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HomeMy WebLinkAbout2019-02-26 - AGENDA REPORTS - TRINITY CLASSICAL ACADEMY TAX EQUITY AND FISCAL RE (2)Agenda Item: 13 DATE: February 26, 2019 SUBJECT: TRINITY CLASSICAL ACADEMY TAX EQUITY AND FISCAL RESPONSIBILITY ACT HEARING DEPARTMENT: Administrative Services PRESENTER: Michael Villegas RECOMMENDED ACTION City Council conduct a public hearing and adopt a Tax Equity and Financial Responsibility Act (TEFRA) resolution approving the issuance of tax-exempt obligations by the California Public Finance Authority in an aggregate amount not to exceed $20 million to finance, refinance, or reimburse costs of acquisition by Trinity Classical Academy, of all but the northwest 2.25 acres of an approximately 11 acre site and the 48,559 square foot two-story building located thereon, all located at 28310 Kelly Johnson Parkway, Santa Clarita, California, 91355. BACKGROUND The California Public Finance Authority (CalPFA or Authority) is a joint exercise of powers authority created under the California Joint Powers Authority Act. More than 15 California cities and counties, including the City of Santa Clarita (City), are members of CalPFA, which issues bonds on behalf of their members and to nonprofit and private entities within the members' geographical jurisdictions where public benefit projects are proposed to be located. Section 147(f) of the Internal Revenue Code of 1986 requires that, in order for the interest on such obligations to be excluded from gross income to investors for federal income tax purposes, the applicable elected representatives of the host governmental unit must approve the issuance of debt. This hearing and approval process is referred to as a TEFRA hearing, after the Tax Equity and Fiscal Responsibility Act of 1983, the regulations for which were promulgated under the Tax Code changes of 1986. The City received a request from CalPFA to conduct a public hearing under and in accordance with Section 147(f) of the Internal Revenue Code, in order for CalPFA to issue tax-exempt revenue bonds (Bonds) in an aggregate principal amount not to exceed $20 million on behalf of Trinity Classical Academy, a California nonprofit religious corporation (Borrower). The proceeds from the sale of the Bonds will be loaned to the Borrower, and used to finance, Page 1 refinance or reimburse costs of acquisition by the Borrower of all but the northwest 2.25 acres of an approximate 11 acre site and the 48,559 square foot two-story building located thereon, all located at 28310 Kelly Johnson Parkway, Valencia (Santa Clarita), California 91355 (Facilities), and other costs and reserves in connection with such acquisition and the issuance of the Bonds (collectively, Project). The Facilities will initially be owned and operated by the Borrower and used as a grade K-12 college preparatory academy known as Trinity Classical Academy (School). The Borrower is currently operating the School in the building being acquired with Bond proceeds. The Borrower expects to lease a portion of the acquired property back to the seller of the property, Northpark Community Church of Santa Clarita, Inc. (Northpark), for a period of time for use in connection with Northpark's church, pre-school and other related activities. The Bonds would be tax-exempt private activity bonds for purposes of the Internal Revenue Code and, as such, require the approval of the elected body of the governmental entity having jurisdiction over the area where the Project to be financed is located. The approval and adoption of the resolution authorizing the issuance of the Bonds will not require the City to be financially obligated, liable, or provide any financing for the Project. The City's credit and bond ratings are not at risk by adopting this resolution and no City revenues are at risk by this bond issuance. In order for the Authority to issue such Bonds, the City must (1) conduct a public hearing allowing members of the public to comment on the proposed Project and the Bonds, and (2) approve the Authority's issuance of Bonds on behalf of the proposed financing. Although the Authority, not the City, will be the issuer of the tax-exempt revenue bonds for the Project, the financing cannot proceed without the City, as the governmental entity having jurisdiction over the site, approving the Bonds. For this item, the Borrower selected Ca1PFA as the financing agency. As a result of the Borrower selecting CalPFA, the City will receive a positive fiscal impact from CalPFA's Community Benefit Program. This program provides for 15 percent of the annual administrative fee paid by the Borrower to be allocated to the City. Participation by the City will not impact the City's appropriations limits or constitute any type of indebtedness by the City. Once the City holds the required public hearing and adopts the required resolution following the public hearing, no other participation of the City in the actions of the Ca1PFA or in the financing will be required. Approval pursuant to this resolution does not constitute any other approval by any commission or agency of the City with respect to any other City regulatory or other requirements, such as building permits, in connection with the Project. ALTERNATIVE ACTION 1. City Council not agree to approve the issuance of bonds by the CaIPFA for Trinity Classical Academy. 2. Other direction as determined by City Council. Page 2 FISCAL IMPACT The City is to receive on an annual basis, over the up to 35 year life of the Bond, 15 percent of the administrative fee that Trinity Classical Academy pays to Ca1PFA annually, which equates to approximately $450 in Fiscal Year 2019-20. ATTACHMENTS Public Hearing Notice Trinity Classical Academy TEFRA Resolution Page 3 CITY OF SANTA CLARITA NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN: z A Public Hearing as required by Section 147(f) of the Internal Revenue Code of 1986, as w amended (the "Code"), will be conducted before the City Council of the City of Santa Clarita in z the City Hall Council Chambers, 23920 Valencia Boulevard, 1" floor, Santa Clarita, California, on the 26' day of February 2019, at or after 6:00 p.m., to consider the proposed issuance by the LU California Public Finance Authority (the "Issuer") of its revenue bonds, in one or more series from time to time, in an aggregate amount not to exceed $20,000,000 (the "Bonds"). The proceeds from v the sale of the Bonds will be loaned to Trinity Classical Academy, a California nonprofit religious corporation (the "Borrower"), and used to finance, refinance or reimburse costs of acquisition by the Borrower of all but the northwest 2.25 acres of an approximate 11 acre site and the 48,559 m square foot two-story building located thereon, all located at 28310 Kelly Johnson Parkway, z Valencia (Santa Clarita), California 91355 (the "Facilities"), and other costs and reserves in a connection with such acquisition and the issuance of the Bonds (collectively, the "Project"). w W J The Facilities will initially be owned and operated by the Borrower and used as a grade K- Q 12 college preparatory academy known as Trinity Classical Academy (the "School"). The U) Borrower is currently operating the School in the building being acquired with Bond proceeds. o The Borrower expects to lease a portion of the acquired property back to the seller of the property, z Q Northpark Community Church of Santa Clarita, Inc. ("Northpark"), for a period of time for use in connection with Northpark's church, pre-school and other related activities M CY LU The Bonds will be paid from repayments by the Borrower. The Bonds will not constitute x a general debt, liability or obligation of the City of Santa Clarita (the "City"), the County of Los Angeles (the "County") or the State of California (the "State"), or of any political subdivision or agency thereof, or a pledge of the faith and credit the City, the County, the State, or of any political o subdivision or agency thereof. The Bonds shall be payable solely from revenues provided Q U therefore in certain financing documents to be executed in connection therewith, and the Issuer Q will not be obligated to pay the Bonds or the interest thereon except from the revenues and v proceeds pledged therefore and from funds provided by the Borrower. U) Those wishing to comment on the proposed financing and the nature and location of the Jv Project may either appear in person at the public hearing or submit written comments, which must be received by the City prior to the hearing. Written comments should be sent to City of Santa z Clarita, 23920 Valencia Boulevard, Suite 120, Santa Clarita, California 91355, Attention: City Clerk by February 26, 2019. Dated: February 7, 2019 Mary Cusick City Clerk Publish Date: February 12, 2019 RESOLUTION NO. 19 - RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING THE ISSUANCE BY THE CALIFORNIA PUBLIC FINANCE AUTHORITY OF ITS EDUCATIONAL FACILITIES REVENUE BONDS, SERIES 2019 (TRINITY CLASSICAL ACADEMY PROJECT) IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $20,000,000 WHEREAS, Trinity Classical Academy, a California nonprofit religious corporation (Borrower), has requested that the California Public Finance Authority (Authority), a joint powers authority organized and existing pursuant to the laws of the State of California, issue its Educational Facilities Revenue Bonds, Series 2019 (Series 2019 Bonds), in an aggregate principal amount not to exceed $20,000,000, and loan the proceeds thereof to the Borrower to finance, refinance or reimburse costs of acquisition by the Borrower, of all but the northwest 2.25 acres of an approximate 11 acre site and the 48,559 square foot two-story building located thereon, all located at 28310 Kelly Johnson Parkway, Valencia (Santa Clarita), California 91355 (Facilities), and other costs and reserves in connection with such acquisition and the issuance of the Bonds (collectively, Project). The Facilities will initially be owned and operated by the Borrower and used as a grade K-12 college preparatory academy known as Trinity Classical Academy (School), and is currently operating the School in the building being acquired with Bond proceeds. The Borrower expects to lease a portion of the acquired property back to the seller of the property, Northpark Community Church of Santa Clarita, Inc. (Northpark), for a period of time for use in connection with Northpark's church, pre-school and other related activities; and WHEREAS, pursuant to Section 147(f) of the Code, prior to their issuance, the Series 2019 Bonds are required to be approved by the "applicable elected representative" of a governmental unit having jurisdiction over the area in which the Series 2019 Project is located, after a public hearing held following reasonable public notice; and WHEREAS, the City Council (City Council) of the City of Santa Clarita, California (City) is the "applicable elected representative" of the City under the Code for the the Series 2019 Project located within the City; and WHEREAS, the Borrower has requested that the City Council approve the Authority's issuance of the Series 2019 Bonds and the financing of the Series 2019 Project located within the City in order to satisfy the requirements of Section 147(f) of the Code; and WHEREAS, the City Council, following notice duly given in the form attached hereto as Exhibit A (TEFRA Notice), held a public hearing today regarding the Authority's issuance of the Series 2019 Bonds and the financing of the Series 2019 Project and now desires to approve the Authority's issuance of the Series 2019 Bonds and the financing of the Series 2019 Project in accordance with the Code; and U Q WHEREAS, the Series 2019 Bonds shall not be deemed to constitute a debt of the City or Q a pledge of the faith and credit of the City, but shall be special limited obligations of the Authority payable solely from the loan repayments to be made by the Borrower to the Authority, and shall contain on the face thereof a statement to the effect that neither the faith and credit nor 0° the taxing power of the City is pledged to the payment of the principal of or interest on the Series z 2019 Bonds; and 0- LU WHEREAS, the City Council has determined that approval of the issuance of the Series W 2019 Bonds is to satisfy the requirements of Section 147(f) of the Code, and shall in no event v constitute an endorsement of the Series 2019 Bonds or the Series 2019 Project or the U) creditworthiness of the Borrower, nor shall such approval in any event be construed to obligate o the City for the payment of the principal of or premium or interest on the Series 2019 Bonds or Q for the performance of any pledge, mortgage or obligation or agreement of any kind whatsoever which may be undertaken by the Authority, or to constitute the Series 2019 Bonds or any of the CY agreements or obligations of the Authority an indebtedness of the City, within the meaning of w any constitutional or statutory provision whatsoever. NOW THEREFORE, the City Council of the City of Santa Clarita, California, does hereby resolve as follows: Q U SECTION 1. APPROVAL: Pursuant to and in accordance with the requirements of Q Section 147(f) of the Code, the City Council hereby approves (a) the Authority's issuance of the v Series 2019 Bonds in an aggregate principal amount not to exceed $20,000,000, and (b) the U5 financing of the Series 2019 Project. Q J U SECTION 2. NO LIABILITY: The City has no responsibility for the payment of the principal of or interest on the Series 2019 Bonds or for any costs incurred by the Borrower with z respect to the Series 2019 Bonds or the Series 2019 Project. SECTION 3. NO OTHER OBLIGATIONS: The adoption of this resolution shall not o r obligate the City to (a) approve any application or request for or take any other action in connection with any planning, approval, permit or other action necessary for any project or (b) make any contribution or advance any funds to the Authority or the Borrower. SECTION 4. AUTHORIZATION: The officers of the City are hereby authorized and w 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 E comply with the terms and intent of this Resolution and the financing transaction approved hereby. Q 2 SECTION 5. EFFECTIVE DATE: This resolution is effective immediately on its Q passage. PASSED, APPROVED AND ADOPTED this 26th day of February, 2019. MAYOR ATTEST: CITY CLERK DATE STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Mary Cusick, City Clerk of the City of Santa Clarita, California, do hereby certify that the foregoing Resolution No. 19- was duly adopted by the City Council of the City of Santa Clarita, California, at a regular meeting thereof, held on the 26th day of February, 2019, by the following vote: AYES: COUNCIL,MEMBERS: NOES: COUNCIL,MEMBERS: ABSENT: COUNCIL,MEMBERS: CITY CLERK