City of Culver City, California
Agenda Item Report
Meeting Date: 12/10/12 Item Number: PH-2
CITY COUNCIL AGENDA ITEM: PUBLIC HEARING - Adoption of a Resolution
Approving the Issuance of Tax Exempt Bonds by the California Municipal Finance
Authority for Park Century School to Finance and Refinance Educational Facilities.
Contact Person/Dept.: Nick Kimball,
Procurement & Financial Svcs Manager
Phone Number: 310-253-6013
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [X] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (Email) Meetings and Agendas – City Council (12/07/12);
(Newspaper) Notice printed in Culver City News (11/22/12); (Email) Park Century School
representatives (12/05/12).
Department Approval:
Jeff Muir (12/03/12)
City Attorney Approval:
Carol A. Schwab (by H. Baker) (12/06/12)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (12/05/12)
City Manager Approval:
John M. Nachbar (12/07/12)
RECOMMENDATION:
Staff recommends City Council conduct a public hearing under the requirements of
the Tax and Equity Fiscal Responsibility Act and the Internal Revenue Code of 1986,
as amended; and approve the issuance of bonds by the California Municipal Finance
Authority for the benefit of Park Century School to provide project financing and
refinancing.
PROCEDURE:
1. Mayor seeks motion from the City Council to receive and file the affidavits of
publication and posting of notices, and correspondence received in response to
the public hearing notices; and,
2. Mayor calls for a staff report and the City Council Members may pose questions
to staff as desired; and,
3. Mayor seeks a motion to open the public hearing; and,
4. Mayor seeks motion to close the public hearing after all public testimony has
been presented; and,
5. City Council discusses the item and arrives at its decision.
City of Culver City, California
Agenda Item Report
BACKGROUND:
In July 2009, the City Council joined the California Municipal Finance Authority
(CMFA) by adopting a resolution authorizing the City Manager to execute a Joint
Powers Agreement with CMFA. CMFA is a Joint Powers Authority that 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.
Park Century School contacted CMFA and has requested that they serve as the
municipal issuer of tax-exempt revenue bonds in an aggregate principal amount not
to exceed $15,000,000 (collectively, the “Bonds”). Proceeds from the Bond issue
will be used to: (i) refinance the School’s obligations under a loan agreement related
to the $10,000,000 California Statewide Communities Development Authority
Variable Rate Demand Revenue Bonds Series 2007; (ii) finance the design,
construction, acquisition, installation, renovation and improvement of real property,
facilities, equipment and improvements of the Campus; (iii) pay the termination
payment with respect to an interest rate swap related to the Series 2007 Bonds; and
(iv) pay costs of issuance and other related costs of the Bonds (collectively, the
"Project"). The facilities financed as part of the Project will be owned by the School
and used for the educational purposes.
CMFA has agreed to work with Park Century School to issue tax exempt bonds.
However, as the local public entity with geographic jurisdiction, Culver City is being
requested to conduct a public hearing to satisfy the public approval requirement of
Section 147(f) of the Internal Revenue Code of 1986, as amended. The purpose of
the TEFRA Hearing, as it is commonly referred, is to provide members of the
community an opportunity to speak in favor of or against the use of tax-exempt
bonds for the financing of a proposed project. Following the close of the TEFRA
Hearing, an “applicable elected representative” of the governmental unit hosting the
project (i.e. City of Culver City) must provide its approval of the issuance of the
bonds for the financing of the project.
The City has held a number of TEFRA hearings over the last few years, including
hearings for The Willows Community School, Turning Point School and The HELP
Group.
DISCUSSION:
The bonds to be issued by CMFA for the Project will be the sole responsibility of the
borrower (i.e. Park Century School), 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 City of Culver City, California
Agenda Item Report
or the State of California, but are to be paid for solely from funds provided by The
Park Century School.
In light of the foregoing, and in order to assist Park Century School in keeping their
operating costs as low as possible, staff recommends that the City Council conduct
the TEFRA Hearing and adopt the resolution in favor of the issuance of the bonds by
the CMFA.
FISCAL ANALYSIS:
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.
Additionally, 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 Culver City, it is expected that
25% of the issuance fee will be granted by the CMFA to the City’s General Fund.
Such grant may be used for any lawful purpose of the City. Park Century School will
be the beneficiary of the Foundation’s charitable donation through a 25% reduction
in issuance fees.
ATTACHMENTS:
1. Proposed Resolution
MOTION:
That the City Council:
1. Adopt the resolution approving the issuance of revenue bonds by the
Authority for the purpose of financing and refinancing facilities for Park
Century School; and
2. Authorize the City Attorney to review/prepare the necessary documents; and
3. Authorize the City Manager to execute such documents on behalf of the City.
MEETING DATE: December 10, 2012
AGENDA ITEM: Adoption of a Resolution Approving the Issuance of Tax
Exempt Bonds by the California Municipal Finance Authority
for Park Century School to Finance and Refinance
Educational Facilities.
ATTACHMENTS
Pages
1. Proposed Resolution ........................................................... 1 - 4
1 RESOLUTION NO. 2012-R
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RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CULVER
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CITY, CALIFORNIA, APPROVING A FINANCING TO BE
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UNDERTAKEN BY THE CALIFORNIA MUNICIPAL FINANCE
AUTHORITY TO BENEFIT PARK CENTURY SCHOOL IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $15,000,000
FOR THE PURPOSE OF FINANCING AND/OR REFINANCING THE
ACQUISITION, CONSTRUCTION, IMPROVEMENT, RENOVATION,
FURNISHING AND EQUIPPING OF EDUCATIONAL FACILITIES
AND CERTAIN OTHER MATTERS RELATING THERETO.
WHEREAS, Park Century School, a nonprofit public benefit corporation (the
"School"), and an organization described in Section 501(c) (3) of the Internal Revenue
Code of 1986 (the "Code") has requested that the Authority participate in a plan of finance
involving the incurrence of one or more tax-exempt loans in an aggregate principal amount
not to exceed $15,000,000 (collectively, the "Bonds") to:
(1) Refinance the School's obligations under a loan agreement
related to the $10,000,000 California Statewide Communities Development
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WHEREAS, pursuant to 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 Relating to the California Municipal
Finance Authority, effective as of 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, the City of Culver City is a member of the Authority; and
WHEREAS, 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 Authority Variable Rate Demand Revenue Bonds (Park Century School)
Series 2007 (the "Series 2007 Bonds") the proceeds of which were used by
the School for:
(a) The design, construction, acquisition, installation, renovation
and improvement of real property, facilities, equipment and
improvements of the School's educational facilities located on its
campus at 3939 Landmark Street in Culver City, California (the
"Campus"), including but not limited to demolition of certain parts of
the then-existing structure, earthquake retrofitting, and complete
renovation of the existing building into a school building that will
include classrooms, offices, meeting rooms, a gym and a stage,
renovation of the parking lot, and landscaping of the Campus;
(b) Miscellaneous construction, renovation, improvements,
demolition, capital maintenance, equipment acquisition and installation
thereof and improvements at the Campus;
(c) Refinancing of an outstanding bank loan originally used to
finance acquisition of the site of the Campus; and
(d) Various costs of issuance, capitalized interest, related
working capital and credit enhancement fees;
(2) Finance the design, construction, acquisition, installation,
renovation and improvement of real property, facilities, equipment and
improvements of the Campus;
(3) Pay the termination payment with respect to an interest rate
swap related to the Series 2007 Bonds; and
(4) Pay costs of issuance and other related costs of the Bonds
(collectively, the "Project").
The facilities financed as part of the Project will be owned by the School and used for the
educational purposes thereof. The Project is located entirely within the territorial limits of
the City of Culver City (the "City"); and
WHEREAS, pursuant to Section 147(f) of 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
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-2- 1 WHEREAS, the Council of the City (the "City Council") is the elected
2 legislative body of the City and is one of the "applicable elected representatives" required
3 to approve the Bonds under Section 147(0 of the Code; and
4 WHEREAS, the Authority has requested that the City Council approve the
5 issuance of the Bonds by the Authority in order to satisfy the public approval requirement
6 of Section 147(f) of the Code and the requirements of Section 4 of the Agreement; and
7 WHEREAS, a public hearing was held by the City Council on December 10,
8 2012, at the City Council meeting which commenced at 7:00 p.m., at the City Hall Council
9 Chambers, 9770 Culver Boulevard, Culver City, California 90232 and all persons desiring
10 to be heard have been heard; and
11 WHEREAS, it is in the public interest and for the public benefit that the City
12 Council now desires to approve the issuance of the Bonds by the Authority.
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NOW, THEREFORE, the City Council of the City of Culver City, DOES
15 HEREBY RESOLVE AS FOLLOWS:
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SECTION 1. The foregoing resolutions are true and correct.
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SECTION 2. The City Council hereby approves the issuance by the Authority
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of the Bonds to finance the Project. It is the purpose and intent of the City Council that this
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20 resolution constitute approval of the Bonds for the purposes of: (a) Section 147(f) of the
21 Code by the applicable elected representative of the governmental unit having jurisdiction
22 over the area in which the Project is located, in accordance with said Section 147(f), and
23 (b) Section 4 of the Agreement; provided, however, that this Resolution shall not constitute
24 an approval by the City Council of the Project for any, other purpose.
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SECTION 3. The issuance of the Bonds shall be subject to the approval of
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27 the Authority of all financing documents relating thereto to which the Authority is a party.
28 The City shall have no responsibility or liability whatsoever with respect to the Bonds.
-3- ANDREW WEISSMAN , Mayor
City of Culver City, California
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SECTION 4. The adoption of this Resolution shall not obligate the City or
2 any department thereof to (i) provide any financing to acquire or construct the Project or
3 any refinancing of 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
acquisition, rehabilitation or operation of the Project; (iii) make any contribution or advance
any funds whatsoever to the Authority; or (iv) take any further action with respect to the
Authority or its membership therein.
SECTION 5. The City Manager, or designee, is hereby authorized and
directed to execute such other agreements, documents and certificates, and to perform
such other acts and deeds, as may be necessary or convenient to effect the purposes of
this Resolution and the transactions herein authorized.
SECTION 6. The City Clerk shall forward a certified copy of this Resolution
to:
Ronald Wolf, Esq.
Hawkins Delafield & Wood LLP
One Embarcadero Center, Suite 3820
San Francisco, California 94111
SECTION 7. This resolution shall take effect immediately upon its adoption.
APPROVED AND ADOPTED this day of
2012.
ATTEST:
MARTIN R. COLE, City Clerk
Al2-01019
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