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HomeMy WebLinkAboutD-1 Staff Report - TEFRA Hearing - Azusa Pacific UniversityPUBLIC HEARING/SCHEDULED ITEM D-1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: JUNE 20, 2022 SUBJECT: PUBLIC HEARING TO ADOPT A RESOLUTION APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY REFUNDING REVUENUE BONDS (AZUSA PACIFIC UNIVERSITY PROJECT), TAX-EXEMPT AND TAXABLE, IN ONE OR MORE SERIES IN BOTH FIXED AND VARIABLE RATE FORM AND IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $90,000,000, FOR THE PURPOSES OF REFINANCING AND REFUNDING BONDS PREVIOUSLY ISSUED TO FINANCE CERTAIN FACILITIES AND IMPROVEMENTS FOR AZUSA PACIFIC UNIVERSITY, FINANCING AND REFINANCING ADDITIONAL FACILITIES OF AZUSA PACIFIC UNIVERSITY AND CERTAIN OTHER PURPOSES, AND MATTERS RELATING THERETO BACKGROUND: The City is acting as a liaison to assist the participating agencies meet legal requirements related to this item. There is no impact to the City relating to this item. Azusa Pacific University (the “University”), a California nonprofit religious corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), has requested that the California Municipal Finance Authority (the “CMFA”) participate in the issuance of one or more series of revenue and refunding bonds in an aggregate principal amount not to exceed $90,000,000 (the “Bonds”), pursuant to a plan of financing and to be issued on a tax-exempt and/or taxable basis, to (1) refund and refinance the CMFA’s Variable Rate Demand Refunding Revenue Bonds (Azusa Pacific University Project) Series 2015A (the “2015A Bonds”); (2) pay termination fees and costs in connection with the APPROVED CITY COUNCIL 6/20/2022 TEFRA Hearing-CMFA for Azusa Pacific University June 20, 2022 Page 2 termination of an interest rate swap entered into by the University and relating to the Series 2015A Bonds; (3) finance and refinance the acquisition, construction, improvement and equipment of educational facilities and support facilities of the University located on and adjacent to the campus of the University, the main address for which is 901 East Alosta Ave., Azusa, California 91702, including the reimbursement to the University for certain expenditures made in connection with such capital projects prior to the issuance of the Bonds; (4) fund one or more debt service reserve funds for the Bonds; (5) fund working capital for the University; and (6) pay certain interest on the Bonds and certain expenses incurred in connection with the issuance of the Bonds (collectively, the “Project”). To proceed with the issuance of the Obligations, the City of Azusa must conduct a public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended. Approval of the recommended actions does not result in any financial obligation of the City. RECOMMENDATIONS: Staff recommends the City Council take the following actions: 1) Conduct the public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended (the “Code”); and 2) Adopt Resolution No. 2022-C43 approving the issuance of the Obligations by the CMFA for the benefit of the University, 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 et seq. THE UNIVERSITY: Azusa Pacific University (the "University") is an evangelical, Christian university committed to God First and excellence in higher education. Founded in 1899, the University's main 121-acre campus is located 26 miles northeast of Los Angeles in the City of Azusa in the San Gabriel Valley. With over 100 bachelor's, master's and doctoral programs, the University offers its approximately 10,300 students a quality education on campus, online, and at six regional centers throughout Southern California. The University is a California nonprofit religious corporation and an exempt organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The University is a California non-profit religious corporation. As an evangelical Christian community of disciples and scholars, the University seeks to advance the work of God in the world through academic excellence in liberal arts and professional programs of higher education that encourage students to develop a Christian perspective of truth and life. The University's student body is comprised of students from many different religious backgrounds and denominations. The University maintains and enforces a policy of equal educational opportunity. The University does TEFRA Hearing-CMFA for Azusa Pacific University June 20, 2022 Page 3 not discriminate in its hiring policies or practices on the basis of race, color, national origin, gender, age, disability, or status as a veteran. The University's award-winning intercollegiate athletics program consists of 19 teams in 14 sports. The program won eight consecutive National Association of Intercollegiate Athletics (NAIA) Directors' Cup awards before beginning provisional membership in the National Collegiate Athletic Association (NCAA) Division II in Fall 2012, becoming a full member in 2014. The University also belongs to the Pacific West Conference in all sports except for football, where it belongs to the Great Northwest Athletic Conference (GNAC). In order for all or a portion of the Obligations to qualify as tax-exempt bonds, the City of Azusa must conduct a public hearing (the “TEFRA Hearing”) providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds or obligations 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 Obligations for the financing of the Project. CALIFORNIA MUNICIPAL FINANCE AUTHORITY: The California Municipal Finance Authority (“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, including the City of Azusa, have become members of CMFA. The CMFA was formed to assist local governments, nonprofit public benefit corporations and businesses with the issuance of taxable and tax-exempt bonds or obligations aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financings. 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 such agreement. The Obligations to be issued by the CMFA for the Project will be the sole responsibility of the Borrowers, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Obligations for the financing of the Project. All financing documents with respect to the issuance of the Obligations will contain clear disclaimers that the Obligations are not obligations of the City or the State of California, but are to be paid for solely from funds provided by the Borrowers. Participation by the City in the CMFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness of the City. Outside of holding the TEFRA hearing and TEFRA Hearing-CMFA for Azusa Pacific University June 20, 2022 Page 4 adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the Obligations will be required. 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 Azusa, it is expected that 25% 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. FISCAL IMPACT: There is no cost to the City related to the recommended action. The public hearing is a requirement of the financing and is the City’s only involvement. SUMMARY: In light of the foregoing, and in order to support higher education, staff recommends that the City conduct the TEFRA Hearing and adopt the resolution in favor of the issuance of the Obligations by the Authority. Prepared by: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachment: 1. Resolution No. 2022-C43 RESOLUTION NO. 2022-C43 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY REFUNDING REVUENUE BONDS (AZUSA PACIFIC UNIVERSITY PROJECT), TAX -EXEMPT AND TAXABLE, IN ONE OR MORE SERIES IN BOTH FIXED AND VARIABLE RATE FORM AND IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $90,000,000, FOR THE PURPOSES OF REFINANCING AND REFUNDING BONDS PREVIOUSLY ISSUED TO FINANCE CERTAIN FACILITIES AND IMPROVEMENTS FOR AZUSA PACIFIC UNIVERSITY, FINANCING AND REFINANCING ADDITIONAL FACILITIES OF AZUSA PACIFIC UNIVERSITY AND CERTAIN OTHER PURPOSES, AND MATTERS RELATING THERETO WHEREAS, Azusa Pacific University (the “University”), a California nonprofit religious corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), has requested that the California Municipal Finance Authority (the “Authority”) participate in the issuance of one or more series of revenue and refunding bonds in an aggregate principal amount not to exceed $90,000,000 (the “Bonds”), pursuant to a plan of financing and to be issued on a tax-exempt and/or taxable basis, to (1) refund and refinance the Authority’s Variable Rate Demand Refunding Revenue Bonds (Azusa Pacific University Project) Series 2015A (the “2015A Bonds”); (2) pay termination fees and costs in connection with the termination of an interest rate swap entered into by the University and relating to the Series 2015A Bonds; (3) finance and refinance the acquisition, construction, improvement and equipment of educational facilities and support facilities of the University located on and adjacent to the campus of the University, the main address for which is 901 East Alosta Ave, Azusa, California 91702, including the reimbursement to the University for certain expenditures made in connection with such capital projects prior to the issuance of the Bonds; (4) fund one or more debt service reserve funds for the Bonds; (5) fund working capital for the University; and (6) pay certain interest on the Bonds and certain expenses incurred in connection with the issuance of the Bonds (collectively, the “Project”); and WHEREAS, the educational facilities and support facilities of the University to be financed and refinanced with the proceeds of the Bonds are or will be located within the territorial limits of the City of Azusa, California (the “City”) and are owned and will be owned by the University; and WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the Bonds by the Authority and the related plan of financing 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 one of the applicable elected representatives required to approve the issuance of the Bonds by the Authority under Section 147(f) of the Code; and Attachment 1 WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (as amended from time to time, the “Agreement”), among certain program participants, including the City; and WHEREAS, on or before June 13, 2022, the Authority’s bond counsel caused a notice to appear in San Gabriel Valley Tribune, which is a newspaper of general circulation in the City, stating that a public hearing with respect to the issuance of the Bonds by the Authority would be held by the City’s City Council on June 20, 2022; and WHEREAS, pursuant to Section 147(f) of the Code, the City has, following notice duly given, held a public hearing on June 20, 2022 regarding the issuance of the Bonds by the Authority, and an opportunity was provided for persons to comment on the matter of the Bonds and the Project; and WHEREAS, it is in the public interest and for the public benefit that this City Council approve the issuance of the Bonds by the Authority for the aforesaid purposes; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Azusa as follows: Section 1. The foregoing recitals are true and correct. Section 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitutes approval of the issuance of the Bonds by the Authority for the purposes of (a) by the “applicable elected representative” of the governmental unit having jurisdiction over the area in which a portion of the Project is located in accordance with Section 147(f) of the Code and (b) by the City Council in accordance with Section 4 of the Agreement. Section 3. The issuance of the Bonds shall be subject to the approval of the Authority of all financing documents relating thereto to which the Authority is a party. The City shall not have any responsibility or liability whatsoever with respect to the Bonds. Section 4. 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 5. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire, rehabilitate or construct the Project or any refinancing of the Project or any portion thereof; (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 or any portion thereof; (iii) make any contribution or advance any funds whatsoever to the Authority or the University; or (iv) take any further action with respect to the Authority or the City’s membership therein. Section 6. This resolution shall take effect immediately upon its adoption. [Remainder of page intentionally left blank] PASSED, APPROVED and ADOPTED this 20th day of June, 2022. ___________________________________ Robert Gonzales Mayor ATTEST: ___________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2022-C43 was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 20th day of June, 2022, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ___________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk