REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, Finance Director/City Controller
Finance Department
BY: KALEB NEUFELD, Assistant City Controller
Finance Department
SUBJECT
Title
Tax Equity and Financial Responsibility Act (TEFRA) public hearing.
TEFRA HEARING - To hear and consider information concerning the proposed issuance of tax-exempt bonds by California Statewide Communities Development Authority for the purpose of financing or refinancing the acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects of certain health facilities owned or operated by Kaiser Foundation Hospitals or its affiliates and located in the City of Fresno.
1. ***RESOLUTION- Approving a plan of finance of the California Statewide Communities Development Authority to issue and reissue revenue bonds for a qualified health facilities project for the benefit of Kaiser Foundation Hospitals or its affiliates, and certain other matters relating thereto. (Subject to Mayor’s Veto)
Body
RECOMMENDATION
Adopt the resolution approving the issuance of the Bonds by the California Statewide Communities Development Authority (the “Authority”) for the benefit of Kaiser Foundation Hospitals, Kaiser Foundation Health Plan, Inc., Kaiser Health Plan Asset Management, Inc., and Kaiser Hospital Asset Management, Inc., each a California nonprofit public benefit corporation (collectively, “Kaiser”) to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following).
EXECUTIVE SUMMARY
Kaiser is seeking to obtain financing and refinancing of the acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects of certain health facilities (the “Project”). The new bonds will be issued by the Authority. As a jurisdiction in which the facilities are located, the Council must consider authorizing the Authority to issue obligations for such purposes.
Should the City authorize the issuance of Bonds, the City would have no obligation or liability associated with these facilities or with these obligations.
BACKGROUND
Kaiser, has requested that the Authority undertake a proposed plan of finance to issue and reissue from time to time one or more series of revenue bonds in an aggregate principal amount not to exceed $880,000,000 (the “Bonds”), but within the City of Fresno jurisdiction, a principal amount not to exceed $314,000,000, for the purpose of, among other things, financing or refinancing the acquisition, construction, improvement, equipping, renovation, rehabilitation, and remodeling of the Project to be owned or operated by Kaiser and located at 7300 N Fresno St., Fresno, CA (not to exceed $120,000,000) and at or near the intersection of E. Locust Ave. and Corporate Drive, Fresno, CA (proposed address 7150 N. Corporate Dr., Fresno, CA) (not to exceed $194,000,000); in Council District 6, of The City of Fresno, California (the “City”).
An ”applicable elected representative” of the jurisdiction in which the Project is to be located is required to approve the proposed plan of finance for the project under section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), and the City Council of Fresno (the “City Council”) is the elected legislative body of the City and is an “applicable elected representative” for the purposes of Section 147(f) of the Code.
The Authority has advised that the bonds may be issued pursuant to a “plan of finance” to issue an original issue of bonds and to issue or reissue one or more additional series of Bonds from time to time after the original issue of Bonds, if necessary or desirable to comply with applicable legal requirements, all in an aggregate principal amount not to exceed $880,000,000 to finance the Project commencing on the date of issuance of the first series of Bonds pursuant to this resolution.
The Authority has requested that the City Council approve the proposed plan of finance in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City.
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Fresno must conduct a public hearing (the “TEFRA Hearing”) providing the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project. Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. 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 Bonds for the financing of the Project.
ENVIRONMENTAL FINDINGS
This item is not a project for purposes of the California Environmental Quality Act (CEQA) section 15378.
LOCAL PREFERENCE
Local preference was not considered because this resolution does not include a bid or award of a construction or service contract.
FISCAL IMPACT
The City has no obligation or liability associated with the requested financing. The Obligations will not constitute indebtedness or obligation of, and will not involve a pledge of the good faith and credit of the City. The Obligations will be limited obligations of the Authority payable only from loan repayments to be made to the Authority from certain funds and accounts established by or pursuant to the bond indenture(s) under which the Obligations will be issued. The Authority has no taxing power and the issuance of the Obligations will not obligate the State of California or any political subdivision of the State to levy or pledge any form of taxation for the Obligations or to make any appropriation for the payment of the Obligations.
Attachment:
Resolution