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HomeMy WebLinkAbout2019-10-22 - AGENDA REPORTS - THE MASTER'S UNIVERSITY AND SEMINARY TAX EQUITY AN (2)Agenda Item: 9 DATE: October 22, 2019 SUBJECT: THE MASTER'S UNIVERSITY AND SEMINARY TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING DEPARTMENT: Administrative Services PRESENTER: Michael Villegas RECOMMENDED ACTION City Council conduct a public hearing and adopt a Tax Equity and Financial Responsibility Act resolution approving the issuance of tax-exempt obligations by the California Municipal Finance Authority in an aggregate amount not to exceed $35 million. BACKGROUND The California Municipal Finance Authority (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 by assisting local governments, non-profit organizations, and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. To date, over 300 municipalities, including the City of Santa Clarita (City), have become members of CMFA. The City received a request from CMFA to conduct a public hearing under and in accordance with Section 147(f) of the Internal Revenue Code, in order for CMFA to issue tax-exempt revenue bonds (Bonds) in an aggregate principal amount not to exceed $35 million on behalf of The Master's University and Seminary (Borrower), a nonprofit public benefit corporation duly organized and existing under the laws of the State of California and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986. The proceeds from the sale of the Bonds will be used for: (A) financing the acquisition, construction, improvement, renovation and equipping of some or all of the following educational facilities and amenities for the benefit of the Borrower, including (1) renovation and improvement of three student housing facilities; (2) improvement and equipping of approximately ten classrooms for upgraded technology and layout; (3) renovation to The Page 1 Master's University Robert L. Powell Library, an existing facility, with renovations and improvements to include study rooms and classrooms; (4) electrical efficiency upgrades to existing The Master's University facilities; (5) a new approximately 12,000 square foot beach volleyball court and related facilities; and (6) a new, approximately 25,000 square foot swimming complex, which will include an Olympic -size swimming pool and related facilities; each located or to be located on the site of the Borrower's main campus at 21726 Placenta Canyon Road, Santa Clarita, California, and the acquisition of furnishings, equipment, technology, and/or library materials; (B) refinancing the outstanding California Statewide Communities Development Authority Variable Rate Revenue Bonds (The Master's College) Series 2014, which financed and refinanced the costs of acquisition, construction, improvement, renovation, remodeling, furnishing and equipping of certain educational facilities including residence halls, classrooms, laboratories, parking facilities, a library, a student center known as the MacArthur Center, a guard station, one or more roads, infrastructure improvements and other related and appurtenant facilities located on the Campus; and (C) paying certain costs of issuance of the Bonds (collectively, Project). 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 CMFA 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 CMFA's issuance of Bonds on behalf of the proposed financing. Although CMFA, 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 CMFA as the financing agency. As a result of the Borrower selecting CMFA, the City will receive a one-time issuance fee paid by the Borrower and 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 CMFA 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. Additionally, approval pursuant to this resolution does not constitute approval or modification of any kind to the existing conditions of approval for The Master's University Master Plan, which was approved by the City Council in 2009. ALTERNATIVE ACTION 1. City Council not agree to approve the issuance of bonds by CMFA for The Master's University and Seminary. Page 2 2. Other action as determined by City Council. FISCAL IMPACT The City will receive 25 percent of a one-time issuance fee from the California Municipal Finance Authority, which will equate to approximately $9,000. The actual amount may vary and will be dependent on the actual closing of the bonds. ATTACHMENTS The Master's University and Seminary Public Notice The Master's University and Seminary Resolution Page 3 CITY OF SANTA CLARITA NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN: A Public Hearing as required by Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code") will be conducted before the City Council of the City of Santa Clarita (the "City") in the City Hall Council Chambers, 23920 Valencia Boulevard, lst floor, Santa Clarita, California, on the 22th day of October 2019, at or after 6:00 p.m., to consider the proposed issuance by the California Municipal Finance Authority (the "Authority") of its revenue bonds, in one or more series, as part of a plan of finance, in a maximum aggregate principal amount not to exceed $35,000,000 (the "Bonds"). The proceeds of the Bonds will be loaned by the Authority to The Master's University and Seminary, a nonprofit public benefit corporation duly organized and existing under the laws of the State of California (the "University") for the purposes of: (A) financing the acquisition, construction, improvement, renovation and equipping of some or all of the following educational facilities and amenities for the benefit of the University, including (1) renovation and improvement of three student housing facilities; (2) improvement and equipping of approximately ten classroom for upgraded technology and layout; (3) renovation to the Robert L. Powell Library, an existing University facility, with renovations and improvements to include study rooms and classrooms; (4) electrical efficiency upgrades to existing University facilities; (5) a new approximately 12,000 square foot beach volleyball court and related facilities; and (6) a new, approximately 25,000 square foot swimming complex, which will include an Olympic size swimming pool and related facilities; each located or to be located on the site of the University main campus (the "Campus") at 21726 Placerita Canyon Road, Santa Clarita, California, and the acquisition of furnishings, equipment, technology and/or library materials at the University campus (all of the foregoing in (1) through (6) above, collectively, the "New Projects"); (B) refinancing the outstanding California Statewide Communities Development Authority Variable Rate Revenue Bonds (The Master's College) Series 2014, which financed and refinanced the costs of acquisition, construction, improvement, renovation, remodeling, furnishing and equipping of certain educational facilities including residence halls, classrooms, laboratories, parking facilities, a library, a student center known as the MacArthur Center, a guard station, one or more roads, infrastructure improvements and other related and appurtenant facilities (the "Refunded Projects" and together with the New Projects, the "Projects") located on the Campus; and (C) paying certain costs of issuance of the Bonds. The facilities so financed and refinanced will be used for exempt educational purposes of the University, and will be owned and operated by, and used by the University or a related subsidiary. The Bonds and the obligation to pay principal of and interest thereon and any redemption premium with respect thereto do not constitute indebtedness or an obligation of the City, the Authority, the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation, or a charge against the general credit or taxing powers of any of them. The Bonds shall be a limited obligation of the Authority, payable solely from certain revenues duly pledged therefor and generally representing amounts paid by the University. c n Q Interested persons wishing to express their views on the issuance of the Bonds or on the nature and location of the Projects proposed to be financed and refinanced may attend the public hearing or, prior to the time of the hearing, submit written comments. The Public Hearing is intended to comply with the public approval requirements of Section 147(f) of the Code. Inquiries concerning the Projects may be directed to The Master's University and Seminary, 21726 Placerita Canyon Road, Santa Clarita, CA 91321, Telephone: (661) 259-3540, Attention: John Russell, Controller. The University is an organization described in Section 501(c)(3) of the Code. Those wishing to comment on the sale, execution and delivery of the Bonds or on the proposed nature and description of the Projects and the financing and refinancing of the Projects with the proceeds of the Bonds, may either appear in person at the time and place indicated above, or submit written comments which must be received prior to the Public Hearing, to the City of Santa Clarita, c/o Michael Villegas, Management Analyst, at 23920 Valencia Blvd., Suite 295, Santa Clarita, CA 91355. Date: October 10, 2019 Mary Cusick, MMC City Clerk Publish Date: October 15, 2019 RESOLUTION NO. 19- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA APPROVING THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE PURPOSE OF FINANCING THE ACQUISITION, CONSTRUCTION, IMPROVEMENT, RENOVATION AND EQUIPPING OF CERTAIN EDUCATIONAL FACILITIES AND AMENITIES FOR THE BENEFIT OF THE MASTER'S UNIVERSITY AND SEMINARY AND REFINANCING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY VARIABLE RATE REVENUE BONDS (THE MASTER'S COLLEGE) SERIES 2014 AND CERTAIN OTHER MATTERS PERTAINING THERETO WHEREAS, pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"), certain public agencies (the "Members") have entered into a Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority dated as of January 1, 2004, (the "Agreement") in order to form the California Municipal Finance Authority (the "CMFA"), for the purpose of promoting economic, cultural and community development, and in order to exercise any powers common to the Members, including the issuance of bonds, notes, or other evidences of indebtedness; and WHEREAS, the City of Santa Clarita, California (the "City") is a Member of the CMFA; and WHEREAS, The Master's University and Seminary (formerly, The Master's College and Seminary), a nonprofit public benefit corporation duly organized and existing under the laws of the State of California and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the `Borrower"), has requested that the CMFA issue and sell revenue bonds in an aggregate principal amount not to exceed $35,000,000 (the "Bonds") for the purpose of making a loan to the Borrower to enable the Borrower to (i) finance all or a portion of the acquisition, construction, improvement, renovation, and equipping of certain educational facilities and amenities for the benefit of the Borrower, to be owned and operated by the Borrower, (ii) refinance the outstanding principal amount of the California Statewide Communities Development Authority Variable Rate Revenue Bonds (The Master's College) Series 2014, issued by the California Statewide Communities Development Authority for the purpose of refinancing indebtedness incurred by the Borrower in connection with certain capital projects of the Borrower located within the territorial limits of the City and (iii) pay certain costs of issuance with respect to the Bonds (together, the "Project"); and WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the "Code"), the issuance of the Bonds by the CMFA must be approved by the City because the Project is located and to be located within the territorial limits of the City; and WHEREAS, the City Council of the City (the "City Council") is the elected legislative body of the City and is one of the "applicable elected representatives" required to approve the N issuance of the Bonds under Section 147(f) of the Code; and 0 Q WHEREAS, the CMFA has requested that the City Council approve the issuance of the Bonds by the CMFA in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Agreement, among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the CMFA; and WHEREAS, the CMFA has requested that the City Council approve the issuance of the Bonds by the CMFA in order to satisfy the requirements of Section 4 of the Agreement; and WHEREAS, the Bonds shall not be deemed to constitute a debt of the City or 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 the taxing power of the City is pledged to the payment of the principal of or interest on the Bonds; and WHEREAS, the City Council has determined that approval of the issuance of the Bonds is to satisfy the requirements of Section 147(f) of the Code, and shall in no event constitute an endorsement of the Bonds or the Project or the creditworthiness of the Borrower, nor shall such approval in any event be construed to obligate the City for the payment of the principal of or premium or interest on the Bonds or 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 Bonds or any of the agreements or obligations of the Authority an indebtedness of the City, within the meaning of any constitutional or statutory provision whatsoever. NOW, THEREFORE, the City Council of the City of Santa Clarita, California, does hereby resolve as follows: SECTION 1. All of the above recitals are true and correct and the City Council so finds SECTION 2. The City Council hereby approves the issuance of the Bonds by the CMFA and finds the Project will create the significant public benefits set forth in foregoing recitals. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds by the CMFA, 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 Project is located and to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement, and Section 6586.5 of the Act. SECTION 3. The issuance of the Bonds shall be subject to approval by the CMFA of all financing documents relating thereto to which the CMFA is a party. The City shall have no responsibility or liability whatsoever with respect to the Bonds. N SECTION 4. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing or refinancing with respect the Project; (ii) make Q 2 any contribution or advance any funds whatsoever to the CMFA; or (iii) take any further action with respect to the CMFA or its membership therein. SECTION 5. The executing officer(s), the Clerk of the Council and all other proper officers and officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary to effect the purposes of this resolution and the transactions herein authorized. SECTION 6. The Clerk shall forward a certified copy of this resolution to the CMFA in care of its counsel: Ronald E. Lee, Esq. Jones Hall, a Professional Law Corporation 475 Sansome Street, Suite 1700 San Francisco, CA 94111 SECTION 7. This resolution shall take effect immediately upon its adoption. SECTION S. The City Clerk shall certify to the adoption of this resolution. PASSED, APPROVED, AND ADOPTED this 22nd day of October 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, do hereby certify that the foregoing Resolution 19 - was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the 22nd day of October 2019, by the following vote: AYES: COUNCIL,MEMBERS: NOES: COUNCIL,MEMBERS: ABSENT: COUNCIL,MEMBERS: CITY CLERK Q