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HomeMy WebLinkAboutStaff Report 3416 City of Palo Alto (ID # 3416) City Council Staff Report Report Type: Action Items Meeting Date: 1/14/2013 City of Palo Alto Page 1 Summary Title: TEFRA Hearing and Approval for Tax-Exempt Financing for Albert L. Schulz Jewish Community Center Title: Public Hearing: TEFRA Hearing and Approval of Conduit Refunding Obligations for the Oshman Family Jewish Community Center Through the California Development Authority Relating to Facilities Located at 3921 Fabian Way, Palo Alto, California 94303 From: City Manager Lead Department: Administrative Services Recommendation Conduct a public hearing under the requirements of the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) and the Internal Revenue Code of 1986, as amended (the “Code”); and Adopt a resolution approving the issuance of tax-exempt refunding obligations by the California Enterprise Development Authority (“CEDA”) for the benefit of Oshman Family Jewish Community Center (the “Borrower”) and authorize the Mayor, City Manager (or such other designated signatory) to execute the Joint Exercise of Powers of Agreement with the CEDA. Background On July 23, 2007, the City of Palo Alto conducted a public hearing (the “TEFRA Hearing”) at the request of the Oshman Family Jewish Community Center (“OFJCC”) to provide members of the community an opportunity to speak in favor of or against the issuance of tax-exempt bonds to finance the acquisition, construction and equipping of facilities located at 3921 Fabian Way, Palo Alto, California 94303 (the “Project”). On August 16, 2007, the ABAG Finance Authority for Nonprofit Corporations issued $134,915,000 of variable rate revenue bonds (the “2007 Bonds”) to enable the OFJCC to finance the Project. Currently, $55,000,000 of the 2007 Bonds are outstanding. City of Palo Alto Page 2 The OFJCC is seeking to refinance the 2007 Bonds with tax-exempt refunding obligations (the “Refunding Bonds”) to be issued through the California Enterprise Development Authority (“CEDA”), a California Joint Powers Agency created by the California Association for Local Economic Development). The Refunding Bonds may have a longer final maturity than the 2007 Bonds and may be sized to include the financing of transaction costs. In order for interest on the Refunding Bonds to qualify as tax-exempt, the City of Palo Alto must conduct another TEFRA with respect to the Project. As with the first TEFRA Hearing, reasonable notice must be provided to the members of the community and, following the close of the TEFRA Hearing, an “applicable elected representative” of the governmental unit hosting the Project must provide its approval of the issuance of the Refunding Bonds. Discussion Since the facilities to be refinanced with the proceeds of the Refunding Bonds are located within the jurisdiction of the City of Palo Alto, the City has been asked to conduct a TEFRA Hearing, and adopt a resolution (Attachment A) that approves both the issuance of the Refunding Bonds by CEDA for the benefit of OFJCC and authorizes the Mayor, City Manager (or such other designated signatory) to join CEDA. As cited in the published notice of December 28, 2012, the public hearing is simply an opportunity for all interested persons to speak or to submit written comments concerning the proposal to issue the Refunding Bonds 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 writing. The Refunding Bonds will refinance no more than $50 million of the outstanding portion of the 2007 Bonds (approximately $55,000,000) and the associated transaction costs. The 2007 Bonds were issued to: (a) finance all or a portion of the costs of acquiring, constructing and equipping a 142,000 square foot community center that includes a social/cultural hall, pre-school, studios/meeting rooms, indoor and outdoor pools, a fitness center, gymnasium, teen center, café, gift center and regional offices; (b) fund capitalized interest on the 2007 Bonds; (c) fund a debt service reserve fund and (d) pay the costs of issuance of the Bonds (collectively, the “Project”). The recommendation includes consideration of the City’s membership in CEDA. The CEDA is a Joint Powers Authority created on May 1, 2006 by the California Association for Local Economic Development to assist businesses and non-profit organizations with tax-exempt and taxable financing. In order for the CEDA to have the authority to serve as the issuer of the Refunding Bonds for the Project, it is necessary for the City of Palo Alto to become a member. Adoption of City of Palo Alto Page 3 the Resolution (Attachment A) allows the City to join CEDA. For information purposes, a copy of the Joint Exercise of Powers Agreement to be executed by a designated signatory of the City is attached to this report (Attachment B). Currently, 59 different communities in California, including the County of Santa Clara and the City of San José, are members of CEDA. The Joint Exercise of Powers Agreement provides that the CEDA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CEDA do not constitute debts, liabilities or obligations of the members executing such agreement. The Refunding Bonds to be issued by the CEDA for the Project will be the sole responsibility of the Borrower, and the City of Palo Alto will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Refunding Bonds. All financing documents with respect to the issuance of the Refunding Bonds will contain clear disclaimers that the Refunding Bonds are not obligations of the City of Palo Alto or the State of California, but are to be paid for solely from funds provided by the Borrower. The City will in no way become exposed to any financial liability by reason of its membership in the CEDA. In addition, participation by the City in the CEDA will not impact the City’s appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing, adopting the required resolution and executing the Joint Exercise of Powers Agreement of the CEDA, no other participation or activity of the City or the City Council with respect to the issuance of the Refunding Bonds will be required. Based on the benefits of the projects to the Palo Alto community and the lack of any financial obligations on the part of the City, staff recommends that Council approve the attached resolution and membership in the CEDA. Resource Impact As stated, the City will incur no financial obligation from approval of the recommendations. The City, in fact, will be remunerated for the administrative costs associated with the preparation, delivery, and approval of documents presented to the Council. Such grant may be used for any lawful purpose of the City. Policy Implications Actions recommended in this report are consistent with Council’s prior actions in supporting non-profit financings by conducting TEFRA Hearings, including a prior TEFRA Hearing for the OFJCC in 2007. City of Palo Alto Page 4 Environmental Review Action on this item does not require environmental review. Attachments:  Attachment A: Resolution Approving Issuance of TEFRA Bonds (PDF)  Attachment B: Resolution Approving Associate Membership in CEDA (PDF) Not Yet Approved  1  130108 jb 0131029   Resolution No. ___  Resolution of the Council of the City of Palo Alto Regarding Approval of  the Issuance of Tax‐Exempt Obligations by the California Enterprise  Development Authority to Refinance Bonds Previously Issued to  Acquire, Construct, Install and Equip a Community Center and Certain  Other Matters Related Thereto    R E C I T A L S A. The ABAG Finance Authority For Nonprofit Corporations, a joint exercise of  powers agency established under the laws of the State of California, previously issued and sold  its variable rate demand revenue bonds in an aggregate face amount of $134,915,000 (the  “Prior Bonds”) for the purpose of making a loan to Oshman Jewish Community Center, a  California nonprofit public benefit corporation (the “Borrower”); and   B.  The Borrower used the proceeds of the Prior Bonds loaned to it to finance the  acquisition of land and construction of a 142,000 square foot community center that included a  social/cultural hall, pre‐school, studios/meeting rooms, indoor and outdoor pools, a fitness  center, gymnasium, teen center, café, gift center and regional offices located at 3921 Fabian  Way (the “Project”) in the City of Palo Alto (the "City"); and   C.  The Prior Bonds and the Project had been approved in accordance with Section  147(f) of the Internal Revenue Code of 1986, as amended (the “Code”);   D.  Interest on the Prior Bonds qualified for tax exemption under Section 103 of the  Code; and   E.  The Borrower wishes to refinance the Prior Bonds with tax‐exempt refunding  bonds or other obligations with a longer maturity (the “Refunding Obligations”) to be issued by  the California Enterprise Development Authority (the “Authority”);   F.  The City has jurisdiction over the entire area in which the Project is located; and    G.  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 Refunding  Obligations in order to satisfy the public approval requirements of Section 147(f) of the Code;  and   H.  The City has caused a notice of public hearing to be held by the Council with  respect to the issuance of the Refunding Obligations, 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 notice provided a reasonable opportunity for persons of differing views to appear  and be heard at the hearing; and  Not Yet Approved  2  130108 jb 0131029    I.  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 Refunding Obligations and the  Project.   The Council of the City of Palo Alto RESOLVES as follows:  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 January 14, 2013 and provided an opportunity to present  arguments both for and against the issuance of the Refunding Obligations 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 Refunding Obligations and the nature and  location of the Project at the public hearing.  SECTION 3. Approval of Refunding Obligation Issue.  After consideration of  comments received at the public hearing, the City Council hereby approves the issuance and  sale of the Refunding Obligations by the Authority for the purpose of providing refinancing for  the Project.  It is the purpose and intent of the Council that this Resolution constitute approval  of the Refunding Obligations by the applicable elected representative of the governmental unit  (a) on behalf of which the Refunding Obligations 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.  //  //  //  //  //  //  //  //  //  //  //  Not Yet Approved  3  130108 jb 0131029   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.   SECTION 5. Limitation of Liability.  The debts, liabilities and obligations of the  Authority and the Borrower shall not be the debts, liabilities and obligations of the City.    INTRODUCED AND PASSED:          AYES:        NOES:    ABSENT:          ABSTENTIONS:     ATTEST:                ___________________________     ______________________________  City Clerk             Mayor    APPROVED AS TO FORM:       APPROVED:    ___________________________     ______________________________  Senior Asst. City Attorney       City Manager                 ______________________________               Director of Administrative                 Services Not Yet Approved  1  130107 jb 0131028  Resolution No. _____  Resolution of the Council of the City of Palo Alto Approving Associate  Membership by the City of Palo Alto in the California Enterprise  Development Authority and the Execution of an Associate Membership  Agreement Relating to Associate Membership of the City in the  Authority    R E C I T A L S       A.  The Oshman Family 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 refinancing of a certain community center developed by the  Participant in and to the benefit of the City;     B.  To facilitate such request, the City desires to become an associate member of  the California Enterprise Development Authority (the “Authority”); and     C.  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;     D.  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;     The Council of the City of Palo Alto RESOLVES 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.  Not Yet Approved  2  130107 jb 0131028      SECTION 4.   No Liability.  The City has no financial responsibility in connection with  the financing agreements and shall not be obligated on the debt.      INTRODUCED AND PASSED:        AYES:        NOES:    ABSENT:          ABSTENTIONS:     ATTEST:             APPROVED:    __________________________     ______________________________  City Clerk             Mayor    APPROVED AS TO FORM:       ______________________________               City Manager  __________________________        Senior Asst. City Attorney       _____________________________               Director of Administrative Services