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HomeMy WebLinkAboutStaff Report 315-07City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL 14 FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE:JULY 23, 2007 CMR: 315:07 SUBJECT:TEFRA HEARING AND APPROVAL FOR TAX-EXEMPT FINANCING FOR ALBERT L. SCHULTZ JEWISH COMMUNITY CENTER AND 899 CHARLESTON, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY THROUGH THE ASSOCIATION OF BAY AREA GOVERNMENTS (ABAG)FINANCE AUTHORITYFOR NONPROFIT CORPORATIONS RECOMMENDATION It is recommended that, after holding thepublic hearing, the Council approve the attached resolutions approving the tax-exempt financing through the ABAGFinance Authority for Nonprofit Corporations (ABAG Finance Authority) for the constructionof the Albert L. Schultz Jewish Community Center and a new continuing care retirement community. BACKGROUND The Albert L. Schultz Jewish Community Center (JCC) has requested that the ABAG Finance Authority issue conduit tax-exempt debt in the amount of $160 million for the construction of a community center consisting of extensive outdoor social and recreational areas; gardens; play areas; terraces; a 57,000 square feet health and fitness club; a 21,000 sq. ft. theater; and space for early childhood education, youth and adult programs to be located in the City of Palo Alto. In addition, 899 Charleston, LLC (899) has requested that the ABAG Finance Authority issue conduit tax-exempt debt in the amount of $180 million to construct a new continuing care retirement community. In total, there will be two series of bonds for $340 million: one for the Albert L. Schultz Jewish Community Center and the second for 899 Charleston, LLC (the retirement community). Both projects will be located on a single multi-use 8.6-acre campus in Palo Alto knov~ as the Taube-Koret Campus for Jewish Life. Section 147(f)(2) of the Internal Revenue Code of 1986 requires that, in order for the interest on such debt to be exempt from income tax for investors, the "applicable elected representatives" of the host governmental unit must approve the issuance of the debt. Such approval must follow a public hearing that has been preceded by reasonable public notice (required public noticing has been conducted). This hearing and approval process is referred to as a "TEFRA" hearing, after the Tax Equity and Fiscal Responsibility Act of 1983. CMR: 315:07 Page 1 of 3 DISCUSSION Since the facilities to be financed with the proceeds of the ABAG Finance Authority’s debt are located within the jurisdiction of the City of Palo Alto, the City has been asked to 1) take action to become an associate member of the ABAG Finance Authority solely for this purpose, and 2) conduct the public hearing and to approve the debt as the host governmental unit. The debt incurred to build the above mentioned projects would be payable solely by the borrower, the Albert L. Schultz Jewish Community Center and 899 Charleston, LLC. The City of Palo Alto would not be a party to the financing agreements. Incurred debt would not be secured by any form of taxation or any obligation of either the City or the ABAG Finance Authority. Neither would the debt represent or constitute a general obligation of either the City or the ABAG Finance Authority. In addition, the borrower must also provide comprehensive indemnification to ABAG Finance Authority and its members including the City. Any risk of nonpayment on bonds issued by the ABAG Finance Authority would be borne by the lenders. As cited in the published notice, the public hearing is simply an opportunity for all interested persons to speak or to submit v~Mtten comments concerning the proposal to issue the debt and the nature or location of the facility to be financed; however, there is no formal obligation on the part of the borrower or the Council to respond to any specific comments made during the hearing or submitted in v~a’iting. The recommendation includes consideration of the City’s associate membership in the ABAG Finance Authority for Nonprofit Corporations, a Joint Power Authority managed by but existing separately from the Association of Bay Area Governments. As an associate member of this Authority, the City would provide public acknowledgement of the project financing as host jurisdiction. Associate membership in the Authority does not, however, obligate the City, in any way, to repayment of the debt nor does it involve any fees to be paid by the City. A copy of the Associate Membership Agreement is attached as Attachment D. Based on the benefits of the projects to the Palo Alto community, and the lack of any financial obligations on the pat of the City, staff recommends that Council approve the attached three resolutions. These include a resolution allowing City membership in the Finance Authority, and two resolutions approving the separate debt issues for the two projects mentioned in this report. RESOURCE IMPACT There are no resource impacts on the City as a consequence of Council’s action on the recommendation. The City’s membership in ABAG Finance Authority bears with it no cost or other financial obligation, but serves as a public acknowledgement of the project financing by the host jurisdiction. The City would in no way be obligated on the debt. POLICY IMPLICATIONS Actions recommended in this report are consistent with Council’s prior direction on the Jewish Community Center projects. ENVIRONMENTAL REVIEW Action on this item does not require environmental review. CMR: 315:07 Page 2 of 3 PREPARED BY: gACCIO Director, Administrative Services DEPARTMENT HEAD APPROVAL: CARL ;trative Services CITY MANAGER APPROVAL: Assistant City Manager ATTACHMENTS Attachment A:Resolution of the Council of the City of Palo Alto Approving Associate Membership by the City of Palo Alto in the ABAG Finance Authority for Non Profit Corporations and the Execution of an Associate Membership Agreement Relating to Associate Membership of the City in the Authority Attachment B:Resolution of the Council of the City of Palo Alto Regarding Approval of the Issuance of Variable Rate Demand Revenue Bonds by the ABAG Finance Authority for Non Profit Corporations to Finance the Acquisition, Construction, Installation and Equipping of a Cultural, Educational, Ethnical and Health Care Center and Certain Other Matters Relating Thereto Attachment C: Attachment D: Resolution of the Council of the City of Palo Alto Regarding Approval of the Issuance of Variable Rate Demand Revenue Bonds by the ABAG Finance Authority for Non Profit Corporations to Finance the Acquisition, Construction, Installation and Equipping of a Continuing Care Retirement Community and Certain Other Matters Relating Thereto Associate Membership Agreement CMR: 315:07 Page 3 of 3 ATTACHMENT A NOT YET APPROVED RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO APPROVING ASSOCIATE MEMBERSHIP BY THE CITY OF PALO ALTO IN THE ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS AND THE EXECUTION OF AN ASSOCIATE MEMBERSHIP AGREEMENT RELATING TO ASSOCIATE MEMBERSHIP OF THE CITY IN THE AUTHORITY WHEREAS, the Albert L. Schultz Jewish Community Center (the "Participant"), a nonprofit, public benefit corporation organized and existing under the laws of the State of California, has requested that the City conduct a public hearing in order to comply with certain legal requirements relating to the financing of a certain community center to be developed by the Participant in and to the benefit of the City; WHEREAS, to facilitate such request, the City desires to become an associate member of the ABAG Finance Authority for Nonprofit Corporations (the "Authority"); and WHEREAS, the form of associate membership agreement (the "Associate Membership Agreement") between the City and the Authority has been filed with the City, and the members of the Council, with the aid of its staff, have reviewed the Associate Membership Agreement; WHEREAS, the City is not a party to the financing agreements and, as such, the debt will not be secured by any form of taxation or any obligation of the City, it will not represent or constitute a general obligation of the City; NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Associate Membership in the Authority. The Council hereby approves associate membership by the City in the Authority. SECTION 2. Approval of Associate Membership Agreement. The Council hereby approves the form of, and authorizes the Mayor, the City Manager or any designee of such officers to execute the Associate Membership Agreement and authorizes the City Clerk to attest to such signature, in substantially the form on file with the City Clerk, together with any changes therein deemed advisable by the official signing the Associate Membership Agreement. SECTION 3. Official Action. The Mayor, City Manager, City clerk and other officers and officials of the City are hereby authorized and directed to take all action and do all things necessary or desirable hereunder with respect to associate membership pin the Authority including but not limited to the execution and delivery of any and all agreements, certificates instruments and other documents which they, or any of them, may deem necessary or desirable and not inconsistent with the purposes of this resolution. 070711 syn 0130152 SECTION 4. No Liability. The City has no financial responsibility in connection with the financing ageements and shall not be obligated on the debt. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney Mayor City Manager Director of Administrative Services 070711 synO130152 2 ATTACHMENT B NOT YET APPROVED RESOLUTION NO. RESOLUTION OF TI~ COUNCIL OF THE CITY OF PALO ALTO REGARDING APPROVAL OF THE ISSUANCE OF VARIABLE RATE DEMAND REVENUE BONDS BY THE ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS TO FINANCE THE ACQUISITION,CONSTRUCTION, INSTALLATION AND EQUIPPING OF A CULTURAL, EDUCATIONAL,ETHNICAL AND HEALTH CARE CENTER AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, the ABAG Finance Authority For Nonprofit Corporations, a joint exercise of powers agency established under the laws of the State of California (the "Authority"), has proposed to issue and sell its variable rate demand revenue bonds in an aggregate face amount not to exceed $160,000,000 (the "Bonds") for the purpose of making a loan to Albert L. Schultz Jewish Community Center, a California nonprofit public benefit corporation (the "Borrower"); and WHEREAS, the Borrower proposes to use the proceeds of the Bonds loaned to it to finance or refinance the acquisition of land and construction of a community center consisting of extensive outdoor social and recreational areas, gardens, play areas, terraces, a 57,000 sq. ft. health and fitness club, a 21,000 sq. ft. theater, and space for early childhood education, youth and adult programs (the "Project"); and WKEREAS, the Project will be located in the City of Palo Alto at 901 San Antonio Road, Palo Alto, California 94303, and will be initially owned and operated by the Borrower; and WHEREAS, the interest on the Bonds may qualify for tax exemption under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code") only if the Bonds are approved in accordance with Section 147(f) of the Code; and WHEREAS, the City of Palo Alto (the "City") has jurisdiction over the entire area in which the Project is located; and WHEREAS, the City Council (the "Council") is the elected legislative body of the City, and as such is required to approve the issuance of the Bonds under Section 147(f) of the Code, and the Authority has requested the Council to approve the issuance and sate of the Bonds in order to satisfy the public approval requirements of Section 147(f) of the Code; and WHEREAS, the City has caused a notice of public hearing to be held by the Council with respect to the issuance of the Bonds, which notice has been published once in a newspaper of general circulation in the City at least 14 days prior to the date set for the heating and which 070710 syn0130163 NOT YET APPROVED notice provided a reasonable opportunity for persons of differing views to appear and be heard at the hearing; and WHEREAS, the Council has duly held the public hearing described above on the date of adoption of this Resolution, and a reasonable opportunity was provided for all persons present to be heard and to comment on the issuance and sale of the Bonds and the Project; and follows: NOW THEREFORE, Council of the City of Palo Alto does hereby RESOLVE as SECTION 1. Recitals. This City Council does hereby find and declare that the above referenced recitals are true and correct. SECTION 2. Public Hearing. Pursuant to Section 147(f) of the Code, the City Council held a public hearing on July 23, 2007 and provided an opportunity to present arguments both for and against the issuance of the Bonds and the nature and location of the Project. The City Council has further considered all testimony and comments submitted in connection with the issuance of the Bonds and the nature and location of the Project at the public hearing. SECTION 3. Approval of Bond Issue. After consideration of comments received at the public hearing, the City Council hereby approves the issuance and sale of the Bonds by the Authority for the purpose of providing financing of the Project. It is the purpose and intent of the Council that this Resolution constitute approval of the Bonds by the applicable elected representative of the governmental unit (a) on behalf of which the Bonds will be issued, and (b) having jurisdiction over the area in which the Project is located, in accordance with Section 147(f) of the Code. // // // // // // // // // // // 070710 syn0130163 2 NOT APPROVED SECTION 4. Authorization. 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. INTRODUCED AND PASSED: AYES: NOES: ABSENT: AB S TENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Sr. Assistant City Attorney City Manager Director of Administrative Services 070710 synO130163 ATTACHMENT C NOT YET APPROVED RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO REGARDING APPROVAL OF THE ISSUANCE OF VARIABLE RATE DEMAND REVENUE BONDS BY THE ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS TO FINANCE THE ACQUISITION, CONSTRUCTION, INSTALLATION AN~ EQUIPPING OF A CONTINUING CARE RETIREM]~NT COMMUNITY AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, the ABAG Finance Authority For Nonprofit Corporations, a joint exercise of powers agency established under the laws of the State of California (the "Authority"), has proposed to issue and sell its variable rate demand revenue bonds in an aggregate face amount not to exceed $180,000,000 (the "Bonds") for the purpose of making a loan to 899 Charleston, LLC, a California limited liability company (the "Borrower"); and Wt-~REAS, the Borrower proposes to use the proceeds of the Bonds loaned to it to finance or refinance the acquisition of land and construction, installation, and equipping of a continuing care retirement community consisting initially of 182 independent living units and 11 dementia facility units, and to be eventually developed into 170 independent living units, 12 assisted living units, and 11 dementia units (the "Project"); and WHEREAS, the Project will be located in the City of Palo Alto at 901 San Antonio Road, Palo Alto, California 94303, will be initially owned by the Borrower, and will be initially operated by the Jewish Home of San Francisco, a California nonprofit public benefit corporation; and WHEREAS, the interest on the Bonds may qualify for tax exemption under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code") only if the Bonds are approved in accordance with Section 147(f) of the Code; and WHEREAS, the City of Palo Alto (the "City") has jurisdiction over the entire area in which the Project is located; and WHEREAS, the City Council (the "Council") is the elected legislative body of the City, and as such is required to approve the issuance of the Bonds under Section 147(f) of the Code, and the Authority has requested the Council to approve the issuance and sale of the Bonds in order to satisfy the public approval requirements of Section 147(f) of the Code; and WHEREAS, the City has caused a notice of public hearing to be held by the Council with respect to the issuance of the Bonds, which notice has been published once in a newspaper of general circulation in the City at least 14 days prior to the date set for the hearing and which 070710 syn 0130164 NOT YET APPROVED notice provided a reasonable opportunity for persons of differing views to appear and be heard at the hearing; and WHEREAS, the Council has duly held the public hearing described above on the date of adoption of this Resolution, and a reasonable opportunity was provided for all persons present to be heard and to comment on the issuance and sale of the Bonds and the Project; and follows: NOW THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as SECTION 1. Recitals. This City Council does hereby find and declare that the above referenced recitals are true and correct. SECTION 2. Public Hearing. Pursuant to Section 147(f) of the Code, the City Council held a public hearing on July 23, 2007 and provided an opportunity to present arguments both for and against the issuance of the Bonds and the nature and location of the Project. The City Council has further considered all testimony and comments submitted in connection with the issuance of the Bonds and the nature and location of the Project at the public hearing. SECTION3. Approval of Bond Issue. After consideration of comments received at the public heating, the City Council hereby approves the issuance and sale of the Bonds by the Authority for the purpose of providing financing of the Project. It is the purpose and intent of the Council that this Resolution constitute approval of the Bonds by the applicable elected representative of the governmental unit (a) on behalf of which the Bonds will be issued, and (b) having jurisdiction over the area in which the Project is located, in accordance with Section 147(f) of the Code. // // // // // // // // // // 070710 syn 0130164 2 NOT YET APPROVED SECTION 4. Authorization. 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. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Sr. Assistant City Attorney City Manager Director of Administrative Services 070710 syn 0130164 ATTACHMENT D ASSOCIATE MEMBERSHIP AGREEMENT by and between the ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS and the CITY OF PALO ALTO THIS ASSOCIATE MEMBERSHIP AGREEMENT dated as of __, 2007, is by and between the ABAG FINANCE AUTHORITY FOR NONPROFIT CORPORATIONS, a joint powers authority duly organized and existing under the laws of the State of California (the "Authority") and the CITY OF PALO ALTO, a municipal corporation duly organized and existing under the laws of the State of California (the "City"). WITNES SETH: WHEREAS, certain public agencies of the State of California (collectively, the "Members"), have entered into a Joint Powers Agreement, dated as of April 1, 1990, revised as of September 18, 1990, and further revised as of June 9, 1992 (the "Ageement"), establishing the Authority and prescribing its purposes and powers; and WHEREAS, the Authority has been formed for the purpose, among others, to assist nonprofit corporations and other entities to obtain financing for projects and purposes serving the public interest; and WHEREAS, the Authority has determined that the City should become an associate member of the Authority. NOW, THEREFORE, in consideration of the above premises and of the mutual promises herein contained, the Authority and the City do hereby agree as follows: Section 1. Purpose. The purpose of this Associate Membership Agreement is to assist nonprofit corporations and other entities to obtain financing for projects and purposes serving the public interest within or impacting upon the City. Section 2. Associate Members Status. The City is hereby made an associate member of the Authority for all purposes of the Agreement. From and after the date of execution and delivery of this Associate Membership Agreement by the City and the Authority, the City shall be and remain an associate member of the Authority. Section 3. Restrictions on Rights of City. The City shall not have the right, as an associate member of the Authority, to vote on any action to be taken by the Authority or 070712 syn0130165