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HomeMy WebLinkAbout75C - PH - TEFRA SAMUELI ACADEMYREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: JUNE 7, 2016 TITLE: PUBLIC HEARING ON ISSUANCE OF OBLIGATIONS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY FOR THE BENEFIT OF ORANGEWOOD REAL PROPERTY AND SAMUELI ACADEMY (STRATEGIC PLAN NO. 2,4) CITY MANAGER 10_=Ke)617� 14il, �7:[�3�I�7►1 CLERK OF COUNCIL USE ONLY: _00:• .rr ❑ As Recommended ❑ As Amended ❑ Ordinance on I6� Reading ❑ Ordinance on 2 "a Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 1. Conduct a Tax Equity and Financial Responsibility Act (TEFRA) hearing in consideration of issuance of tax - exempt obligations by the California Enterprise Development Authority for the purpose of financing and refinancing educational and related facilities located at 1901 and 1919 North Fairview Street, Santa Ana, California, for the benefit of Orangewood Real Property, LLC and Samueli Academy. 2. Adopt a resolution approving the issuance of the tax - exempt obligations by the California Enterprise Development Authority in an aggregate principal amount not to exceed Twelve Million Seven Hundred Fifty Thousand Dollars ($12,750,000) for the purpose of financing and refinancing educational and related facilities located at 1901 and 1919 North Fairview Street, Santa Ana, California, for the benefit of Orangewood Real Property, LLC and Samueli Academy. DISCUSSION Orangewood Real Property, LLC, a California limited liability company (the 'Borrower "), the sole member of which is the Orangewood Foundation, a California nonprofit public benefit corporation and an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code "), has requested that the California Enterprise Development Authority (the "Authority ") issue revenue obligations in the maximum principal amount of $12,750,000 (the "Obligations ") for the purpose of making a loan to the Borrower, to enable the Borrower to finance and refinance the cost of acquisition, construction, development, renovation, furnishing and equipping of educational and related facilities located at 1901 and 1919 North Fairview Street, Santa Ana, California (collectively, the "Facilities "). A portion of the proceeds of the Obligations will be used to pay costs of issuance in connection with the financing. 75C -1 TEFRA Public Hearing for Orangewood Real Property and Samueli Academy June 7, 2016 Page 2 The Borrower owns the Facilities and leases the Facilities to Samueli Academy (the "Academy'), a California nonprofit public benefit corporation and an organization described under Section 501(c)(3) of the Code. The Academy is a charter school established pursuant to the Charter Schools Act of 1992, as amended (constituting Part 26.8 of Division 4 of Title 2 of the Education Code). The Academy operates a high school at the Facilities, serving students in grades 9 through 12. A small portion of the Facilities is leased to Share Our Selves Corporation, a California nonprofit public benefit corporation and federally qualified health center. Share Our Selves Corporation operates an intermittent health clinic at the Facilities for the students of the Academy and their families. The Academy derives its name from its key benefactors, Henry and Susan Samueli. Henry and Susan Samueli are passionate philanthropists whose generosity extends throughout Orange County and worldwide. They are committed to investing in creative, sustainable and entrepreneurial approaches to promote scholastic achievement, build communities of acceptance and altruism, increase knowledge and opportunities, and enhance the quality of life of the underserved. They have provided significant, varied and ongoing support to the Academy for many years. The City of Santa Ana is an associate member of the Authority, a joint powers authority established by the California Association for Local Economic Development whose purpose is to issue tax - exempt and taxable conduit revenue bonds to fund commercial and industrial development projects within member jurisdictions. The Joint Powers Act, comprising Articles 1, 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Government Code of the State of California and Internal Revenue Code Section 145 provide for the issuance of tax - exempt "private activity" obligations by a conduit governmental issuer on behalf of a 501(c)(3) corporation to finance facilities used, owned and /or operated by such entity. For interest on such private activity obligations to be tax - exempt, Section 147(f) of the Code requires, among other things, the obligations and the facilities financed thereby must be approved by both the governmental unit which will issue the obligations (in this case, the Authority) and the governmental unit in which the obligation- financed facilities are located (City of Santa Ana). Further, a public hearing, for which reasonable notice has been given, must be held. This hearing and process is referred to as TEFRA, after the Tax Equity and Fiscal Responsibility Act of 1982. The assets to be financed and refinanced with the proceeds of the Obligations are located within the jurisdiction of the City. Therefore, the City has been asked to conduct the public hearing, and to approve the Obligations as the host governmental unit. The City has effectuated proper notice of the hearing via publication at least 14 days in advance. The Obligations will be payable solely from amounts received pursuant to the terms and provisions of the loan agreement to be executed by the Authority and the Borrower. The City will not be a party to the loan agreement or any other documents in connection with the issuance of the Obligations. The Obligations will not be secured by any form of taxation or by any obligation of either the City or the Authority. The Obligations do not represent or constitute a general obligation of either the City or the Authority. 75C -2 TEFRA Public Hearing for Orangewood Real Property and Samueli Academy June 7, 2016 Page 3 As announced in the published notice, the TEFRA hearing is an opportunity for all interested persons to speak or to submit written comments concerning the proposal to issue the Obligations to finance and refinance the Facilities. There is no requirement that either the Borrower or the City Council respond to any specific comments made or submitted at the hearing. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #2 Youth, Education, Recreation, Objective #4 (Partner with groups and organizations to promote education, senior services, job training and development for all Santa Ana residents). FISCAL IMPACT The City's approval of this financing bears with it no cost or other financial obligation, but serves as a public acknowledgement of the financing and refinancing of the Facilities by the host jurisdiction. Robert C. Cortez Special Assistant to the City Manager City Manager's Office Exhibits: 1. Public Notice 2. TEFRA Resolution FETE TkA MIA 75C -3 75C -4 NOTICE OF PUBLIC HEARING PURSUANT TO SECTION 147(f) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, FOR THE FINANCING AND REFINANCING OF CERTAIN FACILITIES FROM THE SALE OF TAX - EXEMPT OBLIGATIONS NOTICE IS HEREBY GIVEN that at 5:45 p.m., or as soon thereafter as the matter may be heard, on June 7, 2016, in the City Hall Council Chamber, 22 Civic Center Plaza, Santa Ana, California 92701, the City of Santa Ana City Council (the "City Council') will conduct a public hearing (the "Public Hearing ") at which the City Council will hear and consider information concerning the issuance, from time to time, pursuant to a plan of finance, of one or more series of tax- exempt obligations by the California Enterprise Development Authority (the "Issuer ") in an aggregate principal amount not to exceed Twelve Million Seven Hundred Fifty Thousand Dollars ($12,750,000) (the "Obligations "). Proceeds of the Obligations will be loaned to Orangewood Real Property, LLC, a California limited liability company (or any affiliate thereof or successor thereto) (the "Borrower "), the sole member of which is the Orangewood Foundation, a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code "), pursuant to one or more loan agreements (the "Loan Agreement "). The Borrower plans to use the proceeds of the Obligations to finance and refinance the cost of developing, constructing, installing, improving, equipping and furnishing a high school campus on a 7.1 acre parcel of land located at 1901 and 1919 North Fairview Street, Santa Ana, California (the "Facilities "). The Borrower will also use a portion of the proceeds of the Obligations to pay certain costs of issuance in connection with the Obligations. The Facilities are owned by the Borrower and are leased by the Borrower to Samu h Academy, a California nonprofit public benefit corporation and a charter school, in connection with its tax- exempt mission of providing a quality education for students in grades 9 through 12. The Borrower also leases a portion of the Facilities located at 1901 North Fairview Street, Santa Ana, California to Share Our Selves Corporation, a California nonprofit public benefit corporation and federally qualified health center, which operates an intermittent healthcare clinic for the students of Samueli Academy and their families. The Obligations will be paid entirely from repayments by the Borrower under the Loan Agreement. Neither the faith and credit nor the taxing power of the City of Santa Ana (the "City "), the Issuer and its members, the State of California (the "State "), or any other political corporation, subdivision or agency of the State is pledged to the payment of the principal of, premium, if any, or interest on, the Obligations, nor shall the City, the Issuer and its members, the State or any other political corporation, subdivision or agency of the State be liable or obligated to pay the principal of, premium, if any, or interest on, the Obligations. The Public Hearing is intended to comply with the public approval requirements of Section 147(f) of the Code. Those wishing to comment on the issuance of the Obligations, proposed nature and location of the Facilities or the plan of finance 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 by the Clerk of the City Council, at City of Santa Ana, 20 Civic Center Plaza, 8th Floor, Santa Ana, California 92701. Date: May 24, 2016 Exhibit 1 75C -5 75C -6 RESOLUTION NO. 2016 -xxx A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE OF TAX - EXEMPT OBLIGATIONS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $12,750,000 TO FINANCE AND REFINANCE VARIOUS SCHOOL FACILITIES OWNED BY ORANGEWOOD REAL PROPERTY, LLC BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: WHEREAS, Orangewood Real Property, LLC, a California limited liability company (the "Borrower'), the sole member of which is the Orangewood Foundation, a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the "Code "), has requested that the California Enterprise Development Authority, a joint exercise of powers agency established pursuant to the laws of the State of California (the "Authority ") Issue its tax - exempt obligations, from time to time pursuant to a plan of finance (the "Obligations "), in an aggregate principal amount not expected to exceed $12,750,000,' for the benefit of the Borrower, pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State (commencing with Section 6500) (the "Act "), for the purpose of making one or more loans to the Borrower to finance and refinance the cost of constructing, installing, improving and equipping a high school campus located at 1901 and 1919 North Fairview Street, Santa Ana, California (the "Facilities "); and WHEREAS, a portion of the proceeds of the Obligations will be used to pay the costs of issuance in connection with such refinancing and other related costs; and WHEREAS, the Borrower owns the Facilities and leases the Facilities to Samueli Academy, a California nonprofit public benefit corporation and a charter school established pursuant to the Charter Schools Act of 1992, as amended (constituting Part 26.8 of Division 4 of Title 2 of the Education Code), which will operate the Facilities for the purpose of furthering its mission of providing a quality education for students in grades 9 -12; and WHEREAS, the City of Santa Ana (the "City ") is an associate member of the Authority; and WHEREAS, the issuance of the Obligations shall be subject to the approval of and execution by the Authority of all financing documents relating thereto to which the Authority is a party; and WHEREAS, the Facilities are located wholly within the City; and [h1R� WHEREAS, the interest on the Obligations may qualify for tax exemption under Section 103 of the Code only if the Obligations are approved in accordance with Section 147(f) of the Code; and WHEREAS, the City Council of the City (the "Council') is the elected legislative body of the City and is the applicable elected representative required to approve the issue within the meaning of Section 147(f) of the Code; and WHEREAS, the Authority has requested the Council to approve the issuance of the Obligations in order to satisfy the public approval requirements of Section 147(f) of the Code; and WHEREAS, on May 24, 2016, the City caused a notice to appear in The Orange County Register, which is a newspaper of general circulation in the City, stating that a public hearing with respect to the issuance of the Obligations would be held by the Council on June 7, 2016; and WHEREAS, the Council held the public hearing described above on June 7, 2016, and an opportunity was provided for persons to comment on the issuance of the Obligations and the financing and refinancing of the Facilities; and WHEREAS, it is intended that this Resolution shall comply with the public approval requirements of Section 147(f) of the Code; provided, however, that this Resolution is neither intended to nor shall it constitute an approval by the Council of the Facilities for any other purpose, including, but not limited to, compliance with the California Environmental Quality Act (California Public Resources Code, Section 21100, et seq.) ( "CEQA "); NOW, THEREFORE, BE IT RESOLVED, that the Council hereby finds and declares the above recitals are true and correct; and, be It further resolved as follows: Section 1. The Council hereby finds and determines that all of the recitals are true and correct. The Council hereby approves the issuance of the Obligations by the Authority which Obligations may be tax - exempt and /or taxable as approved by the Authority in its resolution, in an amount not to exceed $12,750,000 to finance and refinance the cost of the Facilities. This resolution shall constitute "host' approval of the issuance of the Obligations within the meaning of Section 147(f) of the Code and shall constitute the approval of the issuance of the Obligations within the meaning of the Act; provided, however, that this Resolution shall not constitute an approval by the Council of the Facilities for any other purposes, including compliance thereof with CEQA, nor does it constitute an approval of the underlying credit or financial structure of the Obligations. The City shall not bear any responsibility for the issuance of the Obligations, the tax - exempt status of the Obligations, the repayment of the Obligations or any other matter related to the Obligations. 2 201735,2 036652 RSIND 75C -8 Section 2. All actions heretofore taken by the officers, employees and agents of the City with respect to the approval of the issuance of the Obligations are hereby approved, confirmed and ratified, and the officers and employees of the City and their authorized deputies and agents are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all certificates and documents which they or bond counsel may deem necessary or advisable in order to consummate the issuance of the Obligations and otherwise to effectuate the purposes of this Resolution. Section 3. The adoption of this Resolution shall not obligate the City or any department thereof to (1) provide any financing for the Facilities; (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, construction, rehabilitation or operation of the Facilities; or (iii) make any contribution or advance any funds whatsoever to the Authority, Section 4. This Resolution shall take effect from and after its adoption. 3 201735.2 036652 RS[ND 75C -9 ADOPTED this _ day of June, 2016. Miguel A. Pulido Mayor APPROVED AS TO FORM: Sonia R. Carvalho City Attorney Ryan O. Hodge Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATION OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of Council, do hereby attest to and certify the attached Resolution No. 2016- to be the original resolution adopted by the City Council of the City of Santa Ana on June 2016. Date: _ Clerk of Council City of Santa Ana 4 201735.2 036652 RSIND 75C -10