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Home My WebLink About75D - PH ISSUANCE OF OBLIGATION SAMUELIREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: FEBRUARY 5, 2019 TITLE: PUBLIC HEARING ON ISSUANCE OF OBLIGATIONS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY FOR THE BENEFIT OF ORANGEWOOD REAL PROPERTY, LLC AND SAMUELI ACADEMY (STRATEGIC PLAN NO. 2,4) :z-� /A--�,- CITY MANAGER APPLICANT REQUESTED ACTION CLERK OF COUNCIL USE ONLY: rRIJIJ041wo, ❑ As Recommended ❑ As Amended ❑ Ordinance on 1s' Reading ❑ Ordinance on 2n° Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 1. Conduct a Tax Equity and Financial Responsibility Act (TEFRA) hearing in consideration of issuance of tax-exempt obligations by the California Enterprise Development Authority for the purpose of financing and refinancing educational and related facilities located at 1901 and 1919 North Fairview Street, Santa Ana, California, for the benefit of Orangewood Real Property, LLC and Samueli Academy. 2. Adopt a resolution approving the issuance of the tax-exempt obligations by the California Enterprise Development Authority in an aggregate principal amount not to exceed Thirty Eight Million Dollars ($38,000,000) for the purpose of financing and refinancing educational and related facilities located at 1901 and 1919 North Fairview Street, Santa Ana, California, for the benefit of Orangewood Real Property, LLC and Samueli Academy. DISCUSSION Orangewood Real Property, LLC, a California limited liability company (the "Borrower"), the sole member of which is the Orangewood Foundation, a California nonprofit public benefit corporation and an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), has requested that the Authority issue revenue obligations in the maximum principal amount of $38,000,000 (the "Obligations') for the purpose of making one or more loans to the Borrower, to enable the Borrower to finance and refinance the cost of educational facilities, consisting of classrooms, a student innovation center, a 16,000 square foot gymnasium, an outdoor soccer field, a 48 room student dormitory and other related facilities, all located on a 7.1 acre parcel of land at 1901 and 1919 North Fairview Road, Santa Ana (collectively, the "Facilities"). A portion of the proceeds of the Obligations will be used to pay costs of issuance and related costs in connection with the financing. 4819-8240-9091.2 75D-1 TEFRA Public Hearing for Orangewood Real Property, LLC and Samueli Academy February 5, 2019 Page 2 The Borrower will lease the Facilities to Samueli Academy, a California nonprofit public benefit corporation (the "Academy"), and an organization described under Section 501(c)(3) of the Code. The Academy is a charter school established pursuant to the Charter Schools Act of 1992, as amended (constituting Part 26.8 of Division 4 of Title 2 of the Education Code). The Academy currently operates a high school at the Facilities, serving students in grades 9 through 12. The Facilities will allow the Academy to serve students in junior high school (grades 7 and 8), provide an innovative student dormitory and provide additional facilities to meet the needs of its students. The Academy derives its name from its key benefactors, Henry and Susan Samueli. Henry and Susan Samueli are passionate philanthropists whose generosity extends throughout Orange County and worldwide. They are committed to investing in creative, sustainable and entrepreneurial approaches to promote scholastic achievement, build communities of acceptance and altruism, increase knowledge and opportunities, and enhance the quality of life of the underserved. They have provided significant, varied and ongoing support to the Academy for many years. The City of Santa Ana is an associate member of the Authority, 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. The Joint Powers Act, comprising Articles 1, 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Government Code of the State of California and Internal Revenue Code Section 145 provide for the issuance of tax-exempt "private activity' obligations by a conduit governmental issuer on behalf of a 501(c)(3) corporation to finance facilities used, owned and/or operated by such entity. For interest on such private activity obligations to be tax- exempt, Section 147(f) of the Code requires, among other things, the obligations and the facilities financed thereby must be approved by both the governmental unit which will issue the obligations (in this case, the Authority) and the governmental unit in which the obligation -financed facilities are located (City of Santa Ana). Further, a public hearing, for which reasonable notice has been given, must be held. This hearing and process is referred to as TEFRA, after the Tax Equity and Fiscal Responsibility Act of 1982. The assets to be financed and refinanced with the proceeds of the Obligations are located within the jurisdiction of the City. Therefore, the City has been asked to conduct the public hearing, and to approve the Obligations as the host governmental unit. The City has effectuated proper notice of the hearing via publication at least 14 days in advance. The Obligations will be payable solely from amounts received pursuant to the terms and provisions of the loan agreement to be executed by the Authority and the Borrower. The City will not be a party to the loan agreement or any other documents in connection with the issuance of the Obligations. The Obligations will not be secured by any form of taxation or by any obligation of either the City or the Authority. The Obligations do not represent or constitute a general obligation of either the City or the Authority. In addition, this TEFRA Hearing and the adoption of the Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Project or 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, 4819-8240-9091.2 75D-2 TEFRA Public Hearing for Orangewood Real Property, LLC and Samueli Academy February 5, 2019 Page 3 construction, rehabilitation, installation 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. In general, this action by the City of Santa Ana will not obligate the City or any department thereof to undertake any discretionary action related to the development of the project. As announced in the published notice, the TEFRA hearing is an opportunity for all interested persons to speak or to submit written comments concerning the proposal to issue the Obligations to finance and refinance the Facilities. There is no requirement that either the Borrower or the City Council respond to any specific comments made or submitted at the hearing. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #2 — Youth, Education, Recreation, Objective #4 (Partner with groups and organizations to promote education, senior services, job training and development for all Santa Ana residents). FISCAL IMPACT The City will receive a payment in the amount of $644.40 to hold a TEFRA Hearing for this project and it will be deposited into the Miscellaneous Revenue, Miscellaneous Service Charge account (no. 01102002-53902). -5:1- Nk- Steven A. Mendoza Executive Director Community Development Agency Exhibits: 4819-8240-9091.2 1. Public Notice 2. TEFRA Resolution APPROVED AS TO FUNDS AND ACCOUNTS: Kathryn Downf, CPA Executive Director IM Finance and Management Services Agency 75D-3 75D-4 EXHIBIT 1 NOTICE OF PUBLIC HEARING PURSUANT TO SECTION 147(f) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, FOR THE FINANCING AND REFINANCING OF CERTAIN FACILITIES FROM THE SALE OF TAX-EXEMPT OBLIGATIONS NOTICE IS HEREBY GIVEN that at 5:45 p.m., or as soon thereafter as the matter may be heard, on February 5, 2019, in the City Hall Council Chamber, 22 Civic Center Plaza, Santa Ana, California 92701, the City of Santa Ana City Council (the "City Council") will conduct a public hearing (the "Public Hearing") at which the City Council will hear and consider information concerning the issuance, from time to time, pursuant to a plan of finance, of one or more series of tax-exempt obligations by the California Enterprise Development Authority (the "Issuer") in an aggregate principal amount not to exceed Thirty -Eight Million Dollars ($38,000,000) (the "Obligations"). Proceeds of the Obligations will be loaned to Orangewood Real Property, LLC, a California limited liability company, or any affiliate thereof or successor thereto (the "Borrower"), the sole member of which is Orangewood Foundation, a California nonprofit public benefit corporation, and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), pursuant to one or more loan agreements (the "Loan Agreement"). The Borrower plans to use the proceeds of the Obligations to finance and refinance the cost of developing, constructing, installing, improving, equipping and furnishing educational facilities, consisting of classrooms, a student innovation center, a 16,000 square foot gymnasium, an outdoor soccer field, a 48 room student dormitory and other related facilities, all located on a 7.1 acre parcel of land at 1901 and 1919 North Fairview Road, Santa Ana, California (the "Facilities"). The Borrower will also use a portion of the proceeds of the Obligations to pay certain costs of issuance and other related costs in connection with the Obligations. The Facilities will be owned by the Borrower and are leased by the Borrower to Samueli Academy, a California nonprofit public benefit corporation and a charter school, in connection with its tax-exempt mission of providing a quality education for students in grades 7 through 12. The Obligations will be paid entirely from repayments by the Borrower under the Loan Agreement. Neither the faith and credit nor the taxing power of the City of Santa Ana (the "City"), the Issuer and its members, the State of California (the "State"), or any other political corporation, subdivision or agency of the State is pledged to the payment of the principal of, premium, if any, or interest on, the Obligations, nor shall the City, the Issuer and its members, the State or any other political corporation, subdivision or agency of the State be liable or obligated to pay the principal of, premium, if any, or interest on, the Obligations. The Public Hearing is intended to comply with the public approval requirements of Section 147(f) of the Code. Those wishing to comment on the issuance of the Obligations, proposed nature and location of the Facilities or the plan of finance may either appear in person at the time and place indicated above or submit written comments, which must be received prior to the Public Hearing by the Clerk of the City Council, at City of Santa Ana, 20 Civic Center Plaza, 8th Floor, Santa Ana, California 92701. 4835-2047-3475.1 75D-5 75D-6 EXHIBIT 2 RESOLUTION NO. 2019 -XXX RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE OF TAX-EXEMPT OBLIGATIONS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $38,000,000 TO FINANCE FACILITIES FOR THE BENEFIT OF THE ORANGEWOOD REAL PROPERTY, LLC AND SAMUELI ACADEMY WHEREAS, Orangewood Real Property, LLC, a California limited liability company (the "Borrower"), the sole member of which is Orangewood Foundation, a California nonprofit public benefit corporation (the "Foundation"), has requested that the California Enterprise Development Authority, a joint exercise of powers agency established pursuant to the laws of the State of California (the "Authority"), issue its tax-exempt obligations, from time to time pursuant to a plan of finance (the "Obligations"), in an aggregate principal amount not expected to exceed $38,000,000, 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"), for the purpose of making one or more loans to the Borrower to finance the cost of developing, constructing, installing, improving, equipping and furnishing educational facilities, consisting of classrooms, a student innovation center, a 16,000 square foot gymnasium, an outdoor soccer field, a 48 room student dormitory and other related facilities, all located on a 7.1 acre parcel of land at 1901 and 1919 North Fairview Road, Santa Ana, California (collectively, the "Facilities"); and WHEREAS, a portion of the proceeds of the Obligations will be used to pay the costs of issuance in connection with such financing and other related costs; and WHEREAS, the Foundation is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the "Code") and, through the Borrower, will own the Facilities in connection with its mission of helping foster and community youth develop and achieve their educational goals, from high school to college to graduate school; and WHEREAS, the Borrower will lease the Facilities to Samueli Academy, a California nonprofit public benefit corporation and charter school; 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(f) of the Code; and WHEREAS, the Facilities are located within the territorial limits of the City of Santa Ana (the "City"), and the City Council of the City (the "City Council") is the elected legislative body of the City and is the "applicable elected representative" required to approve the issuance of the Obligations under Section 147(f) of the Code; and 4834-87574403.1 75D-7 :*:/:Il 11110 WHEREAS, the issuance of the Obligations shall be subject to the approval of and execution by the Authority of all financing documents relating thereto to which the Authority is a party; and WHEREAS, the Authority and the Borrower have requested the City Council to approve the issuance of the Obligations in order to satisfy the public approval requirements of Section 147(f) of the Code; and WHEREAS, a public hearing was held by the City Council on this 5ti' day of February, 2019, at the meeting which commenced at the hour of 5:45 p.m., in the City Hall Council Chamber, 22 Civic Center Plaza, Santa Ana, California 92701, following duly published notice thereof in a newspaper of general circulation in the City of Santa Ana, and all persons desiring to be heard have been heard; and WHEREAS, it is intended that this Resolution shall comply with the public approval requirements of Section 147(f) of the Code; provided, however, that this Resolution is neither intended to nor shall it constitute an approval by the City Council of the Facilities for any other purpose, including, but not limited to, compliance with the California Environmental Quality Act (California Public Resources Code, Section 21100, et seq.) ("CEQA" ); NOW, THEREFORE, BE IT RESOLVED, that the City Council hereby finds and declares the above recitals are true and correct; and, be it Section 1. The City Council hereby finds and determines that all of the recitals are true and correct. The City Council, as the "applicable elected representative" of the governmental unit on behalf of which the Obligations will be issued and having jurisdiction over the area in which the Facilities are located, hereby approves the issuance of the Obligations by the Authority, which Obligations may be tax-exempt and/or taxable as approved by the Authority in its resolution, in an amount not to exceed $38,000,000 to finance the cost of the Facilities. This Resolution shall constitute "issuer" approval and "host" approval of the issuance of the Obligations within the meaning of Section 147(f) of the Code; provided, however, that this Resolution shall not constitute an approval by the City Council of the Facilities for any other purposes, including compliance thereof with CEQA, nor does it constitute an approval of the underlying credit or financial structure of the Obligations. The City shall not bear any responsibility for the issuance of the Obligations, the tax-exempt status of the Obligations, the repayment of the Obligations or any other matter related to the Obligations. 2 7501-8 EXHIBIT 2 Section 2. All actions heretofore taken by the officers, employees and agents of the City with respect to the approval of the issuance 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 issuance of 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 (a) provide any financing for the Facilities; (b) 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, construction, rehabilitation or operation of the Facilities; or (c) make any contribution or advance any funds whatsoever to the Authority. Section 4. This Resolution shall take effect from and after its adoption. 75D-9 EXHIBIT 2 ADOPTED this day of APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By: �&V� Ry O. Mdge Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers 2019. Miguel A. Pulido Mayor CERTIFICATE OF ATTESTATION AND ORIGINALITY I, NORMA MITRE, Acting Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2019 -XXX to be the original resolution adopted by the City Council of the City of Santa Ana on Date: Clerk of the Council City of Santa Ana id 75D-10