City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Kevin Werner, City Administrator
Date: 12/13/2022
Subject: TEFRA Hearing
RECOMMENDED ACTION:
1) Conduct the public hearing under the requirements of TEFRA and the Internal Revenue Code of 1986, as amended (the “Code”).
2) Adopt the resolution approving the issuance of the Bonds by the CMFA for the benefit of Bethany Home Society of San Joaquin County, Inc. doing business as Bethany Home (the “Borrower”), a California nonprofit public benefit corporation, 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). The resolution will also authorize the Mayor or designee thereof to execute the Joint Exercise of Powers Agreement with the CMFA.
BACKGROUND:
The California Municipal Finance Authority (CMFA) has been asked by Bethany Home Society of San Joaquin County, Inc (“Borrower”) to be the issuer of tax-exempt financing for the Terraces at Bethany project (“Project”) that was approved by the City Council in July 2022. As a result, the City of Ripon has been requested to take the following actions:
1. Conduct a public hearing under the Tax and Equity Fiscal Responsibility Act (“TEFRA”) on December 13, 2022 in connection with the proposed issuance of revenue bonds by the California Municipal Finance Authority (the “CMFA”), a joint exercise of powers authority and public entity of the State of California, in an amount not to exceed $60,000,000, (the “Bonds”), to finance and/or refinance the construction, expansion, equipping, improvement, renovation, rehabilitation, furnishing and/or remodeling of senior living and related facilities known as Bethany Home (collectively, the “Project”).
2. Adopt a resolution to become a member of the CMFA and to approve the financing of the Project by the CMFA.
The Borrower requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $60,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used to finance and/or refinance the construction, expansion, equipping, improvement, renovation, rehabilitation, furnishing and/or remodeling of senior living and related facilities known as Bethany Home.
DISCUSSION:
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Ripon must conduct a public hearing (the “TEFRA Hearing”) providing City residents 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.
California Municipal Finance Authority
The CMFA was created on January 1, 2004, pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 300 municipalities have become members of CMFA.
The CMFA was formed to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financings.
Execution of the Joint Exercise of Powers Agreement
In order for the CMFA to have the authority to serve as the issuer of the bonds for the Project, it is necessary for the City of Ripon to become a member of the CMFA. Attached to this report is a copy of the Joint Exercise of Powers Agreement (the “JPA” o be executed by a designated signatory of the City.
The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing the JPA. .
It is important to note that the Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the 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.
There are no costs associated with membership in the CMFA and the City will in no way become exposed to any financial liability by reason of its membership in the CMFA. In addition, participation by the City in the 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, adopting the required resolution and executing the Joint Exercise of Powers Agreement of the CMFA, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required.
The Joint Exercise of Powers Agreement expressly provides that any member may withdraw from such agreement upon written notice to the Board of Directors of the CMFA. In the case of the proposed bond financing for the Borrower, the City following its execution of the Joint Exercise of Powers Agreement, could, at any time following the issuance of the Bonds, withdraw from the CMFA at no expense by providing written notice to the Board of Directors of the CMFA.
FISCAL IMPACT:
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Ripon, it is expected that a portion of the issuance fee attributable to the City will be granted by the CMFA to the General Fund of the City. Such grant may be used for any lawful purpose of the City.
Attachments:
1. CMFA JPA Agreement- Ripon
RESOLUTION NO. 22-49
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RIPON APPROVING, AUTHORIZING AND DIRECTING
EXECUTION OF A JOINT EXERCISE OF POWERS
AGREEMENT RELATING TO THE CALIFORNIA
MUNICIPAL FINANCE AUTHORITY, AND APPROVING
THE ISSUANCE OF BONDS PURSUANT TO A PLAN OF
FINANCE BY THE CALIFORNIA MUNICIPAL FINANCE
AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT
NOT TO EXCEED $60,000,000 FOR THE PURPOSE OF
FINANCING AND/OR REFINANCING THE
CONSTRUCTION, EXPANSION, EQUIPPING,
IMPROVEMENT, RENOVATION, REHABILITATION
AND/OR REMODELING OF SENIOR LIVING AND RELATED
FACILITIES AND CERTAIN OTHER MATTERS RELATING
THERETO
WHEREAS, pursuant Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), certain public agencies (the “Members”) have entered into a Joint Exercise of Powers Agreement, effective on January 1, 2004 (the “Agreement”) in order to form the California Municipal Finance Authority (the “Authority”), for the purpose of promoting economic, cultural and community development, and in order to exercise any powers common to the Members, including the issuance of bonds, notes or other evidences of indebtedness; and WHEREAS, City of Ripon (the “City”), has determined that it is in the public interest and for the public benefit that the City become a Member of the Authority in order to facilitate the promotion of economic, cultural and community development activities in the City, including the financing of projects therefor by the Authority; and WHEREAS, there is now before this City Council of the City of Ripon (the “Council”) the form of the Agreement; and
WHEREAS, the Agreement has been filed with the City, and the members of the City Council, with the assistance of its staff, have reviewed said document; and WHEREAS, the California Municipal Finance Authority (the “Authority”) is authorized to issue and sell revenue bonds for the purpose, among others, of financing or refinancing the construction of capital projects; and
WHEREAS, Bethany Home Society of San Joaquin County, Inc. doing business as Bethany Home (the “Borrower”), a California nonprofit public benefit corporation, has requested that the California Municipal Finance Authority (the “Issuer”) provide for the issuance of one or more series of revenue bonds from time to time pursuant to a plan of finance in an aggregate principal amount not to exceed $60,000,000 (the “Bonds”); and WHEREAS, the proceeds of the Bonds will be used, among other things, to finance and/or refinance the construction, expansion, equipping, improvement, renovation, rehabilitation, furnishing and/or remodeling of senior living and related facilities known as Bethany Home (collectively, the “Project”), which are all owned and operated by the Borrower; and WHEREAS, the Project is located within the City; and
WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”), the issuance of the Bonds by the Issuer must be approved by the City because the Project is located within the territorial limits of the City; and WHEREAS, the Council is the elected legislative body of the City and is the applicable elected representative under Section 147(f) of the Code; and WHEREAS, the Issuer has requested that the Council approve the issuance of the Bonds by the Issuer in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Agreement; and WHEREAS, the Issuer is also requesting that the Council approve the issuance of any refunding bonds hereafter issued by the Issuer for the purpose of refinancing the Bonds which financed and/or refinanced the Project (the “Refunding Bonds”), but only in such cases where federal tax laws would not require additional consideration or approval by the Council; and WHEREAS, pursuant to Section 147(f) of the Code, the Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Issuer; and
WHEREAS, the Council understands that its actions in holding this public hearing and in approving this Resolution do not obligate the Council in any manner for payment of the principal, interest, fees or any other costs associated with the issuance of the Bonds or Refunding Bonds, and said Board expressly conditions its approval of this Resolution on that understanding; and
WHEREAS, it is intended that this Resolution shall comply with the public approval requirements of Section 147(f) of the Code and Section 4 of the Agreement; provided, however, that this Resolution is neither intended to nor shall it constitute an approval by the Council of the Project for any other purpose, including, but not limited to, compliance with the California Environmental Quality Act (California Public Resources Code, Section 21100, et seq.) (“CEQA”).
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Ripon, as follows:
Section 1. The Agreement is hereby approved and the Mayor of the City of Ripon or designee thereof is hereby authorized and directed to execute said document, and the City Clerk or such Clerk’s designee is hereby authorized and directed to attest thereto.
Section 2. The Council hereby approves the issuance by the Issuer of the Bonds and the Refunding Bonds for the purposes of financing and/or refinancing the Project. It is the purpose and intent of the Council that this Resolution shall constitute approval of (a) the issuance of the Bonds by the Issuer for the purposes of Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, and (b) the issuance of the Bonds and Refunding Bonds for the purposes of Section 4 of the Agreement.
Section 3. The officers of the Council are hereby authorized and directed, jointly and severally, to do any and all things and execute and deliver any and all documents, certificates and other instruments 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. Any actions heretofore taken by such officers are hereby ratified and approved.
Section 4. The Council expressly conditions its approval of this Resolution on its understanding that the City shall have no obligation whatsoever to pay any principal, interest, fees or any other costs associated with the Issuer’s issuance of the Bonds or Refunding Bonds for the financing and/or refinancing of the Project.
Section 5. The Bonds shall be a limited obligation of the Issuer, payable solely from certain revenues duly pledged therefor and generally representing amounts paid by the Borrower.
The Bonds shall not constitute a debt or obligation of the City.
Section 6. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or take any action with respect to the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the Project; (iii) make any contribution or advance any funds whatsoever to the Issuer; or (iv) take any further action with respect to the Issuer or its membership therein.
Section 7. 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 8. The City Clerk shall forward a certified copy of this Resolution and an originally executed Agreement to the Authority in care of its counsel:
Ronald E. Lee, Esq.
Jones Hall, APLC
475 Sansome Street, Suite 1700
San Francisco, CA 94111
Section 9. This Resolution shall take effect from and after the date of its passage and adoption.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Ripon this 13th day of December, 2022, by the following vote:
RESULT: ADOPTED [UNANIMOUS]
MOVER: Leo Zuber, Vice Mayor
SECONDER:Daniel de Graaf, Council Member
AYES: Restuccia, Zuber, de Graaf, Barton, Uecker
THE CITY OF RIPON,
A Municipal Corporation
By ________________________________
MICHAEL RESTUCCIA, Mayor
ATTEST:
By: ___________________________
LISA ROOS, City Clerk