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HomeMy WebLinkAbout2025-08-26 - AGENDA REPORTS - MASTERS UNIVERSITY TEFRA HEARINGO Agenda Item: 2 CITY OF SANTA CLARITA AGENDA REPORT PUBLIC HEARINGS CITY MANAGER APPROVAL: Lj ' DATE: August 26, 2025 SUBJECT: THE MASTER'S UNIVERSITY AND SEMINARY TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING DEPARTMENT: City Manager's Office 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 $65 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 350 municipalities, including the City of Santa Clarita (City), have become members of CMFA. The City received a request from CMFA and The Master's University and Seminary (TMU) 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 $65 million for TMU, a nonprofit religious 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 Master's University and Seminary has requested that the CMFA participate in the issuance of one or more series of revenue bonds in an aggregate principal amount not to exceed $65 million to be applied as follows: (i)(a) approximately $21 million to refinance the costs to purchase and modestly improve certain single-family residential properties located within the 21600 block of Cleardale Street, between 24806 and 24864 of Meadview Avenue, within the Page 1 Packet Pg. 71 O 21700 block of Oak Orchard Road, within the 21300 and 21600 blocks of Placenta Canyon Road, and between 21900 and 22040 of Placerita Canyon Road, between 21705 and 21759, and 21804 and 21926 of Placeritos Boulevard, and within the 24700 block of Quigley Canyon Road, all of which were previously acquired for temporary housing of TMU students, (b) approximately $7.2 million to refinance the costs to purchase, improve and equip an apartment complex located at 22710 8th Street, and (c) approximately $10 million to finance the acquisition, improvement, and equipping of one or more apartment complexes located within one-half mile of the 22710 8th Street complex all located within the territorial limits of the City; (ii) approximately $13 million to finance or refinance the acquisition, construction, improvement, renovation, and equipping of certain educational facilities and amenities including capital improvements and expenditures to academic, student support, and related facilities on the TMU main campus generally located at 21726 Placerita Canyon Road, Santa Clarita, California (collectively the "Projects"); (iii) to finance capitalized interest on the Bonds; and (iv) to pay costs of issuance with respect to the Bonds. The aforementioned residential properties and apartment complexes are expected to be used as campus housing for faculty, staff, and temporary student housing primarily for upperclassmen enrolled at TMU. Proceeds of the Bonds will not be used to acquire additional single-family residential housing within the Placenta Canyon area of the City. The facilities so financed and refinanced, consisting of the Projects, will be used for exempt educational purposes of TMU, and will be owned and operated by, and used by, TMU or a related subsidiary. The Projects will be used in a manner consistent with the current TMU Master Plan and any amendment to such plan that is approved by the City. 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. 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 Bonds, the City must conduct a public hearing, allowing members of the public to comment on the proposed Project and the Bonds, and approve the CMFA's issuance of Bonds on behalf of the proposed financing. Although CMFA, not the City, will be the issuer of the Bonds for the Project, the financing cannot proceed without the City, as the governmental entity having jurisdiction over the site, approving the Bonds. The Master's University and Seminary selected CMFA as the financing agency. As a result of TMU selecting CMFA, the City will receive a one-time issuance fee paid by the CMFA. Participation by the City will not impact its appropriations limits or constitute any type of indebtedness. Specifically, 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 any of the cost mentioned above. In addition, the City's credit, bond ratings, and revenues are not at risk whatsoever by adopting this resolution or bond issuance. Once the City holds the required public hearing and adopts the required resolution following the public hearing, no other participation by the City will be required in any capacity. Page 2 Packet Pg. 72 O 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 planning approval, permit or other action necessary, in connection with the Project. ALTERNATIVE ACTION 1. City Council not agree to approve the issuance of bonds by CMFA for TMU. 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 $13,000 and will be deposited to General Fund miscellaneous revenues (100-462101). The actual amount may vary and will be dependent on the actual closing of the bonds. ATTACHMENTS Public Hearing Notice Resolution Page 3 Packet Pg. 73 2.a NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that on Tuesday, August 26, 2025, a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code") will be held by the City Council of the City of Santa Clarita (the "City") with respect to 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 $65,000,000 (the `Bonds"). The proceeds of the Bonds will be loaned by the Authority to The Master's University and Seminary, a nonprofit religious 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 "University") to be applied as follows: (i)(a) approximately $21 million to refinance the costs to purchase and modestly improve certain single-family residential properties located within the 21600 block of Cleardale St, between 24806 and 24864 of Meadview Ave., within the 21700 block of Oak Orchard Rd., within the 21300 and 21600 blocks of Placenta Canyon Rd., and between 21900 and 22040 of Placenta Canyon Rd., between 21705 and 21759, and 21804 and 21926 of Placentos Blvd., and within the 24700 block of Quigley Canyon Rd. (all previously acquired for the educational purposes of the University), (b) approximately $7.2 million to refinance the costs to purchase, improve and equip an apartment complex located at 22710 8th St., and (c) approximately $10 million to finance the acquisition, improvement and equipping of one or more apartment complexes located within one-half mile of the 22710 8th St. complex (all of the above, the "Properties") all located within the territorial limits of the City; (ii) approximately $13 million to finance or refinance the acquisition, construction, improvement, renovation and equipping of certain educational facilities and amenities including capital improvements and expenditures to academic, student support and related facilities on the University's main campus (the "Campus") generally located at 21726 Placerita Canyon Rd., Santa Clarita, California (together with the Properties, the "Projects"); (iii) to finance capitalized interest on the Bonds; and (iv) to pay costs of issuance with respect to the Bonds. The Properties are expected to be used as Campus housing for faculty, staff and temporary student housing primarily for upperclassmen enrolled at the University. Proceeds of the Bonds will not be used to acquire additional single-family residential housing within the Placenta Canyon area of the City. The facilities so financed and refinanced consisting of the Projects 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 Projects will be used in a manner consistent with the University's Campus Master Plan, as approved by the City, and any amendment to such plan that is approved by the City. 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. The public hearing will commence at 6:00 p.m., local time, or as soon thereafter as the matter can be heard and will be held at the City Council Chambers of the City of Santa Clarita, at 23920 Valencia Blvd., lst Floor, Santa Clarita, CA 91355. 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 Placenta Canyon Rd., Santa Clarita, CA 91321, Telephone: (661) 259-3540, Attention: John Russell, Controller. Packet Pg. 74 2.a At the public 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, CA 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. 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, c/o Michael Villegas, Assistant to the City Manager, at 23920 Valencia Blvd., 1st Floor, Santa Clarita, CA 91355. Date: August 15, 2025 Mary Cusick, MMC City Clerk Published: The Signal — August 19, 2025 Packet Pg. 75 2.b RESOLUTION NO. 25- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, 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 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 "Authority"), 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 Authority; and WHEREAS, the Master's University and Seminary, a nonprofit religious 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 Authority issue and sell revenue bonds in an aggregate principal amount not to exceed $65,000,000 (the "Bonds") for the purpose of making a loan to the Borrower to be applied as follows: (i)(a) approximately $21 million to refinance the costs to purchase and modestly improve certain single- family residential properties located within the 21600 block of Cleardale St, between 24806 and 24864 of Meadview Ave., within the 21700 block of Oak Orchard Rd., within the 21300 and 21600 blocks of Placerita Canyon Rd., and between 21900 and 22040 of Placerita Canyon Rd., between 21705 and 21759, and 21804 and 21926 of Placeritos Blvd., and within the 24700 block of Quigley Canyon Rd. (all previously acquired for the educational purposes of the Borrower), (b) approximately $7.2 million to refinance the costs to purchase, improve and equip an apartment complex located at 22710 8th St., and (c) approximately $10 million to finance the acquisition, improvement and equipping of one or more apartment complexes located within one-half mile of the 22710 8th St. complex (all of the above, the "Properties") all located within the territorial limits of the City; (ii) approximately $13 million to finance or refinance the acquisition, construction, improvement, renovation and equipping of certain educational facilities and amenities including capital improvements and expenditures to academic, student support and related facilities on the Borrower's main campus (the "Campus") generally located at 21726 Placerita Canyon Rd., Santa Clarita, California (together with the Properties, the "Projects"); (iii) to finance capitalized interest on the Bonds; and (iv) to pay costs of issuance with respect to the Bonds; WHEREAS, the Borrower has advised the City that the Properties will be used as housing for faculty, staff and temporary student housing primarily for upperclassmen enrolled at the Page 1 of 3 Packet Pg. 76 2.b Borrower in a manner consistent with the Borrower's approved Campus Master Plan, and any amendment to the Campus Master Plan that is approved by the City thereafter, and that proceeds of the Bonds will not be used to acquire additional single-family residential housing within the Placerita Canyon area of 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 Projects are 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 issuance of the Bonds under Section 147(f) of the Code; and 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 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 Authority; and WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the requirements of Section 4 of the Agreement. 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 Authority. 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 (a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Projects are located and are to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement. 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 whatsoever with respect to the Bonds. Section 4. The adoption of this resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Projects or any financing of the Projects; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, rehabilitation or operation of the Projects; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. Page 2 of 3 Packet Pg. 77 2.b Section 5. The officers and staff of the City are hereby authorized and directed, jointly and severally, to do any and all things, to execute and deliver any and all documents, which in consultation with City Attorney, they may deem necessary or advisable in order to effectuate the purposes of this Resolution, and any and all such actions previously taken by such officers or staff members are hereby ratified and confirmed. Section 6. This resolution shall take effect immediately upon its adoption. Section 7. The City Clerk shall certify to the passage and adoption of this resolution. PASSED, APPROVED, AND ADOPTED this 26th day of August 2025. 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 25-_was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the 26th day of August 2025, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Page 3 of 3 CITY CLERK Packet Pg. 78