SR - AGR-6170 - JOINT EXERCISE OF POWERS KIRKWOOD FINANCINGw
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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