SR - RES-11119 - LUTHERAN HIGH SCHOOL ASSOCIATION *���°�°�c* AGENDA ITEM
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�o...A November 13 2018
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ReviewedNeri�ed B •
City Manager
TO: Honorable Mayor and Finance Dire tor
Members of the City Council To Be Presente y: Will Kolbow
THRU• RiCk Otto Cons Calendar _ City Mgr Rpts
. City Manager Council Reports Legal Affairs
Boards/Cmtes X Public Hearings
FROM: William M. Kolbow��y. Admin Reports Plan/Environ
Administrative Services Director
1. SUSJECT
Conduit financing for the Lutheran High School Association of Orange County Project.
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 Obligations by the California Enterprise
Development Authority ("CEDA"); not to exceed $17,000,000, for the benefit of Lutheran
High School Association of Orange County (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).
3. RECOMMENDED ACTIONS
1) Conduct the TEFRA Hearing;
2) Adopt Resolution No. 11119 authorizing of the issuance of the Obligations by CEDA.
4. FISCAL IMPACT
No Fiscal Impact
CEDA and the Borrower will pay the cost of the publication of the notice of public hearing.
ITEM � l . � � 11/13/2018
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5. STRATEGIC PLAN GOAL(S)
2. Be a fiscally health community.
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e. Create an environment to attract, retain and expand economic opportunities.
6. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
LUTHERAN HIGH SCHOOL ASSOCIATION OF ORANGE COUNTY
The Borrower requested that CEDA serve as the municipal issuer of the Obligations in an
aggregate principal amount not to exceed $17,000,000 of tax-exempt and/or taxable revenue
Obligations. The proceeds of the Obligations will be used for making a loan to the Borrower, to
enable the Borrower to refinance the Borrower's loan obligations under the Loan Agreement,dated
as of September 1,2010, as amended,between the Borrower and CEDA. The proceeds of the loan
will financed and refinanced the cost of the acquisition, construction, renovation, installation,
equipping and furnishing the real property and improvements located at �222 North Santiago
Boulevard,Orange,California 92867(the"Project"),which consists of will be owned and operated
by the Borrower.
The Borrower is a co-educational high school committed to providing the best educational
experience possible toward the development of well-balanced,healthy, strong and caring students. •
Since opening its doors in 1973, the Borrower has grown into one of Southern California's finest
private high schools, offering state and nationally-recognized programs in academics, athletics,
and the arts. The Borrower is accredited by the National Lutheran School Accreditation
Organization and the Western Association of Schools and Colleges.
CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY
The City of Orange is an associate member of CEDA, a joint powers authority established by the
California Association for Local Economic Development whose purpose is to issue tax-exempt
and taxable conduit revenue bonds to fund commercial and industrial development projects within
member jurisdictions. CEDA was created pursuant to a Joint Exercise of Powers Agreement,dated
as of June 1, 2006 (the "Joint Exercise of Powers Agreement"), among the cities of Selma,
Lancaster and Eureka. Together with associate members, CEDA has more than 200 members.
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 CEDA.
CEDA is a public entity, separate and apart from each member. The debts, liabilities and
obligations of CEDA do not constitute debts, liabilities or obligations of the members executing
such agreement.
ITEM 2 11/13/2018
In order for all or a portion of the Obligations to qualify as tax-exempt obligations, 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 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. Only non-profits, such as schools,
hospitals, and those constructing low-income housing, are eligible to issue tax-exempt obligations
under TEFRA.
The Obligations to be issued by CEDA 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 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 Borrower.
There are no costs associated with the City's membership in CEDA and the City will in no way
become exposed to any financial liability by reason of its membership in CEDA. In addition,
participation by the City in CEDA 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 and
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.
8. ATTACHMENTS
Resolution No. 11119
ITEM 3 11/13/2018
RESOLUTION NO. 11119
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE APPROVING THE ISSUANCE
BY CALIFORNIA ENTERPRISE DEVELOPMENT
AUTHORITY OF NOT TO EXCEED $17,000,000
AGGREGATE PRINCIPAL AMOUNT OF THE
ISSUER'S REVENUE OBLIGATIONS FOR THE
PURPOSE OF FINANCING AND REFINANCING
THE COST OF ACQUISITION, CONSTRUCTION,
RENOVATION, INSTALLATION, EQUIPPING
AND FURNISHING OF FACILITIES FOR THE
BENEFIT OF LUTHERAN HIGH SCHOOL
ASSOCIATION OF ORANGE COUNTY,
PROVIDING THE TERMS AND CONDITIONS
FOR SUCH OBLIGATIONS AND OTHER �
MATTERS RELATING THERETO HEREIN
SPECIFIED. ,
WHEREAS, Lutheran High School Association of Orange County, a nonprofit religious
corporation duly organized and existing under the laws of the State of California(the"Borrower"),
has submitted and the California Enterprise Development Authority(the"Issuer")has accepted, an
application requesting the Issuer to issue, from time to time,pursuant to a plan of finance, its tax-
exempt and/or taxable revenue obligations in an aggregate principal amount not to exceed
$17,000,000(the"Obligations") for the benefit of the Borrower pursuant to Chapter 5 of Division 7
of Title 1 of the Government Code of the State, (commencing with Section 6500) (the "Act") the
proceeds of which will be used to (a) refinance the Borrower's loan obligations under the Loan
Agreement, dated as of September 1, 2010, as amended, between the Borrower and the Issuer, the
proceeds of which loan to the Borrower thereunder financed and refinanced the cost of the
acquisition, construction, renovation, installation, equipping and furnishing the real property and
improvements located at 2222 North Santiago Boulevard, Orange, California 92867 (the
"Facilities"); and(b)pay certain costs of issuance in connection with the financing; and
WHEREAS,the issuance of the Obligations must be approved by the governmental unit on
behalf of which the Obligations are issued and a governmental unit having jurisdiction over the
territorial limits in which the Facilities are located pursuant to the public approval requirement of
Section 147(�of the Internal Revenue Code of 1986, as amended(the"Code"); and
WHEREAS, the Facilities are located within the territorial limits of City of Orange (the
"City") and the City Council of the City of Orange (the "City Council") is the elected legislative
body of the City; and
WHEREAS,the Facilities provide significant benefits to the residents of the City through
the services provided by the Borrower and the Facilities will also create employment opportunities
for residents of the City; and
WHEREAS,the Issuer and the Borrower have requested that the City Council approve the
issuance of the Obligations by the Issuer and the financing of the Facilities with the proceeds of the
Obligations pursuant to Section 147(fl of the Code; and
WHEREAS,the Issuer's issuance of the Obligations will result in a more economical and
efficient issuance process because of the Issuer's expertise in the issuance of conduit revenue
bonds; and
WHEREAS, it is intended that this Resolution shall comply with the public approval
requirements of Section 147(� of the Code; provided, however, th'at this Resolution is neither
intended to, nor shall it, constitute an approval by the City Council of the Facilities for any other
purpose; and
WHEREAS, a public hearing was held by the City Council on this November 13, 2018, at
the meeting which commenced at the hour of 6:00 p.m.,at the City of Orange, Council Chambers,
located at 300 East Chapman Avenue,Orange,California 92867,following dulypublishednotice
thereof in a newspaper of general circulation in the City of Orange, and all persons desiring to be
heard have been heard.
NOW,THEREFORE, BE IT RESOLVED,by the City Council of the City of Orange as
follows:
Section 1. The City Council hereby finds and determines that all of the recitals are true and
correct. The City Council hereby approves tlie issuance of the Obligations by the Issuer, which
Obligations may be tax-exempt andlor taxable as approved by the Issuer in its resolution, in an
amount not to exceed$17,000,000 to finance and refinance the cost of the Facilities. This resolution
shall constitute approval of the issuance of the Obligations within the meaning of Section 147(� of
the Code and shall constitute the approval of the issuance of the Obligations within the meaning of
the Act;provided, however,that this Resolution shall not constitute an approval by the City Council
of the Facilities for any other purpose. The City shall not bear any responsibility for the tax-exempt
status of the Obligations, the repayment of the Obligations or any other matter related to the
Obligations.
Section 2. All actions heretofore taken by the officers, employees and agents of the City
with respect to the approval of the Obligations are hereby approved,confirmed and ratified, and the
officers and employees of the City and their authorized deputies and agents are hereby authorized
and directed,jointly and severally, to do any and all things and to execute and deliver any and all
certificates and documents which they or bond counsel may deem necessary or advisable in order to
consummate the Obligations and otherwise to effectuate the purposes of this Resolution.
Section 3. The adoption of this Resolution shall not obligate the City or any department
thereof to (i) provide any financing with respect to the Facilities; (ii) approve any application or
request for or take any other action in connection with any planning approval,permit or other action
necessary with respect to the Facilities;(iii)make any contribution or advance any funds whatsoever
to the Issuer or the Borrower; or (iv) take any further action with respect to the Issuer or its
membership therein.
Reso.No. 11119 2 GAS
Section 4. This Resolution shall take effect from and after its adoption.
ADOPTED this 13t1'day of November, 2018.
Teresa E. Smith,Mayor of the City of Orange
ATTEST:
Robert Zornado, Chief Clerk of the City of Orange
I, ROBERT ZORNADO, Chief Clerk of the City of Orange, California, do hereby certify
that the foregoing Resolution was duly and regularly adopted by the City Council of the City of
Orange at a regular meeting therefore held on the 13`h day of November 2018, by the following
vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS: .
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
Robert Zornado, Chief Clerk of the City of Orange
Reso.No. 11119 3 GAS