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SR - AGR-6170 - JOINT EXERCISE OF POWERS KIRKWOOD FINANCINGw ���ryA �� VIVT4 AGENDA ITEM November 25, 2014 TO: Honorable Mayor and Members of the City Council THRU: John W. Sibley City Manager FROM: William M. Kolbow /ZA Vv-- Finance Director 1. SUBJECT Conduit financing for the Kirkwood at Orange Project. Reviewed/Verified By: City Managevorvw-__ Finance Dire To Be Presen : Will Kolbow Cons Calendar _ City Mgr Rpts Council Reports _ Legal Affairs Boards /Cmtes X Public Hrgs Admin Reports Plan /Environ 2. SUMMARY 1) Conduct a public hearing under the requirements of the Tax Equity and Fiscal Responsibility Act of 1982 ( "TEFRA ") and the Internal Revenue Code of 1986, as amended (the "Code "). 2) Adopt the resolution approving the issuance of the Bonds by the California Municipal Finance Authority ( "CMFA "), not to exceed $4,250,000, for the benefit of Redwood Town Court, dba Kirkwood at Orange (the "Borrower "), 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. 3. RECOMMENDED ACTIONS 1) Conduct the TEFRA Hearing; 2) Execute the Joint Exercise of Powers Agreement of the CMFA, and; 3) Adopt Resolution No. 10827 authorizing of the issuance of the Bonds by the CMFA. 4. FISCAL IMPACT No Fiscal Impact ITEM I k 1 11/25/2014 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 Orange, it is expected that 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. The Borrower will be the beneficiary of the CMFA's charitable donation through a 25% reduction in issuance fees. 5. STRATEGIC PLAN GOAL 2. Be a fiscally health community. e. Create an environment to attract, retain and expand economic opportunities. 6. GENERAL PLAN IMPLEMENTATION Not applicable. 7. DISCUSSION and BACKGROUND Kirkwood at Orange requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $4,250,000 of tax - exempt revenue bonds. The proceeds of the Bonds will be used for the purpose of making a loan to the Borrower, to enable the Borrower to refinance the construction and equipping the 48 -unit assisted living complex consisting of a two - story, approximately 38,775 square foot building located on an approximately 1.2 acre site at 1525 E. Taft Avenue in the City of Orange, California (the "Project "), which will be owned and operated by the Borrower. In order for all or a portion of the Bonds to qualify as tax - exempt bonds, the City of Orange 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 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 200 municipalities have become members of CMFA. ITEM 2 11/25/2014 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 Orange to become a member of the CMFA. Attached to this report is a copy of the Joint Exercise of Powers Agreement to 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 such agreement. 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 by providing written notice to the Board of Directors of the CMFA. 8. ATTACHMENTS JPA Agreement Resolution No. 10827 ITEM 3 11/25/2014