REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, MBA, City Controller/Finance Director
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 Enterprise Development Authority for the purpose of financing the acquisition, construction, installation and equipping of a healthcare facility located at 4615 & 4623 North First Street, Fresno, California 93726 (the Facility) and paying certain costs of issuance in connection with such financing by United Health Centers of the San Joaquin Valley.
1. ***RESOLUTION - Approving the issuance by the California Enterprise Development Authority of not to exceed $10,000,000 aggregate principal amount of the California Enterprise Development Authority’s Revenue Bonds for the purpose of financing the cost of developing, constructing, installing, equipping and furnishing of a facility for the benefit of United Health Centers of the San Joaquin Valley and other matters relating thereto (Subject to Mayor's veto).
Body
RECOMMENDATIONS
Staff recommends that the Council first hold a Tax Equity and Financial Responsibility Act (TEFRA) public hearing and then, upon conclusion, adopt the accompanying Resolution approving the issuance of tax-exempt bonds (Bonds) by the California Enterprise Development Authority (Authority) on behalf of United Health Centers of the San Joaquin Valley (Applicant) in the aggregate principal amount not to exceed $10,000,000.
EXECUTIVE SUMMARY
The Applicant is seeking to obtain financing for the developing, constructing, installing, equipping and furnishing of a Facility (as defined below) which will serve as a health clinic. The new tax-exempt Bonds will be issued by the Authority. As the governing body of a jurisdiction in which the Facilities are located, the Council must hold a public hearing in accordance with Section 147(f) of the Internal Revenue Code for the purpose of receiving any public testimony regarding the project before it considers authorizing the Authority to issue bonds for this purpose.
Should the City authorize the issuance of Bonds, the City would have no obligation or liability associated with this facility or with these Bonds.
BACKGROUND
The City has received a request by the Applicant to hold a public hearing regarding a proposed issuance of Bonds for the purpose of (a) financing the acquisition, construction, installation and equipping of a healthcare facility located at 4615 & 4623 North First Street, Fresno, California 93726 in Council District 4 (the Facility) and (b) paying certain costs of issuance in connection with such financing. The new tax-exempt bonds will be issued by the Authority in an amount not to exceed $10,000,000. Upon conclusion of the public hearing, the City is then requested to authorize the Authority to proceed with the issuance of the Bonds.
Under the provisions of TEFRA as codified in Section 147(f) of the Internal Revenue Code, the City in which the proposed Facilities are located must (1) conduct a public hearing and (2) approve the Authority issuance of indebtedness in order to facilitate the financing. This notice of the public hearing was posted on the City’s website on April 12, 2023. No testimony regarding this proposed issuance has been received as of today.
The attached resolution, if approved by the Council, will provide authorization to the Authority to issue tax-exempt bonds on behalf of the Applicant in an amount not to exceed $10,000,000. The Bonds will not constitute a debt or liability to the City.
Incorporated in 1971, the Applicant is a private nonprofit organization that provides comprehensive medical, dental and community health services to the medically underserved in the central San Joaquin Valley. The Applicant is licensed by the State of California as a community health center, and the Federal and State governments have designated the Applicant as a Federally Qualified Health Center. The Applicant is staffed by a comprehensive team of over 400 health professionals, who serve over 190,000 patients a year in the Central San Joaquin Valley. The agricultural economy of the San Joaquin Valley depends heavily on a farm labor force, which is made up primarily of local agricultural and farm workers. During the peak harvest season, migrant workers from throughout the Southwestern United States come to assist in the harvesting of a variety of fruits and vegetables. The Applicant primarily serves these farmers and workers, and their families. To that end, the Applicant desires to expand its services in the City by renovating two health clinics.
The Authority is 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. Federal and state laws provide the ability for cities and counties to join together under cooperative agreements to form joint powers authorities to issue tax-exempt and taxable bonds to fund projects that provide a public benefit and serve the needs of residents within the jurisdictions of the participating members. Cities and counties in California utilize joint powers authorities primarily for economies of scale, to access specialized transaction knowledge and resources, and to avoid using valuable local staff time on these types of transactions.
ENVIRONMENTAL FINDINGS
Pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15378, this item is not a project for the purposes of CEQA.
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 Bonds will not constitute an indebtedness or obligation of and will not involve a pledge of the good faith and credit of the City. The Bonds will be limited obligations of the Authority payable only from loan repayments to be made to it from certain funds and accounts established by or pursuant to the bond indenture(s) under which the Bonds will be issued. The Authority has no taxing power. The issuance of the Bonds will not obligate the State of California or any political subdivision of the State to levy or pledge any form of taxation for the Bonds or to make any appropriation for the payment of the Bonds.
Attachment: Resolution