in-u pnnalud ano u t not 1. exceed Thirteen Million: 17oClars.{513<C k[1,Ekalf pursuant:to a luau agtettre i {she -i.ttsur-Agreement'.'i a tnung_the Lender:: the Authority and The Pegasus Se6ou1 fthc"Srhuo l;;:a. t alifurnia r�owrofil public benein carpora€ion a€id an ommizxtion de-senbed in Section-.50l€ct€3),if the - hu"t€al Revenue cod.of 1,46,as ainrndcd_:-The- Authority pions t.lcmi-the pn rc^de ofthe I.,4DA to t}terStduaad:iia lirnanee die vtf conAruct€on of--u: scictee aad techuolrgy',burkling,rc-slLiinLa et rrcrpt middle srho l ciassrix.€€ns,€es urturing a parking hu3 and upgrading the middle achn of quad.including all assoeiartA design. mini ccruil; and planning.€casts .related thereto and related capital prtilest cc-" (collectively. the 'Facilities") and paying related r-Mmtsca: itiiwred with respmi to the L:vans. t•collecus•eiv�the Prajcclt), The owner and npera€s 4 the Facilities w€lt br the Scisi 1.Which is located at "titfv4�Lcxineton I.ant.Huntington,Ikaeh,Calilbry ua: The Loans will le paid I anitolj lbun repayments tside by the scltiod under the Loan Age iancot. Ntithff the full frith and credit nor the taxing power,.-: if any.,of the lacy,the Auhurny and its rm:mbays,the :sui€c(if Califomia Nv--Sta€e l or any ntlu:r polweal. corporation;:subdivisntu of agetwy;of dw suite is pledged,to the pa}vrneatt:o€tha pO innipal Of,plelaiitam; fau€v- or weren rvitti p the lo�ixaAadl the City,the.Anti arhv and its inembetc.doe State.or any tuhe'r poluici d coiptc.e uin,subilb"Won or Agency of itie State to Ilultie or bbtigtued to pay the Principal Of.prctava,if any,or intert,:wutb rat to the Loan. 'Ile Public.licaring.is intended ter;compfy with the. public approval requirratpcnts of+,e,Woo 147IP or,the Internal Revenue Code of 199f.+..as.atnended. Towe L -iih'tta to comment on €tic "ing'_cs€'dv-, JAW-6 or ua dit prtrp OsU d actlruir aid 10CA690 df any .f the profit o€u€the ftnaucing of the Pm'jm silb dw j raceets of the l.,oiuta tarty Cuba appear lot pkm)u a the tune aid{dace pmdtaa€ed aba,e or 40"ut writ ut- eo€rai ,ouzels most be twceivail prux ux the Public ;heating,€o the City,do Robin EoanirNu,City Clerk:. at,fheaddra s indicated above, Caste; May v2019 ury OF I1C:'NTINGTTON BEACH CH N Robin Finanrdao City Clark 6304546-Los Angeles Times Page 2 of 2 TEFRA PublicHearings Pegasus School Huntington Pointe Apartments Hermosa Vista Apartments .June 3 , 2019 t. SUPPLEMENTAL COMMUNICATION Mwdng Agenda hem No:. �' Tax and Equity Fiscal Responsibility Act (TEFRA) TEFRA is a Federal and State Tax Code, that allows for the issuance or refinancing of bonds, with a portion of the bonds to be tax exempt There is no fiscal impact to the City - the City is a conduit to allow for the tax exempt financing P Bonds are limited obligations of the Issuance Organization (both the California Municipal Finance Authority and the California Statewide Communities Development Authority) o Paid solely by the Requestor No obligation of the City Not reported on City's financials kt`=. 'Ktir'su` S7 y Projects Pegasus School is requesting funding for construction of a science and technology building , remodeling school classrooms and parking improvements and related expenses Huntington Pointe and Hermosa Vista Apartments are existing affordable housing projects and are requesting bond refinancing for the acquisition , rehabilitation and improvements for the properties 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 1986 ; Adopt the Resolutions approving the issuance of the Bonds by both the California Municipal Finance Authority and the California Statewide Communities Development Authority for the financing of the projects . Questions ?