“
CITY OF SIMI VALLEY
MEMORANDUM
J
anuary 23, 2023
TO
: City Council
F
ROM: Department of Environmental Services
S
UBJECT: A PUBLIC HEARING TO CONSIDER ADOPTION OF A RESOLU TION
APPROVING THE ISSUAN CE OF TAX -EXEMPT REVENUE BONDS BY
THE CALIFORNIA PUBLIC FINANCE AUTHORITY FOR THE FINANCING
OF A RES IDENTIAL CARE FACILIT Y PR OJECT FOR THE ELDERL Y
AND AUTHORI ZING THE CITY OF SIM I VALLEY TO JOIN THE
CALIFORNIA PUBLIC FINANCE AUTHORITY AS A NON -CHARTER
ADDITIONAL MEMBER
STAFF RECOMMENDATION
It is recommended at the conclusion of this public hearing under the requirements of the Tax Equity and Fiscal Res ponsibility Act of 1983 and Sec tion 147(f) of the Internal Revenue Code (1986), as amended, by the City Council:
1. Adopt Resolution No. 2023-03 (page 8) authorizing the City of Simi Valley to join the California Public Finance Authority as a non-c harter additional member , and authorizing the issuance of one or more series of r evenue bonds in an aggregate amount not to exceed $450,000,000 by the California Public Finance Authority, on behalf of “Kendal at Ventura,” a non-profit corporation, to provide for the financing of a residential care facility project (Enso V erde) for the elderly located at the southwest corner of Tapo Canyon Road and Guardian Street;
2. Authorize the City Manager, or designee, to execute any supporting documents to effectuate the resolution.
BACKGROUND AND OVERVIEW
On
September 21, 2020, the City Council approved a Conditional Use Permit, a General Plan and Specific Plan Amendment, Zone change, and Tentative Parcel Map for the property owner, Peppertree Business Park, to construct and operate a 357- unit Residential Care Facility for th e Elderly ( “RCFE”) on a 20.7 -acre project site located at the southwest corner of Tapo Canyon Road and Guardian Street. The RCFE is designated for persons 62 years of age or older and will be licensed by the State of California. The project includes 306 independent living units and 51 assisted/memory care units.
AGENDA ITEM NO.
5D
S
ubsequently, staff was contacted by “Kendal at Ventura,” who has expressed interest in acquiring the property, and submitted a Preliminary Review application. The Preliminary Review application process allows the City’s Planning staff to conceptually review the project design for the applicant and identify any early Planning, Public Works, and Fire design issues. This provides the applicant with an opportunity to modify their application based on staff’s input and submit a better designed project that will flow more easily through the permit review process. As a result of the Preliminary Review, t he following modifications to the project are being pursued by “Kendal at Ventura,” which will be subject to future Planning Commission approval:
Approved Project
(Peppertree Ranch)
Preliminary Review
Application (Kendal)
Square Footage 461,804 469,192
Independent Living Units 306 260
Teacher/Workforce
Apartments
N/A 24
Assisted Living 25 24
Memory Support 26 24
Total 357 332
“
Kendal at Ventura” (“Kendal ”) is currently seeking financing through the California Public Finance Authority ( “CalPFA”). Created under the authority provided in the California Government Code, the CalPFA was created for the purpose of issuing tax -exempt and taxable conduit bonds for public and private entities throughout California. To facilitate this request, the City must approve the bond issuance in order for Kendal to obtain tax -exempt status. In order for jurisdictions to participate in CalPFA, they must become members of the program and have their legislative body approve a Joint Powers Agreement (“JPA”), which provides that CalPFA is a public entity, separate and apart from the City and from each member executing the Agreement. The debts, liabilities, and obligations of CalPFA do not obligate the City Council in any manner
for payment of the principal,
interest, fees or any other costs associated with the issuance of bonds.
FINDINGS AND ALTERNATIVES
The California Public Finance Authority is a political subdivision of the State of California and was initially formed on May 12, 2015, among Kings County and the Housing Authority of Kings County, California. The sole purpose of CalPFA is to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax -exempt financing to promote economic, cultural, and communit y development opportunities that create temporary and permanent jobs, affordable housing, community infrastructure and improve the overall quality of life in local communities. CalPFA, serving as the conduit issuer, provides a mechanism for both private and public sectors to obtain access to capital to finance locally approved projects.
2 Kendal has requested that CalPFA issue and sell tax exempt revenue bonds in the maximum principal amount of $450,000,000 and lend the proceeds to them, for the purpose of financing and refinancing the costs of acquisition, development, construction, improvement and equipping of the Enso Verde project, located at southwest corner of Tapo Canyon Road and Guardian Street. To facilitate this request, the City must approve the bond issuance to obtain tax-exempt status.
In order for CalPFA to allow cities or other public entities to approve the issuance of bonds for any future project, it is necessary for the City to become a member of CalPFA. Staff is recommending that the City Council adopt a resolution authorizing the City of Simi Valley to join CalPFA in order to approve the bond issuance to Kendal at the close of the public hearing. The Joint Exercise of Powers Agreement explicitly provides that CalPFA is a public entity, separate and apart from the Member executing the agreement, and the debts, liabilities and obligations of CalPFA do es not obligate the City or the City Council in any manner for payment of the principal, interest, fees or any other costs associated with the issuance of bonds. To that end, the bonds issued for the Enso Verde project are the sole responsibility of Kendal at Ventura.
There is no cost associated with membership and members may withdraw from the agreement upon written notice to the CalPFA Board of Directors. To date, over fifty public agencies have become members of CalPFA. Through its conduit issuance fees, CalPFA shares a portion of the issuance fees it receives with its member communities when the bonds are issued. Each public agency who conducts the TEFRA hearing shall receive CalPFA’s annual administration fee of 1.5 basis points per year. The City estimates that it could receive approximately $67,500 annually for the term of the respective bonds , if the full amount of $450,000,000 is issued for the Enso Verde project.
TEFRA Hearing
Pursuant to Section 147(f) of the Internal Revenue Code (1986), as amended, in order for the bonds to qualify as tax-exempt bonds, the issuance of the bonds by CalPFA must be approved by a governmental unit at a public hearing following reasonable notice to the members of the community. The public hearing requirement is in accordance with the Federal Tax Equity and Fiscal Responsibility Act (TEFRA) and the hearings are known as TEFRA Hearings. Since Kendal’s residential care facility project for the elderly, Enso Verde, is located within the Simi Valley city limits, the City Council’s approval of the bond issuance is required following the close of the TEFRA hearing; the Simi Valley City Council is holding the TEFRA hearing as the “applicable elected representative” of the governmental unit hosting the proposed project.
In accordance with TEFRA, the City published a Notice of Public Hearing in the Ventura County Star on January 13, 2023, and the public hearing provides the opportunity for all interested persons to speak or submit written comments concerning the proposal to issue the bonds and the nature or location of the facility to be financed. However, it should be noted that neither the City nor Kendal is formally obligated to respond to any specific comments made during the hearing or submitted in writing. Further, the public hearing is 3 not intended for the City Council to consider the proposed changes to the project ; however, comments regarding the project are welcome.
As noted above, the City shall have no obligation whatsoever to pay any principal, interest, fees or any other costs associated with the CalPFA ’s issuance of the Bonds for the financing and refinancing of the Enso Verde project.
The following alternatives are available to the City Council at the conclusion of the public hearing under the requirements of TEFRA and Section 147(F) of the Internal Revenue Code of 1986:
1. Adopt a R esolution No. 2023- 03 authorizing the City of Simi Valley to join the California Public Finance Authority as a non- charter additional member, and authorizing the issuance of one or more series of revenue bonds in an aggregate amount not to exceed $450,000,000 by the California Public Finance Authority, on behalf of “Kendal at Ventura,” a non-profit corporation, to provide for the financing of a residential care facility project (Enso Verde) for the elderly located at the southwest corner of Tapo Canyon Road and Guardian Street.
2. Authorize the City Manager, or designee, to execute any supporting documents to effectuate the resolution.
3. Do not adopt the resolutions.
Staff recommends Alternative Nos. 1 and 2.
SUGGESTED CITY COUNCIL MOTION
I move to:
1) A dopt a resolution authorizing the City of Simi Valley to join the California Public Finance Authority a s a non- charter additional member, and authorizing the issuance of one or more series of revenue bonds in an aggregate amount not to exceed $450,000,000 by the California Public Finance Authority, on behalf of “Kendal at Ventura.” A non -profit corporation, to provide for financing of a residential care facility project (Enso Verde) for the elderly located at the southwest corner of Tapo Canyon Road and Guardian Street; and
2) A uthorize the City Manager, or designee, to execute any supporting documents to effectuate the resolution.
4 SUMMARY
“Kendal of Ventura,” a non-profit corporation, (“Kendal”) is seeking financing through the California Public Finance Authority (C alPHA). To facilitate CalPHA ’s issuance of tax - exempt bonds to help finance Kendal’s Enso Verde residential care facility for the elderly project, the City must conduct a public hearing regarding the issuance of the bonds. Under no circumstances will the City be in any way responsible or liable for the payment of the bonds.
_________________________________
Linda Swan
Assistant City Manager
INDEX Page
Public Hearing Procedure .............................................................................................. 6 Resolution No. 2023-03 (Authorizing Issuance of Bonds and the City of Simi Valley to Join the California Public Finance Authority) ................................. 8 Joint Exercise of Powers Resolution ............................................................................ 10
5 PUBLIC HEARING PROCEDURE
HEARING DATE: January 23, 2023
1. MAYOR
: This is the time and place set for a public hearing to consider adoption of a resolution authorizing the City of Simi Valley to join the California Public Finance Authority as a non- charter additional member and authorizing the issuance of one or more series of tax -exempt revenue bonds in an aggregate amount not to exceed $450,000,000 by the California Public Finance Authority, on behalf of “Kendal at Ventura,” a non- profit corporation, to provide for financing of a residential care facility project (Enso Verde) for the elderly located at the southwest corner of Tapo Canyon Road and Guardian Street and authorize the City Manager, or his designee, to execute any supporting documents to effectuate the resolution.
May I have a reading of the resolutions?
2. CLERK
: (Reads resolution and/or ordinance)
3. MAYOR: May we have an oral report on this matter by staff?
4. STAFF
: (Report)
5. ANY COUNCIL
MEMBER : (Questions of staff and staff response)
6. MAYOR: Please read any public comments on this matter that have been received.
7. AUDIENCE
: (Comments)
8. MAYOR: The hearing is closed. Are there any comments or questions from members of the City Council? (Note: If the City
Council has any further questions of staff or the applicant at this time, the Public Hearing may need to be re-opened.)
9. ANY COUNCIL
MEMBER
: (Comments)
10. MAYOR: The Chair will now entertain a motion.
11. ANY COUNCIL
MEMBER :
6 Adopt, modify, or not adopt Resolution No. 2023-03 (requires a second and a vote; requires reading of resolution).
Suggested motion: I move to adopt the resolution,
authorizing the City of Simi Valley to join the California Public Finance Authority as a non- charter member and
authorizing the issuance of tax-exempt revenue bonds in an aggregate principal amount not to exceed
$450,000,000 by the California Public Finance Authority for the financing of a residential care facility project (Enso Verde) for the elderly located at the southwest corner of Tapo Canyon Road and Guardian Street; and authorize
the City Manager, or designee, to execute any supporting documents to effectuate the resolution.
* Any action to refer the matter back to staff or to continue the matter requires a second and a vote.
12. ANY COUNCIL
MEMBER
: Second
13. MAYOR
: (Call for vote)
14. MAYOR
: Proceed to the next item.
7 RESOLUTION NO. 2023-03
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SIMI VALLEY APPROVING A FINANCING TO BE
UNDERTAKEN BY THE CALIFORNIA PUBLIC FINANCE
AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT
NOT TO EXCEED $ 450,000,000, FOR THE PURPOSE OF
FINANCING AND REFINANCING THE ACQUISITION,
DEVELOPMENT, CONSTRUCTION, IMPROVEMENT AND
EQUIPPING OF A RESIDENTIAL CARE FACILITY FOR THE
ELDERLY PROJECT AND CERTAIN OTHER MATTERS
RELATING THERETO
WHEREAS, “Kendal at Ventura,” a California nonprofit public benefit corporation (the “Corporation”), has requested that the California Public Finance Authority (the “Authority”) adopt a plan of financing providing for the issuance of revenue bonds, notes and bond anticipation notes in one or more series issued from time to time, including bonds and other obligations issued to refund such bonds, notes and bond anticipation notes in one or more series from time to time (the “Bonds”), and a t no time to exceed $450,000,000 in outstanding aggregate principal amount to finance and refinance the acquisition, development, construction, improvement and equipping of a residential care facility for the elderly project generally to be known as “Enso Verde” (collectively, the “Project”); and
WHEREAS, the Project is located within the City of Simi Valley (the “City”); and WHEREAS, the City proposes to become an Additional Member of the Authority pursuant to Section 12 of the Joint Exercise of Powers Ag reement (the “Agreement”) relating to the Authority; 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 Authority must be approved by the City because the Project is located within the territorial limits of the City; and WHEREAS, the City Council of the City (the “City Council”) is the elected legislative body of the City and is the applicable elected representative under Section 147(f) of the Code; and
WHEREAS, pursuant to Section 147(f) of the Code, the City 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 Authority; and WHEREAS, the City Council understands that its actions in holding this public hearing and in approving this Resolution do not obligate the City Council in any manner for payment of the principal, interest, fees or any other costs associated with the issuance of the Bonds, and said City Council expressly conditions its approval of this Resolution on that understanding.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES HEREBY RESOLVE AS FOLLOWS:
8 SECTION 1. The City hereby requests to become an Additional Member of the Authority pursuant to Section 12 of the Agreement. The Agreement is hereby approved and the Mayor of the City and all other proper officers and officials of the City, or a designee thereof, are hereby authorized and directed to execute the Agreement.
SECTION 2. The City Council hereby approves the plan of financing for the issuance from time to time of one or more series of Bonds by the Authority for the purposes of financing and refinancing the Project. It is the purpose and intent of the City Council that this Resolution shall constitute approval of the issuance of the Bonds by the Authority for the purpose 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.
SECTION 3. The officers of the City 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 City 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 Authority’s issuance of the Bonds for the financing and refinancing of the Project.
SECTION 5. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the Office of the City Clerk.
PASSED and ADOPTED this 23rd day of January 2023.
Attest:
Lucy Blanco, City Clerk Fred D. Thomas, Mayor of the City of Simi Valley, California
Approved as to Form: Approved as to Content:
David L. Caceres, City Attorney Brian Paul Gabler, City Manager
9 RES. NO. 2023-03
10 11
12 13
14 15
16 17
18 19
20 [Signature Page to Joint Exercise of Powers Agreement Relating to the California Public Finance Authority] IN WITNESS WHEREOF, the Additional Members hereto have caused this Agreement to be executed and attested by their proper officers thereunto duly authorized.
Dated: ________________
Additional Member Name:
By:
Its:
ATTEST:
___________________________________
By:
Its:
Fred D. Thomas
Mayor, City of Simi Valley
Lucy Blanco,CMC
City Clerk, City of Simi Valley
21