CITY OF POMONA
COUNCIL REPORT
January 8, 2024
To: Honorable Mayor and Members of the City Council
From: Anita D. Gutierrez, Acting City Manager
Submitted By: Kirk Pelser, Economic Development Director SUBJECT: PUBLIC HEARING PURSUANT TO SECTION 147(F) OF THE INTERNAL REVENUE CODE; RESOLUTION APPROVING ASSOCIATE MEMBERSHIP AGREEMENT WITH THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND RESOLUTION APPROVING CONDUIT FINANCING FOR PROVIDENT GROUP-POMONA PROPERTIES L.L.C. ______________________________________________________________________________ RECOMMENDATION:
It is recommended that the City Council Conduct a Public Hearing and Adopt the Following Resolutions 2024-04 (Attachment No.1) & 2024-05 (Attachment No. 2):
CONDUCT A PUBLIC HEARING REGARDING THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF CERTAIN REVENUE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $50,000,000 FOR THE PURPOSE OF FINANCING, REFINANCING AND/OR REIMBURSING THE ACQUISITION, CONSTRUCTION, INSTALLATION, FURNISHING, AND EQUIPPING OF A 174,533 SQUARE FOOT STUDENT HOUSING FACILITY CONSISTING OF APPROXIMATELY 202 APARTMENT STYLE STUDENT HOUSING UNITS AND 10,217 SQUARE FEET OF ACADEMIC AND ADMINISTRATIVE SPACE ADOPT A RESOLUTION NO 2024-04 (ATTACHMENT NO. 1) OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA APPROVING ASSOCIATE MEMBERSHIP BY THE CITY OF POMONA, CALIFORNIA IN THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND THE EXECUTION OF AN ASSOCIATE MEMBERSHIP AGREEMENT RELATING TO ASSOCIATE MEMBERSHIP OF THE CITY OF POMONA, CALIFORNIA IN THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY.
ADOPT A RESOLUTION NO 2024-05 (ATTACHMENT NO. 2) OF THE CITY COUNCIL OF THE CITY OF POMONA APPROVING THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF CERTAIN REVENUE BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $50,000,000 FOR THE PURPOSE OF FINANCING, REFINANCING AND/OR REIMBURSING THE ACQUISITION, CONSTRUCTION, INSTALLATION, FURNISHING, AND EQUIPPING OF A 174,533 SQUARE FOOT STUDENT HOUSING FACILITY CONSISTING OF APPROXIMATELY 202 APARTMENT STYLE STUDENT HOUSING UNITS AND 10,217 SQUARE FEET OF ACADEMIC AND ADMINISTRATIVE SPACE LEASED TO WESTERN UNIVERSITY OF HEALTH SCIENCES AND CERTAIN OTHER MATTERS RELATING THERETO.
EXECUTIVE SUMMARY:
Provident Group-Pomona Properties L.L.C., a Delaware limited liability company (the “Borrower”), is the owner of The Daumier, an approximately 174,533 square foot facility consisting of 202 apartment style units and approximately 10,217 square feet of academic and administrative space (the “Property”) adjacent to the campus of Western University of Health Sciences (the “University”. The sole member of the Borrower is Provident Resources Group Inc. (the “Corporation”), a Georgia nonprofit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986. The Property provides housing to the University’s students and to the University. The Borrower has requested that the California Enterprise Development Authority (the “Authority”) issue tax-exempt bonds, notes or other evidences of indebtedness (the “Bonds”), from time to time, in one or more series in an aggregate principal amount not to exceed $50,000,000 (the “Bonds”).
FISCAL IMPACT:
There is no financial impact to the City from joining the Authority as an Associate Member, conducting the public hearing and approving the issuance of the Bonds by the Authority to finance and refinance the Property. The City is in no way associated with the debt issuance and is not obligated to make debt service payments on the Bonds. In addition, adopting resolutions in no way makes the City a party to the debt issuance.
PUBLIC NOTICING REQUIREMENTS:
A Public Notice of the Public Hearing is required for compliance with Section 147(f) of the Internal Revenue Code of 1986. Said Notice of Public Hearing (Attachment No. 3) is attached hereto and was duly published on December 22, 2023 in the Daily Bulletin.
DISCUSSION:
California Enterprise Development Authority
The Authority is a joint powers authority established by the California Association for Local Economic Development and created pursuant to a Joint Powers Agreement, dated as of June 1, 2006 (the “JPA Agreement”), among the cities of Selma, Lancaster and Eureka. There are now approximately 250 cities and counties that are associate members of the Authority. The Authority’s primary 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.
The JPA Agreement permits any other local agency in California to join the Authority as an “Associate Member.” The Authority has requested that the City become an Associate Member of the Authority. Associate membership in the Authority will assist the City as well as for-profit and nonprofit organizations located within the City in financing and refinancing industrial and commercial development projects and other public purpose projects within the City. Associate Members are not restricted or inhibited in any way with respect to their independent ability to finance any project in any manner they deem appropriate, which may or may not involve or include the Authority.
The proceeds of the Bonds will be used, among other things, (a) to finance, refinance and/ or reimburse the cost of acquisition, construction, installation, furnishing and equipping of the Property; (b) to pay a portion of the interest on the Bonds, if deemed necessary or advisable by the Borrower; (c) to provide working capital to the Borrower, if deemed necessary or advisable by the Borrower; (d) to fund a debt service reserve fund, if deemed necessary or advisable by the Borrower; and (e) to pay certain expenses incurred in connection with the issuance of the Bonds.
The interest on the Bonds is intended to be excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. A public hearing and approval of the issuance of the Bonds by an applicable elected representative of the jurisdiction in which the Property is required for interest to be excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. The City Council is an applicable elected representative and the Borrower and the Authority have requested the City’s assistance.
The Authority will act as issuer and perform all of the necessary legal and administrative responsibilities associated with the financing. The Bonds are special, limited Bonds of the Authority payable solely through the repayment of the loan by the Borrower, which repayment is used to pay the principal of and interest on the Bonds. The Bonds issued by the Authority are not an obligation of the City or any member of the Authority. Neither the faith or credit, nor the taxing power of the City, any member of the Authority, the State or any political subdivision is pledged to the repayment of the Bonds.
The Borrower and the Corporation
The Borrower owns and operates the Property to assist the University’s students obtain affordable and convenient housing while attending the University. The Corporation is committed to making a positive impact in communities across the country and furthering education. In 2013, California Statewide Communities Development Authority issued Student Housing Revenue Bonds (the “2013 Bonds”), the proceeds of which were used by the Borrower to fund the development, acquisition, construction, furnishing and equipping of the Property. The bonds to be issued by the Authority would currently refund the 2013 Bonds.
Prepared by:
Kirk Pelser
Economic Development Director
ATTACHMENTS:
Attachment No. 1 - Resolution No. 2024-04
Attachment No. 2 – Resolution No. 2024-05
Attachment No. 3 – Notice of Public Hearing
4 4882-5613-6593.2
4882-5613-6593.2
Public Hearing to adopt Resolutions Related to Financing of Non-Profit Housing January 8, 2024