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HomeMy WebLinkAbout2021-02-09 - AGENDA REPORTS - 2021 TEFRA HEARING (2)Agenda Item: 10 P CITY OF SANTA CLARITA AGENDA REPORT PUBLIC HEARINGS CITY MANAGER APPROVAL:1 DATE: February 9, 2021 SUBJECT: HENRY MAYO NEWHALL MEMORIAL HOSPITAL 2021 TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING DEPARTMENT: Administrative Services PRESENTER: Johanna Medrano 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 Public Finance Authority in an aggregate amount not to exceed $125 million to refinance bonds previous issued for the benefit of Henry Mayo Newhall Memorial Hospital d/b/a Henry Mayo Newhall Hospital (Borrower) in 2013 and 2014 and finance the construction, remodeling and equipping of new operating rooms at Henry Mayo Newhall Hospital. 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, including the City of Santa Clarita (City), are members of the California Public Finance Authority (CalPFA or Authority), 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 such bonds. 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 issue tax-exempt revenue bonds (Bonds) in an aggregate amount not to exceed $125 million on behalf of the Borrower. The Borrower will use the proceeds of the Bonds to refinance bonds previous issued for the benefit of the Borrower in 2013 and 2014 and fund the construction, Page 1 Packet Pg. 57 remodeling, and equipping of new operating rooms in the patient care tower (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 or refinanced 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) conduct a public hearing allowing members of the public to comment on the proposed Project, 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, the financing cannot proceed without the City, as the governmental entity having jurisdiction over the site, approving of the Authority's issuance of the Bonds. The City has previously in 2000, 2007, 2013, and 2016 conducted public hearings to allow Henry Mayo Newhall Memorial Hospital to meet the procedural requirements associated with bond financing. As a result of the Borrower selecting CaIPFA, the City will have a positive fiscal impact from CaIPFA'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 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 decline the approval of the issuance of bonds by the CaIPFA for 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 percent of the Administrative fee that Henry Mayo Newhall Memorial Hospital pays to CaIPFA annually, which equates to approximately $1,200 in FY 2021-22. The life of the Bond has yet to be determined by the Authority or the Borrower. Page 2 Packet Pg. 58 ATTACHMENTS Public Hearing Notice Henry Mayo 2021 - TEFRA Resolution Page 3 Packet Pg. 59 10.a NOTICE OF PUBLIC HEARING ON THE HENRY MAYO NEWHALL MEMORIAL HOSPITAL 2021 TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING NOTICE IS HEREBY GIVEN that at 6 p.m. on February 9, 2021 or as soon thereafter as practicable, at the regular meeting place of the City Council (the "Council") of the City of Santa Clarita (the "City"), City Council Chambers, 23920 Valencia Boulevard, Santa Clarita, 91355, a Public Hearing as required by Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), will be held to consider the proposed issuance by the California Public Finance Authority of its qualified 501(c)(3) bonds, as described in Section 145 of the Code, in one or more series from time to time, as part of a plan of finance, in an aggregate amount not to exceed $125,000,000 (the "Bonds"). The proceeds of the Bonds will be used to, among other things, finance and refinance the acquisition, construction, equipping, improvement, rehabilitation, remodeling and other capital improvements of health care and related facilities located on the campus of the Henry Mayo Newhall Hospital with a street address of 23845 McBean Parkway, in the community of Valencia in the City of Santa Clarita, California (collectively, the "Facilities"). The refinancing may include refinancing of all or a portion of the California Statewide Communities Development Authority Revenue Bonds (Henry Mayo Newhall Memorial Hospital) Series 2013A and Series 2013B and/or the California Statewide Communities Development Authority Insured Revenue Bonds (Henry Mayo Newhall Memorial Hospital) Series 2014, proceeds of which financed or refinanced other health care and related improvements that are part of the Facilities. The Facilities are all located along McBean Parkway and are adjacent to each other, from 25751 McBean Parkway westward to the main Orchard Village Road entrance. The Facilities are used or to be used in an integrated operation and are owned and/or operated or to be owned and/or operated by Henry Mayo Newhall Memorial Hospital, doing business as Henry Mayo Newhall Hospital, a nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986. At the hearing, the testimony of all interested persons will be heard. Persons who require accommodation for any audio, visual or other disability in order to participate in a public hearing of the City Council may obtain assistance by requesting such accommodation in writing addressed to the City Clerk, 23920 Valencia Boulevard, Santa Clarita, 91355 or telephonically by calling (661) 255-4391. Any such request for accommodation should be made at least 48 hours prior to the scheduled meeting for which assistance is requested. Due to the COVID-19 pandemic, the City Council meeting will be conducted remotely. Any interested persons wishing to express their views on the issuance of the Bonds or on the nature and location of the Facilities proposed to be financed and refinanced may participate via teleconference using a toll -free teleconference line available in the Agenda, including: Telephone: 833-548-0282 Meeting ID: 964 0497 2668. Further options for attending remotely and additional instructions for participation will be included in the posted City Council meeting agenda. If you challenge the proposed action in court, you may be limited to raising only those issues you 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. 4128-7494-8137.1 Packet Pg. 60 10.a Dated: January 28, 2021 Mary Cusick, MMC City Clerk Publish Dated: February 2,2021 4128-7494-8137.1 Packet Pg. 61 10.b RESOLUTION 21- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING A BOND FINANCING TO BE ISSUED BY THE CALIFORNIA PUBLIC FINANCE AUTHORITY TO BENEFIT HENRY MAYO NEWHALL MEMORIAL HOSPITAL, DOING BUSINESS AS HENRY MAYO NEWHALL HOSPITAL, AND RELATED ACTION IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $125,000,000, FOR THE PURPOSE OF FINANCING OR REFINANCING THE ACQUISITION, CONSTRUCTION, EQUIPPING, IMPROVEMENT, REHABILITATION, REMODELING AND OTHER CAPITAL IMPROVEMENTS OF HEALTH CARE AND RELATED FACILITIES AND CERTAIN OTHER -MATTERS RELATING THERETO WHEREAS, Henry Mayo Newhall Memorial Hospital, doing business as Henry Mayo Newhall 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 $125,000,000 (the "Bonds"); and WHEREAS, the proceeds of the Bonds will be used to, among other things, finance and refinance the acquisition, construction, equipping, improvement, rehabilitation, remodeling and other capital improvements of health care and related facilities located on the campus of the Henry Mayo Newhall Hospital with a street address of 23845 McBean Parkway, in the community of Valencia in the City of Santa Clarita, California (collectively, the "Facilities") and the refinancing may include refinancing of all or a portion of the California Statewide Communities Development Authority Revenue Bonds (Henry Mayo Newhall Memorial Hospital) Series 2013A and Series 2013B and/or the California Statewide Communities Development Authority Insured Revenue Bonds (Henry Mayo Newhall Memorial Hospital) Series 2014, proceeds of which financed or refinanced other health care and related improvements that are part of the Facilities, and the Facilities are all located along McBean Parkway and are adjacent to each other, from 25751 McBean Parkway westward to the main Orchard Village Road entrance; and WHEREAS, the Facilities to be financed and refinanced with the proceeds of the Bonds are owned and/or operated by the Borrower or to be owned and/or operated by the Borrower and located in the community of Valencia in the City of Santa Clarita (the "City"); and 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 because the Project is 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 an applicable elected representative under Section 147(f) of the Code; and Page 1 of 3 Packet Pg. 62 10.b WHEREAS, the Authority has requested that the City 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 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 Authority. NOW, THEREFORE, the City Council of the City of Santa Clarita, California, does hereby resolve as follows: SECTION 1. The City Council hereby approves the issuance of the Bonds by the Authority for the purposes of financing and refinancing the Project. It is the purpose and intent of the City 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 by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, in accordance with said Section 147(f). SECTION 2. 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 3. The adoption of this resolution shall not obligate the City to (i) 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 (ii) make any contribution or advance any funds to the Authority or the Borrower. SECTION 4. 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 5. This resolution shall become effective immediately upon its passage and adoption. PASSED, APPROVED AND ADOPTED this 9th day of February 2021. ATTEST: CITY CLERK DATE: MAYOR Page 2 of 3 Packet Pg. 63 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 No. 21- was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the 9th day of February 2021, by the following vote AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: CITY CLERK Page 3 of 3 Packet Pg. 64