HomeMy WebLinkAbout2016-09-13 - AGENDA REPORTS - HMNMH TEFRA HEARING (2)Agenda Item: 10
CITY OF SANTA CLARITA
AGENDA REPORT
PUBLIC HEARINGS
CITY MANAGER APPROVAL: fill
DATE: September 13, 2016
SUBJECT: HENRY MAYO NEWHALL MEMORIAL HOSPITAL TAX EQUITY
AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING
DEPARTMENT: Administrative Services
PRESENTER: Lance O'Keefe
RECOMMENDED ACTION
City Council:
1. 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 (Ca1PFA or Authority) in an aggregate amount not to exceed $150 million to
finance the construction of a New Patient Tower at the Henry Mayo Newhall Memorial
Hospital.
2. City Council approve the Ca1PFA's Joint Exercise of Powers Agreement naming the City as
an Additional Member to the Authority.
BACKGROUND
The California Public Finance Authority is a joint exercise of powers authority created under the
California Joint Powers Authority Act. More than 15 California cities and counties are members
of the 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 the California Public Finance Authority to conduct a public
hearing under and in accordance with Section 147(f) of the Internal Revenue Code in order to
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issue tax-exempt revenue bonds (Bonds) in an aggregate amount not to exceed $150 million on
behalf of Henry Mayo Newhall Memorial Hospital (Borrower). The Borrower will use the
proceeds of the Bonds to fund the construction of a new 125,000-square-foot patient care tower
(Project). The Project will add an additional 120 patient beds, a new maternity unit, and
additional operating rooms. The Project construction timeline is expected to begin in 2016 and
end in 2018. The Project is part of the Borrower's 15-year Master Plan Development that was
approved by City Council on December 9, 2008.
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; no City revenues are at risk by this bond issuance.
In order for the Authority to issue such Bonds, the City must 1) become an Additional Member
of the Authority through the signing of a Joint Exercise of Powers Agreement (JPA), 2) conduct
a public hearing allowing members of the public to comment on the proposed Project, and 3)
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 being a member of the Authority and, as the
governmental entity having jurisdiction over the site, approving of the Authority's issuance of
indebtedness.
The City is not a current member of the Authority, and there is no cost to the City to become an
Additional Member of the Authority. The approval and adoption of the resolution authorizing
the issuance of Bonds will agree that the City will become a member of the Authority through
the signing of a JPA.
The City has previously conducted public hearings to allow Henry Mayo Newhall Memorial
Hospital to meet the procedural requirements associated with bond financing. On November 28,
2000, the City Council held a public hearing and adopted Resolution 00-153, approving the
issuance of tax-exempt obligations by the California Statewide Communities Development
Authority (CSCDA), in an amount not to exceed $55 million for the refinancing of 1988 tax-
exempt obligations and earthquake repairs and seismic retrofits. On April 24, 2007, the City
Council held a public hearing and adopted Resolution 07-24, approving the issuance of tax-
exempt obligations by the CSCDA, in an amount not to exceed $75 million for infrastructure
expansion and medical equipment upgrades. On November 26, 2013, City Council held a public
hearing and adopted Resolution 13-75, approving the issuance of tax-exempt obligations by the
CSCDA, in an amount not to exceed $175 million for the refinancing of the 2000 and 2007 tax-
exempt obligations. The remaining $54 million was allocated to the planning and construction
of various improvements to the facilities; including the predevelopment of the New Patient
Tower, a medical office building, parking structure expansion, and medical equipment.
For this item, the Borrower selected CaIPFA as the financing agency, as determined by the
Borrower's Capital Markets group through an in-house evaluation and selection process. As a
result of the Borrower selecting Ca1PFA, the City will have a positive fiscal impact from
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CaIPFA's Community Benefit Program. This program provides for 15% 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 and executes the JPA agreement, no other
participation of the City in the actions of the CaIPFA 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 the City becoming an Additional Member of CaIPFA, subsequently
declining the approval of the issuance of bonds by the CaIPFA for the New Patient Tower at
the Henry Mayo Newhall Memorial Hospital.
2. Other direction as determined by City Council.
FISCAL IMPACT
The City is to receive on an annual basis, over the 20-30 year life of the Bond, 15% of the
Administrative fee that Henry Mayo Newhall Memorial Hospital pays to CaIPFA annually,
which equates to approximately $2,250 in FY 2016-17. The life of the Bond has yet to be
determined by the Authority or the Borrower.
ATTACHMENTS
Public Notice
Resolution
CaIPFA Agreement/Additional Member Signature Page
CaIPFA No Liability Letter
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10.a
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 in
the City Hall Council Chambers, 23920 Valencia Boulevard, I" floor, Santa Clarita, California,
on the 13ffi day of September 2016, at or after 6:00 p.m., to consider the proposed issuance by the
California Public Finance Authority (the "Issuer") of its revenue bonds, in one or more series
from time to time, as part of a plan of finance, in an aggregate amount not to exceed
$150,000,000 (the "Bonds"). The proceeds of the Bonds will be used to finance construction of
a New Patient Tower (the "Project") at the Henry Mayo Newhall Memorial Hospital located at
23845 McBean Parkway, 23833 McBean Parkway, 23701 McBean Parkway, and 25727 McBean
Parkway, each in the community of Valencia in the City of Santa Clarita, California 91355-2083
(collectively, the "Facilities"). The Project is to be used in an integrated operation and owned
and operated by the Henry Mayo Newhall Memorial Hospital (the "Borrower"), a nonprofit
public benefit corporation and an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
The Bonds will be paid from repayments by the Borrower. The Bonds will not constitute 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 subdivision or agency thereof. The Bonds shall be payable solely from revenues
provided therefore in certain financing documents to be executed in connection therewith, and
the Issuer will not be obligated to pay the Bonds or the interest thereon except from the revenues
and proceeds pledged therefore and from funds provided by the Borrower.
Those wishing to comment on the proposed financing and the nature and location of the Project z
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
Clarita, 23920 Valencia Boulevard, Suite 120, Santa Clarita, California 91355, Attention: City
Clerk.
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If you wish to challenge this action in court, you may be limited to raising only those issues you o
or someone else raised at the public hearing described in this notice, or in written correspondence
delivered to the City Council, at, or prior to, the public hearing.
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Dated: September 13, 2016
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Mary Cusick a
City Clerk
Publish Date: August 27, 2016
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10.b
RESOLUTION 16-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA,
CALIFORNIA, APPROVING A TAX-EXEMPT BOND FINANCING TO BE ISSUED
BY THE CALIFORNIA PUBLIC FINANCE AUTHORITY TO BENEFIT
HENRY MAYO NEWHALL MEMORIAL HOSPITAL AND RELATED ACTION
WHEREAS, Henry Mayo Newhall Memorial Hospital, a nonprofit public benefit
corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of
1986 (the "Borrower"), has requested that the California Public Finance Authority (the
"Authority") issue bonds in one or more series in an aggregate principal amount not to exceed
$150,000,000 (the "Bonds");
WHEREAS, the proceeds of the Bonds will be used to, among other things, finance and
refinance the acquisition, construction, improvement, and equipping of health and related
facilities located at 23845 McBean Parkway, 23833 McBean Parkway, 23701 McBean Parkway,
and 25727 McBean Parkway, each in the community of Valencia in the City of Santa Clarita,
California 91355-2083 (collectively, the "Facilities");
WHEREAS, the Facilities to be financed and refinanced with the proceeds of the Bonds
are owned and operated by the Borrower and located in the community of Valencia in the City of
Santa Clarita (the "City");
WHEREAS, the City proposes to become an Additional Member of the Authority
pursuant to Section 12 of the Joint Exercise of Powers Agreement (the "Agreement") relating to
the California Public Finance Authority;
WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the
"Code"), the issuance of the Bonds by the Authority must be approved by the City;
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 issuance
of the Bonds under Section 147(f) of the Code;
WHEREAS, the Authority has requested that the Council approve the issuance of the
Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of
the Code; and
WHEREAS, pursuant to Section 147(f) of the Code, the 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 Authority.
NOW THEREFORE, the City Council of the City of Santa Clarita does hereby resolve as
follows:
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10.b
SECTION 1. The City hereby requests to become an Additional Member of the
Authority pursuant to Section 12 of the Agreement. The Council hereby approves the
Agreement and any one of the officers of the City is hereby authorized and directed to execute
the Agreement.
SECTION 2. The Council hereby approves the issuance of the Bonds by the Authority.
It is the purpose and intent of the Council that this Resolution constitute approval of the issuance
of the Bonds by the Authority, for the purposes of Section 147(f) of the Code.
SECTION 3. The issuance of the Bonds shall be subject to the approval of the Authority
of all financing documents relating thereto to which the Authority is a party. The City shall have
no responsibility or liability with respect to the Bonds or the credit worthiness of the Borrower.
SECTION 4. The adoption of this Resolution shall not obligate the City to 1) 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 2) make any contribution or advance any
funds to the Authority or the Borrower.
SECTION 5. 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 6. This Resolution shall become effective immediately upon its passage and
adoption.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Santa
Clarita, California this 13th day of September, 2016.
ATTEST:
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CITY CLERK
MAYOR
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10.b
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 was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the day of , 2016, by the following
vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
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JOINT EXERCISE OF POWERS AGREEMENT a -
RELATING TO THE CALIFORNIA PUBLIC FINANCE AUTHORITY I I
THIS AGREEMENT, dated as of May 12, 2015, among the parties executing this
Agreement (all such parties, except those which have withdrawn as provided herein, are referred
to as the "Members" and those parties initially executing this Agreement are referred to as the
"Charter Members"):
WITNESSETH
WHEREAS, pursuant to Title 1, Division 7, Chapter 5 of the California Government
Code (in effect as of the date hereof and as the same may from time to time be amended or
supplemented, the "Joint Exercise of Powers Act"), two or more public agencies may by
agreement jointly exercise any power common to the contracting parties; and
WHEREAS, each of the Members is a "public agency" as that term is defined in Section
6500 of the Joint Exercise of Powers Act; and
WHEREAS, each of the Members is empowered by law to promote economic, cultural
and community development, including, without limitation, the promotion of opportunities for
the creation or retention of employment, the stimulation of economic activity, the increase of the
tax base, and the promotion of opportunities for education, cultural improvement and public
health, safety and general welfare; and
WHEREAS, each of the Members may accomplish the purposes and objectives described
/ in the preceding preamble by various means; and
WHEREAS, each Member is also empowered by law to acquire, construct, improve,
operate and dispose of real property for a public purpose; and
WHEREAS, the Joint Exercise of Powers Act authorizes the Members to create a joint
exercise of powers entity with the authority to exercise any powers common to the Members, as
specified in this Agreement and to exercise the additional powers granted to it in the Joint
Exercise of Powers Act and any other applicable provisions of the laws of the State of California;
and
WHEREAS, a public entity established pursuant to the Joint Exercise of Powers Act is
empowered to issue or execute bonds, notes, commercial paper or any other evidences of
indebtedness, leases, installment sale or other financing agreements or certificates of
participation therein (herein "Bonds"), and to otherwise undertake financing programs under the
Joint Exercise of Powers Act or other applicable provisions of the laws of the State of California
to accomplish its public purposes; and
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WHEREAS, the Members have determined to specifically authorize a public entity a
authorized pursuant to the Joint Exercise of Powers Act to issue Bonds pursuant to the Joint
Exercise of Powers Act or other applicable provisions of the laws of the State of California; and
WHEREAS, it is the desire of the Members to use a public entity established pursuant to
the Joint Exercise of Powers Act to undertake the financing and/or refinancing of projects of any
nature, including, but not limited to, capital or working capital projects, purchase or acquisition
of property, receivables, commodities, bonds, other revenue streams or assets of any kind,
liability or other insurance, or retirement programs, or facilitating Members use of existing or
new financial instruments and mechanisms; and
WHEREAS, by this Agreement, each Member desires to create and establish the
"California Public Finance Authority" for the purposes set forth herein and to exercise the
powers provided herein;
NOW, THEREFORE, the Members, for and in consideration of the mutual promises and
agreements herein contained, do agree as follows:
Section 1. Purpose.
This Agreement is made pursuant to the provisions of the Joint Exercise of Powers Act.
The purpose of this Agreement is to establish a public entity for the joint exercise of powers
common to the Members and for the exercise of additional powers given to a joint powers entity
under the Joint Powers Act or any other applicable law, including, but not limited to, the
issuance of Bonds for any purpose or activity permitted under the Joint Exercise of Powers Act
or any other law. Such purpose will be accomplished and said power exercised in the manner
hereinafter set forth.
Section 2. Term.
This Agreement shall become effective in accordance with Section 17 as of the date
hereof and shall continue in full force and effect until such time as it is terminated in writing by
all the Members; provided, however, that this Agreement shall not terminate or be terminated
until all Bonds issued or caused to be issued by the Authority (defined below) shall no longer be
outstanding under the terms of the indenture, trust agreement, resolution or other instrument
pursuant to which such Bonds are issued.
Section 3. Authority.
A. CREATION AND POWERS OF AUTHORITY.
Pursuant to the Joint Exercise of Powers Act, there is hereby created a public
entity to be known as the "California Public Finance Authority" (the "Authority"), and
said Authority shall be a public entity separate and apart from the Members. Its debts,
liabilities and obligations do not constitute debts, liabilities or obligations of any
Members.
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B. BOARD. a
The Authority shall be administered by the Board of Directors (the "Board," or
the "Directors" and each a "Director") whose members shall be, at all times, members of
the Board of Supervisors (the "Board of Supervisors") of Kings County, California, with
each such Director serving in his or her individual capacity as Director of the Board. The
term of office as a member of the Board shall terminate when such member shall cease to
be a member of the Board of Supervisors and the successor to such member of the Board
of Supervisors shall become a member of the Board.
Notwithstanding the preceding paragraph, the Board may by resolution or
bylaws provide for changes in the qualifications, composition and number of Directors,
the appointment of Directors, successors, their respective terms of office and any other
provisions relating to the qualification and office of the Directors, including provision for
alternative Directors (in which case all references in this Agreement to any Director shall
be deemed to refer to and include the applicable alternate Director, if any, when so acting
in place of a regularly appointed Director).
The Board shall. be the administering agency of this Agreement and, as such,
shall be vested with the powers set forth herein, and shall administer this Agreement in
accordance with the purposes and functions provided herein.
Directors shall not receive any compensation for serving as such, but shall be
entitled to reimbursement for any expenses actually incurred in connection with serving
as a Director, if the Board shall determine that such expenses shall be reimbursed and
there are unencumbered funds available for such purpose.
C. OFFICERS; DUTIES; OFFICIAL BONDS.
The officers of the Authority shall be the Chair, Vice -Chair, Secretary and
Treasurer (defined below). The Board, in its capacity as administering agent of this
Agreement, shall elect a Chair, a Vice -Chair, and a Secretary of the Authority from
among Directors to serve until such officer is re-elected or a successor to such office is
elected by the Board. The Board shall appoint one or more of its officers or employees to
serve as treasurer, auditor, and controller of the Authority (the "Treasurer") pursuant to
Section 6505.6 of the Joint Exercise of Powers Act to serve until such officer is re-elected
or a successor to such office is elected by the Board.
Subject to the applicable provisions of any resolution, indenture, trust agreement
or other instrument or proceeding authorizing or securing Bonds (each such resolution,
indenture, trust agreement, instrument and proceeding being herein referred to as an
"Indenture") providing for a trustee or other fiscal agent, and except as may otherwise be
specified by resolution of the Board, the Treasurer is designated as the depositary of the
Authority to have custody of all money of the Authority, from whatever source derived
and shall have the powers, duties and responsibilities specified in Sections 6505, 6505.5
and 6509.5 of the Joint Exercise of Powers Act.
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The Treasurer of the Authority is designated as the public officer or person who a
has charge of, handles, or has access to any property of the Authority, and such officer
shall file an official bond with the Secretary of the Authority in the amount specified by
resolution of the Board but in no event less than $1,000.
The Board shall have the power to appoint such other officers and employees as it
may deem necessary and to retain independent counsel, consultants and accountants.
The Board shall have the power, by resolution, to the extent permitted by the Joint
Exercise of Power Act or any other applicable law, to delegate any of its functions to one
or more of the Directors or officers, employees or agents of the Authority and to cause
any of said Directors, officers, employees or agents to take any actions and execute any
documents or instruments for and in the name and on behalf of the Board or the
Authority.
D. MEETINGS OF THE BOARD.
(1) Ralph M. Brown Act.
All meetings of the Board, including, without limitation, regular,
adjourned regular, special, and adjourned special meetings shall be called,
noticed, held and conducted in accordance with the provisions of the
Ralph M. Brown Act (commencing with Section 54950 of the
Government Code of the State of California), or any successor legislation
hereinafter enacted (the "Brown Act").
(2) Regular Meetings.
The Board shall provide for its regular meetings; provided,
however, it shall hold at least one regular meeting each year. The date,
hour and place of the holding of the regular meetings shall be fixed by
resolution of the Board. To the extent permitted by the Brown Act, such
meetings may be held by telephone conference.
(3) Special Meetings.
Special meetings of the Board may be called in accordance with
the provisions of Section 54956 of the Government Code of the State of
California. To the extent permitted by the Brown Act, such meetings may
be held by telephone conference.
(4) Minutes.
The Secretary of the Authority shall cause to be kept minutes of
the regular, adjourned regular, special, and adjourned special meetings of
the Board and shall, as soon as possible after each meeting, cause a copy
of the minutes to be forwarded to each Director.
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(5) Quoruin.
A majority of the Board shall constitute a quorum for the
transaction of business. No action may be taken by the Board except upon
the affirmative vote of a majority of the Directors present at the meeting,
except that less than a quorum may adjourn a meeting to another time and
place.
E. RULES AND REGULATIONS.
The Authority may adopt, from time to time, by resolution of the Board such
bylaws, policies or rules and regulations for the conduct of its meetings and affairs as
may be required.
Section 4. Powers.
The Authority shall have the power, in its own name, to exercise the common powers of
the Members and to exercise all additional powers given to a joint powers entity under any of the
laws of the State of California, including, but not limited to, the Joint Exercise of Powers Act, for
any purpose authorized under this Agreement. Such powers shall include the common powers
specified in this Agreement and may be exercised in the manner and according to the method
provided in this Agreement. The Authority is hereby authorized to do all acts necessary for the
exercise of such power, including, but not limited to, any of all of the following: to make and
enter into contracts; to employ agents and employees; to acquire, construct, improve, own,
maintain and operate, or provide for maintenance and operation, and sell, lease, pledge, assign,
mortgage or otherwise dispose, of any property, improvements, commodities, leases, contracts,
receivables, bonds or other revenue streams or assets of any kind; to exercise the power of
condemnation; to incur debts, liabilities or obligations; to receive gifts, contributions and
donations of property, funds, services, and other forms of assistance from person, firms,
corporations and any governmental entity; to sue and be sued in its own name; to establish and
collect fees; to form public benefit nonprofit corporations or other affiliate entities to accomplish
any of its purposes; to make grants, loans or provide other financial assistance to governmental,
nonprofit and for profit organizations to accomplish any of its purposes; and generally to do any
and all things necessary or convenient to accomplish its purposes. The boundaries of the
Authority shall encompass the boundaries of all the Members and the powers of the Authority
may be exercised anywhere within those boundaries or to the extent permitted by the laws of the
State of California, including, but not limited to the Joint Exercise of Powers Act, outside of
those boundaries, which may be outside of the State of California, provided that the power of
condemnation may only be exercised within the jurisdictional boundaries of the Charter
Members.
Without limiting the generality of the foregoing, the Authority may issue or cause to be
issued Bonds, and pledge any property, contracts or revenues as security to the extent permitted
under the Joint Exercise of Powers Act, or any other applicable provision of law.
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The manner in which the Authority shall exercise its powers and perform its duties is and
shall be subject to the restrictions upon the manner in which a California county could exercise
such powers and perform such duties. The manner in which the Authority shall exercise its
powers and perform its duties shall not be subject to any restrictions applicable to the manner in
which any other public agency could exercise such powers or perform such duties, whether such
agency is a party to this Agreement or not.
Section 5. Fiscal Year.
For the purposes of this Agreement, the term "Fiscal Year" shall mean the fiscal year as
established from time to time by resolution of the Board, being, at the date of this Agreement, the
period from July 1 to and including the following June 30, except for the first Fiscal Year which
shall be the period from the date of this Agreement to June 30, 2015.
Section 6. Disposition of Assets.
At the end of the term hereof or upon the earlier termination of this Agreement as set
forth in Section 2, after payment of all expenses and liabilities of the Authority, all property of
the Authority both real and personal shall automatically vest in the Members in the manner and
amount determined by the Board in its sole discretion and shall thereafter remain the sole
property of the Members; provided, however, that any surplus money on hand shall be returned
in proportion to the contributions made by the Members.
Section 7. Bonds.
From time to time the Authority shall issue Bonds, in one or more series, for the purpose
of exercising its powers and raising the funds necessary to carry out its purposes under this
Agreement.
The services of bond counsel, financing consultants and other consultants and advisors
working on the projects and/or their financing or refinancing or on post -issuance compliance or
administration may be used by the Authority. The expenses of the Board shall be paid from the
proceeds of the Bonds, payments made by Bond obligors or other third parties, or any other
unencumbered funds of the Authority available for such purpose.
Section 8. Bonds Only Limited and Special Obligations of Authority.
The Bonds, together with the interest and premium, if any, thereon, shall not be deemed
to constitute a debt of any Member or pledge of the faith and credit of the Members or the
Authority. The Bonds shall be only special obligations of the Authority, and the Authority shall
under no circumstances be obligated to pay the Bonds except from revenues and other funds
pledged therefor. Neither the Members nor the Authority shall be obligated to pay the principal
of, premium, if any, or interest on the Bonds, or other costs incidental thereto, except the
Authority from the revenues and funds pledged and available therefor, and neither the faith and
credit nor the taxing power of the Members nor the faith and credit of the Authority shall be
pledged to the payment of the principal of, premium, if any, or interest on the Bonds nor shall the
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Members or the Authority in any manner be obligated to make any appropriation for such
payment.
No covenant or agreement contained in any Bond or related document shall be deemed to
be a covenant or agreement of any Director, or any officer, employee or agent of the Authority in
his or her individual capacity, and neither the Board of the Authority nor any Director or officer
thereof executing the Bonds shall be liable personally on any Bond or be subject to any personal
liability or accountability by reason of the issuance of any Bonds.
Section 9. Accounts and Reports.
All funds of the Authority shall be strictly accounted for. The Authority shall establish
and maintain such funds and accounts as may be required by good accounting practice and by
any provision of any Indenture (to the extent such duties are not assigned to a trustee of Bonds).
The books and records of the Authority shall be open to inspection at all reasonable times by
each Member.
The Treasurer of the Authority shall cause an independent audit to be made of the books
of accounts and financial records of the Authority by a certified public accountant or public
accountant in compliance with the provisions of Section 6505 of the Joint Exercise of Powers
Act. In each case the minimum requirements of the audit shall be those prescribed by the State
Controller for special districts under Section 26909 of the Government Code of the State of
California and shall conform to generally accepted auditing standards. When such an audit of
accounts and records is made by a certified public accountant or public accountant, a report
thereof shall be filed as a public record with each Member and also with the county auditor of
each county in which a Member is located; provided, however, that to the extent permitted by
law, the Authority may, instead of filing such report with each Member and such county auditor,
elect to post such report as a public record electronically on a website designated by the
Authority. Such report if made shall be filed within 12 months of the end of the Fiscal Year or
Years under examination.
The Treasurer is hereby directed to report in writing on the first day of July, October,
January, and April of each year to the Board and the Members which report shall describe the
amount of money held by the Treasurer for the Authority, the amount of receipts since the last
such report, and the amount paid out since the last such report (which may exclude amounts held
by a trustee or other fiduciary in connection with any Bonds to the extent that such trustee or
other fiduciary provided regular reports covering such amounts.)
Any costs of the audit, including contracts with, or employment of, certified public
accountants or public accountants in making an audit pursuant to this Section, shall be borne by
the Authority and shall be a charge against any unencumbered funds of the Authority available
for that purpose.
In any Fiscal Year the Board may, by resolution adopted by unanimous vote, replace the
annual special audit with an audit covering a two-year period.
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Section 10. Funds. a
Subject to the applicable provisions of any Indenture, which may provide for a trustee or
other fiduciary to receive, have custody of and disburse Authority funds, the Treasurer of the
Authority shall receive, have the custody of and disburse Authority funds pursuant to the
accounting procedures developed under Sections 3.0 and 9, and shall make the disbursements
required by this Agreement or otherwise necessary to carry out any of the provisions of purposes
of this Agreement.
Section 11. Notices.
Notices and other communications hereunder to the Members shall be sufficient if
delivered to the cleric of the governing body of each Member; provided that, to the extent
permitted by law, the Authority may provide notices and other communications and postings
electronically (including, without limitation, through email or by posting to a website).
Section 12. Additional Members/Withdrawal of Members.
Qualifying public agencies may be added as parties to this Agreement and become
Charter Members upon: (1) the filing by such public agency with the Authority of an executed
counterpart of this Agreement, together with a copy of the resolution of the governing body of
such public agency approving this Agreement and the execution and delivery hereof, and (2)
adoption of a resolution of the Board approving the addition of such public agency as a Charter
Member. Upon satisfaction of such conditions, the Board shall file such executed counterpart of
this Agreement as an amendment hereto, effective upon such filing.
Qualifying public agencies may also be added as Non -Charter Members ("Additional
Members") of the Authority upon: (1) the filing by such public agency with the Authority of a
resolution of the governing body of such public agency requesting to be added as an Additional
Member of the Authority, and (2) adoption of a resolution of the Board approving the addition of
such public agency as an Additional Member. An Additional Member may limit in the
aforementioned resolution the scope of its Additional Membership to what is necessary or
appropriate to facilitate the financing or refinancing of one or more specified projects or
programs.
A Member may withdraw from this Agreement upon written notice to the Board;
provided, however, that at least one Member shall be a Charter Member and no such withdrawal
shall result in the dissolution of the Authority so long as any Bonds remain outstanding. Any
such withdrawal shall be effective only upon receipt of the notice of withdrawal by the Board,
which shall acknowledge receipt of such notice of withdrawal in writing and shall file such
notice as an amendment to this Agreement effective upon such filing.
Section 13. Indemnification.
To the full extent permitted by law, the Board may authorize indemnification by the
Authority of any person who is or was a Director or an officer, employee or other agent of the
Authority, and who was or is a party or is threatened to be made a party to a proceeding by
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reason of the fact that such person is or was such a Director or an officer, employee or other
agent of the Authority, against expenses, including attorneys fees, judgments, fines, settlements
and other amounts actually and reasonably incurred in connection with such proceeding, if such
person acted in good faith in a manner such person reasonably believed to be in the best interests
of the Authority and, in the case of a criminal proceeding, had no reasonable cause to believe the
conduct of such person was unlawful and, in the case of an action by or in the right of the
Authority, acted with such care, including reasonable inquiry, as an ordinarily prudent person in
a like position would use under similar circumstances. The Board may purchase a policy or
policies of insurance in furtherance of any indemnification obligation created or otherwise in
protection of Directors, officers, employees or other agents.
Section 14. Contributions and Advances.
Contributions or advances of public funds and of the use of personnel, equipment or
property may be made to the Authority by the Members for any of the purposes of this
Agreement. Payment of public funds may be made to defray the cost of any such contribution or
advance. Any such advance may be made subject to repayment, and in such case shall be repaid,
in the manner agreed upon by the Authority and the Member making such advance at the time of
such advance. It is mutually understood and agreed to that no Member has any obligation to
make advances or contributions to the Authority to provide for the costs and expenses of
administration of the Authority, even though any Member may do so. The Members understand
and agree that a portion of the funds of the Authority that otherwise may be allocated or
distributed to the Members may instead be used to make grants, loans or provide other financial
assistance to governmental units and to nonprofit organizations to accomplish any of the
governmental unit's or nonprofit organization's purposes.
Section 15. Immunities.
All of the privileges and immunities from liabilities, exemptions from laws, ordinances
and rules, and other benefits which apply to the activity of officers, agents or employees of
Members when performing their respective functions within the territorial limits of their
respective public agencies, shall apply to the same degree and extent to the Directors, officers,
employees, agents or other representatives of the Authority while engaged in the performance of
any of their functions or duties under the provisions of this Agreement.
Section 16, Amendments.
Except as provided in Sections 3B and 12 above, this Agreement shall not be amended,
modified, or altered, unless the written consent of each of the Charter Members is obtained;
provided that no amendment shall materially adversely affect the interests of any Additional
Member unless the negative consent of that Additional Member is also obtained. To obtain the
negative consent of each such Additional Member, the following negative consent procedure
shall be followed: (a) the Authority shall provide each such Additional Member with a notice at
least sixty (60) days prior to the date such proposed amendment is to become effective
explaining the nature of such proposed amendment and this negative consent procedure; (b) the
Authority shall provide each such Additional Member who did not respond a reminder notice
with a notice at least thirty (30) days prior to the date such proposed amendment is to become
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effective; and (c) if no such Additional Member objects to the proposed amendment in writing a
within sixty (60) days after the initial notice, the proposed amendment shall become effective
with respect to all Members.
Section 17. Effectiveness.
This Agreement shall become effective and be in full force and effect and a legal, valid
and binding obligation of each of the Members on the date that the Board shall have received
from two of the Charter Members an executed counterpart of this Agreement, together with a
certified copy of a resolution of the governing body of each such Charter Member approving this
Agreement and the execution and delivery hereof.
Section 18. Partial Invalidity.
If any one or more of the terms, provisions, promises, covenants or conditions of this
Agreement shall to any extent be adjudged invalid, unenforceable, void or voidable for any
reason whatsoever by a court of competent jurisdiction, each and all of the remaining terms,
provisions, promises, covenants and conditions of this Agreement shall not be affected thereby,
and shall be valid and enforceable to the fullest extent permitted by law.
Section 19. Successors.
This Agreement shall be binding upon and shall inure to the benefit of the successors of
the parties hereto. Except to the extent expressly provided herein, no Member may assign any
right or obligation hereunder without the consent of the other Members.
Section 20. Miscellaneous.
This Agreement may be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
The section headings herein are for convenience only and are not to be construed as
modifying or governing the language in the section referred to.
Wherever in this Agreement any consent or approval is required, the same shall not be
unreasonably withheld.
This Agreement shall be governed under the laws of the State of California.
This Agreement is the complete and exclusive statement of the agreement among the
Members, which supercedes and merges all prior proposals, understandings, and other
agreements, whether oral, written, or implied in conduct, between and among the Members
relating to the subject matter of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and attested by their duly authorized representatives as of the day and year first above written.
ATTEST:
By ()P - haLL
Catherine Venturella
Clerk of the Board
0
Charter Member:
COUNTY OF KINGS
By 11�,,? 1-d
Richard gundes, Chairman
Kings County Board of Supervisors
Charter Member:
HOUSING AUTHORITY OF THE
COUNTY OF KINGS
By `_ •� ,��
Richard Fa des, Chairman
;nnifer Molina
lerk of the Housing Authority Board
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IN WITNESS WHEREOF, the Additional Members hereto have caused this Agreement
to be executed and attested by their proper officers thereunto duly authorized.
Dated:
ATTEST:
By:
Its:
Additional Member Name:
By:
Its:
[Signature Page to Joint Exercise of Powers Agreement Relating to the California Public Finance Authority]
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O R R I C K
December 21, 2015
California Public Finance Authority
2999 Oak Road, Suite 710
Walnut Creek, CA 94597
Attn: Michael LaPierre
Re: California Public Finance Authority
ORRICK, HERRINGTON 8 SUTCLIFFE LLP
THE ORRICK BUILDING
405 HOWARD STREET
SAN FRANCISCO,CA 94105
tel 415-773-5700
fax 415-773-5759
www.orrick.com
Justin Cooper
415.773.5908
jcooper@orrick.com
The California Public Finance Authority ("Ca1PFA") was formed pursuant to a Joint Exercise
of Powers Agreement (the "Agreement") between two original members, Kings County and the
Housing Authority of Kings County (the "Charter Members"). In accordance with Section 12
of the Agreement, additional cities, counties and other local government entities may, and have,
joined Ca1PFA (each a Non -Charter Member or "Additional Member" and, together with the
Charter Members, the "Members"). You have asked whether an Additional Member is
exposed to liability by virtue of its decision to become a member of Ca1PFA and/or its approval
of bonds proposed to be issued by Ca1PFA.
Ca1PFA is a political subdivision of the State of California created under the California Joint
Powers Act (California Government Code Section 6500 and following) (the "Act") and the
Agreement. Pursuant to the Act and the Agreement, Ca1PFA is authorized to issue revenue
bonds and certificates of participation for the benefit of conduit borrowers.
In order to meet state law and policy requirements for the issuance of certain private activity
bonds, Ca1PFA has adopted a policy to not issue bonds or other forms of indebtedness unless the
governing body of an Additional Member (or Charter Member, as the case may be) in which the
proposed project (the "Project) is located approves the issuance of bonds for the Project.
Furthermore, in the case of most tax-exempt obligations issued by Ca1PFA, Section 147(f) of the
Internal Revenue Code of 1986 requires that the proposed financing be approved by a
governmental unit having jurisdiction over the area in which the facility to be financed is
located. A financing will be treated as having been approved by a governmental unit if "the
applicable elected representative" of such governmental unit approves such issue after a
public hearing following reasonable public notice of such hearing. This is referred to as
"TEFRA" approval.
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Pursuant to applicable state law, Ca1PFA policies, and the documents providing for the issuance
of bonds by Ca1PFA, the bonds are issued as limited obligations of Ca1PFA, not of any Charter
Member or Additional Member, and are payable solely out of the revenues and receipts derived
from the Project being financed and the loan(s) made by Ca1PFA to the borrower from proceeds
of the bonds.
Specifically, Section 8 of the Agreement provides that "[t]he Bonds, together with the interest
and premium, if any, thereon, shall not be deemed to constitute a debt of any Member or pledge
of the faith and credit of the Members... Neither the Members nor... shall be obligated to pay the
principal of, premium, if any, or interest on the Bonds, or other costs incidental thereto..."
(emphasis added). The Agreement also expressly provides that Ca1PFA is a public entity
separate and apart from the Members, and "[i]ts debts, liabilities and obligations do not
constitute debts, liabilities or obligations of any Members."'
Accordingly, bonds issued for any particular Project will be indebtedness of Ca1PFA, and the
Member in whose jurisdiction the Project is located will not be asked to approve or execute any
of the financing documents. Moreover, the disclosure prepared for the bonds will not have any
information regarding the Member and will not include the Member's name, other than with
respect to where the Project is located. The documents will, however, be made available for
review by the Member's staff upon request.
In order to further limit Ca1PFA's financial liability and that of its Members, Ca1PFA requires
that, in connection with the loan of bond proceeds to a borrower, such borrower must
indemnify Ca1PFA and the applicable Member from all losses, damages, claims, actions,
liabilities, costs and expenses of any conceivable nature, kind or character relating to the
applicable bonds and Project. We call attention, however, to the fact that such obligation may
be subject to bankruptcy, insolvency, reorganization, arrangement and other laws relating to or
affecting creditors' rights, to the application of equitable principles, to the exercise of judicial
discretion in appropriate cases and to possible limitations on legal remedies.
1 See Cal. Government Code Section 6508.1. "...the debts, liabilities, and obligations of the agency shall be
debts, liabilities, and obligations of the parties to the agreement unless the agreement specifies otherwise."
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Please do not hesitate to contact me if you have further questions with respect to this matter
Sincerely yours,
Is/Justin Cooper
Justin Cooper
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