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25-87994
CITY OF GLENDALE, CALIFORNIA
REPORT TO THE GLENDALE CITY COUNCIL
AGENDA ITEM
Report: Tax Equity and Fiscal Responsibility Act Public Hearing for California Municipal Finance Authority Proposed Issuance of Approximately $60 Million in Tax Exempt Revenue Bonds in Support of Gateways Hospital and Mental Health Center. (1) Resolution of the City Council of the City of Glendale Approving the Issuance of Approximately $60 Million Tax Exempt Revenue Bond Obligations in Support of Gateways Hospital and Mental Health Center and Certain Other Matters Relating Thereto by the California Municipal Finance Authority (CMFA).
COUNCIL ACTION
Item Type: Public Hearing
Approved for June 3, 2025 calendar
EXECUTIVE SUMMARY
Gateways Hospital and Mental Health Center (Gateways), a non-profit organization located in Echo Park and with facilities in Glendale, has applied for the issuance of approximately $60 million in revenue bonds by the California Municipal Finance Authority (CMFA).
Gateways recently acquired several properties at and around the former Glendale College of Law at 220 N. Glendale Avenue (see attached plat map – Exhibit A) with a short-term loan and cash with taxable financing in order to secure these properties in a competitive real estate environment. They are looking to refinance these properties with a tax-exempt financing to achieve a better interest rate and acquire two additional properties. Eventually Gateways will remodel and upgrade all of these properties to meet their needs through separate tax-exempt financing.
Specifically, Gateways will use the funding to:
(a) refinance an existing bank loan, a portion of the proceeds of which were used to:
(i) finance the acquisition of the building located at 220 North Glendale Avenue, to be used as forensic conditional release outpatient program and general administration facility (the “Law School Building”),
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(ii) finance the acquisition of four residential cottages located at 215-217 North Everett Street, 223-225 North Everett Street, 231-231A North Everett Street and 233-235 North Everett Street in Glendale, California, to be used as Statewide Transitional Residential Program Services facilities, and (iii) finance the acquisition of a building located at 234-236 North Glendale Avenue, to be used as rental property (currently leased by two commercial tenants: 234 by ITT Insurance Services and 236 by H & H Book Services), and
(c) finance the acquisition of two additional residential cottages located at 227 North Everett Street and 219-221 North Everett Street in Glendale, California, to be used as Statewide Transitional Residential Program Services facilities (collectively the “Projects”).
In order to issue revenue bonds utilized within city limits, the City Council has been requested to conduct a Tax Equity and Fiscal Responsibility Act hearing on behalf of Gateways (Borrower) and CMFA. Section 147 (f) of the Internal Revenue Code of 1986 requires that the local elected public body conduct a public hearing related to the proposed issuance of revenue bonds and that the public be provided an opportunity to present arguments both for and against the issuance of these bonds by CMFA.
RECOMMENDATION
That the City Council conduct a Tax Equity and Fiscal Responsibility Act (TEFRA) hearing and approve the issuance of up to approximately $60 million in Tax Exempt Revenue Bonds in order to refinance the acquisition of the properties which are owned and operated by the Borrower and to acquire two additional parcels.
ANALYSIS
Gateways Hospital and Mental Health Center, a non-profit organization located in Echo Park, has been serving the Greater Los Angeles area since 1953. Their qualified healthcare professionals treat all mental health conditions and provide services for children, adolescents, transitional aged youth and adults. They pride themselves on offering quality mental health treatment to all individuals in need, regardless of their ability to pay.
The Borrower has applied for the issuance of approximately $60 million in revenue bonds by CMFA in order to refinance the acquisition of the properties which are owned and operated by the Borrower and to acquire two additional parcels.
In order to issue revenue bonds which will be utilized within Glendale, the City of Glendale has been requested to conduct a TEFRA hearing on behalf of the Borrower and CMFA.
Section 147 (f) of the Internal Revenue Code of 1986 requires that the local elected public body conduct a public hearing related to the proposed issuance of revenue bonds and that the public be provided an opportunity to present arguments both for and against the issuance of these bonds by CMFA. The City Council has previously conducted TEFRA hearings for City and other privately sponsored projects such as Glendale Adventist Medical Center, Maple Park, Casa de la Paloma, Park Paseo, and Ararat Homes. {{section.number}}{{item.number}}3
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The CMFA was created on January 1, 2004, to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 350 municipalities, including the City of Glendale, have become members of the CMFA. The CMFA is a public entity, separate and apart from each member. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members.
The bonds to be issued by the CMFA for the proposed project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the proposed project or the repayment of the bonds for the financing of the proposed project. All financing documents with respect to the issuance of the bonds will contain clear disclaimers that the bonds are not obligations of the City or the State of California but are to be paid for solely from funds provided by the borrower.
The City became a member of the CMFA in August 2012 and the City will in no way become exposed to any financial liability by reason of its membership in CMFA. In addition, participation by the City in CMFA 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 and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the bonds will be required.
There is no fiscal impact to the City of Glendale associated with this TEFRA hearing or with the issuance of tax-exempt revenue bonds by the CMFA. The bonds proposed to be issued will be the indebtedness of the Borrower, and the City will not be asked to approve or execute any of the documents relating to the financing. The bond proceeds will benefit the Borrower and will allow for the acquisition, refinancing and rehabilitation expenditures for the Projects.
Project Development Team
Bond Issuer: California Municipal Finance Authority
Bond Counsel: Stradling Yocca Carlson & Rauth LLP
Issuer Counsel: Jones Hall, APLC
Financial Advisor: HG Wilson Municipal Finance, Inc.
STAKEHOLDERS/OUTREACH
Pursuant to Section 147(f) of the Internal Revenue Code of 1986, a Notice of Public Hearing was published in the Los Angeles Times at least 7 days in advance of the hearing offering the date and time of the TEFRA hearing and describing the manner in which interested members of the public can call in and voice their support or opposition to the bond issuance.
FISCAL IMPACT
There is no fiscal impact to the City of Glendale associated with this TEFRA hearing or with the issuance of tax-exempt revenue bonds by the CMFA. The bonds proposed to be {{section.number}}{{item.number}}4
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issued will be the indebtedness of the Borrower, and the City will not be asked to approve or execute any of the documents relating to the financing.
Through its conduit issuance activities, the CMFA shares a portion of the bond issuance fees it receives with its member communities. With respect to the City of Glendale, up to approximately $5,000 will be granted by CMFA to the City. Such grant may be used for any lawful purpose of the City. This revenue will be received by the City after bond issuance and will be designated for the Affordable Housing Trust Fund.
ENVIRONMENTAL REVIEW (CEQA/NEPA)
Not applicable.
CAMPAIGN DISCLOSURE
This item is exempt from campaign disclosure requirements.
ALTERNATIVES TO STAFF RECOMMENDATION
1) The Council may decline adopting a resolution approving the issuance of approximately $60 Million Tax Exempt Revenue Bond Obligations in support of Gateways Hospital and Mental Health Center.
2) City Council may elect to consider any other alternative not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Bradley Calvert, Director of Community Development
Prepared by:
Peter Zovak, Assistant Director of Community Development Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Attachment A – Plat Map