HomeMy WebLinkAboutItem 22 - Public Hearing – Tax Equity Fiscal Responsibility Act Hearing for Orange County School of the Arts and The Legacy Fund Community Development Agency
www.santa-ana.org/cd
Item # 22
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 2, 2026
TOPIC: Tax Equity Fiscal Responsibility Act Hearing for Orange County School of the
Arts and The Legacy Fund
AGENDA TITLE
Public Hearing -Tax Equity Fiscal Responsibility Act Hearing for Orange County School
of the Arts and The Legacy Fund
Legal Notice published in the OC Register on May 22, 2026.
RECOMMENDED ACTION
1. Conduct a Tax Equity and Financial Responsibility Act Resolution Hearing in
consideration of the issuance of tax-exempt bond financing ("Bonds") by the
California Enterprise Development Authority ("CEDA") for Orange County School
of the Arts ("OCSA") and The Legacy Fund (together the "Borrower"), both
California nonprofit public benefit corporation and organizations described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, to loan the
proceeds of the Bonds to Legacy and OCSA pursuant to one or more loan
agreements to: (a) refinance the outstanding amount of the CEDA 2016 Tax-
Exempt Loan in an amount not expected to exceed $31,000,000 (as defined
below); (b) refinance a taxable loan in an amount not expected to exceed
$9,000,000, the proceeds of which were utilized to finance a working capital
deficit of OCSA (occurring at the OCSA Locations as detailed below); and (c)
finance capital educational facilities including equipment to be located at the
OCSA Locations in an amount not expected to exceed $6,000,000.
2. Adopt a resolution approving the issuance of revenue bonds by the CEDA in an
amount not to exceed $46,000,000.
RESOLUTION NO. 2026-XXX entitled RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE BY THE
CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF TAX EXEMPT
OBLIGATIONS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$46,000,000 FOR THE PURPOSE OF FINANCING AND REFINANCING THE
ACQUISITION OF LAND AND IMPROVEMENTS, CONSTRUCTION, AND
ACQUISITION OF EQUIPMENT FOR ORANGE COUNTY SCHOOL OF ARTS
AND THE LEGACY FUND
GOVERNMENT CODE 484308 APPLIES: Yes
TEFRA Hearing for Orange County School of the Arts and The Legacy Fund
June 2, 2026
Page 2
DISCUSSION
The Borrower has requested the City of Santa Ana ("City") to conduct a Tax Equity and
Fiscal Responsibility Act ("TEFRA") hearing. The tax-exempt bonds to be issued are the
sole responsibility of the Borrower. The City bears no financial or legal liability for the
project(s) or bond repayment and incurs no indebtedness. Additionally, the City was
provided a draft resolution, a draft notice, a draft staff report, and a TEFRA Hearing Fee
of$820 was required per the City's Miscellaneous Fee Schedule for the City to conduct
the TEFRA hearing.
A TEFRA hearing is a public hearing required by the Internal Revenue Service (IRS) for
certain types of tax-exempt bond issuances, particularly those involving private activity
bonds (PABs) or bonds issued by nonprofit organizations. The hearing is mandated
under the Tax Equity and Fiscal Responsibility Act of 1982 and is a prerequisite for the
interest on these bonds to be excluded from gross income for federal tax purposes.
The primary purpose of a TEFRA hearing is to provide the public with an opportunity to
comment on the proposed use of tax-exempt bond proceeds. This process ensures
transparency and accountability in the allocation of public financial benefits, such as tax
exemption, to private projects or nonprofit borrowers.
In order to provide for tax-exempt financing under IRS regulations, the borrower
(Orange County School of the Arts) needs approval by a local public agency where the
financed project is located following the holding of a Tax Equity Fiscal Responsibility Act
(TEFRA) public hearing. OCSA and The Legacy Fund (which is a non-profit foundation
supporting OCSA) has requested the City's approval of its plans to enter into certain
loans to finance and refinance certain capital improvements and working capital
expenditures at its Santa Ana campus.
Project Description
OCSA and the Legacy Fund plan to refinance certain outstanding loans with Farmers
and Merchants Bank (F&M) and to finance certain capital improvements to its Santa
Ana campus. OCSA and The Legacy Fund plan to enter into new loan agreements with
CEDA and F&M pursuant to which CEDA will loan the proceeds of the F&M loan to
OCSA and The Legacy Fund pursuant to one or more loan agreements to:
a. refinance the outstanding amount of the California Enterprise Development
Authority 2016 Tax-Exempt Loan (Orange County School of the Arts) Series A,
California Enterprise Development Authority 2016 Tax-Exempt Loan (Orange
County School of the Arts) Series B, California Enterprise Development Authority
2016 Tax-Exempt Loan (Orange County School of the Arts) Series C, California
Enterprise Development Authority 2016 Tax-Exempt Loan (The Legacy Fund)
Series A, California Enterprise Development Authority 2016 Tax-Exempt Loan
(The Legacy Fund) Series B, and California Enterprise Development Authority
2016 Tax-Exempt Loan (The Legacy Fund) Series C (the "2016 Bonds") which
were issued to finance and refinance capital educational facilities and equipment
TEFRA Hearing for Orange County School of the Arts and The Legacy Fund
June 2, 2026
Page 3
at OCSA's campus in Santa Ana (OCSA Locations) in an amount not expected to
exceed $31,000,000;
b. refinance a taxable loan the proceeds of which were utilized to finance a working
capital deficit of OCSA (occurring at the OCSA Locations) in an amount not
expected to exceed $9,000,000; and
c. finance capital educational facilities including equipment to be located at the
OCSA Locations in an amount not expected to exceed $6,000,000.
The Legacy Fund and OCSA will be solely responsible for the repayment of the loans
from CEDA and F&M. 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 on behalf of OCSA;
(ii) approve any application or request for, or take any other action in connection
with, any planning approval, permit, or other action necessary to the project;
(iii) make any contribution or advance any funds whatsoever to CEDA; or
(iv) take any further action with respect to CEDA or its membership therein. The
City is a member of CEDA and has previously approved financings issued
through CEDA.
FISCAL IMPACT
Funds in the amount of$820 were deposited into the General Fund revenue account for
the TEFRA Hearing Fee — Non-Housing Project (No. 01102002-53902).
EXHIBIT(S)
1. Resolution
2. Hearing Notice Proof of Publication
Submitted By: Michael L. Garcia, Executive Director, Community Development Agency
Approved By: Alvaro Nunez, City Manager
EXHIBIT 1
RESOLUTION NO. 2026-XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA APPROVING THE ISSUANCE BY THE
CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY
OF TAX EXEMPT OBLIGATIONS IN AN AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $46,000,000 FOR
THE PURPOSE OF FINANCING AND REFINANCING THE
ACQUISITION OF LAND AND IMPROVEMENTS,
CONSTRUCTION, AND ACQUISITION OF EQUIPMENT
FOR ORANGE COUNTY SCHOOL OF THE ARTS AND THE
LEGACY FUND
WHEREAS, pursuant Chapter 5 of Division 7 of Title 1 of the California
Government Code (the "Act"), certain public agencies (the "Members") have entered into
a Joint Exercise of Powers Agreement Relating to the California Enterprise Development
Authority, dated as of June 1, 2006 (the "Agreement"), in order to form the California
Enterprise Development Authority (the "Authority"), for the purpose of promoting
economic, cultural and community development and in order to exercise any powers
common to the Members, including the issuance of bonds, notes or other evidences of
indebtedness; and
WHEREAS, the City of Santa Ana (the "City") is a Member of the Authority in order
to facilitate the promotion of economic, cultural and community development activities in
the City, including the financing of projects therefor by the Authority; and
WHEREAS, the Authority is authorized to issue and sell revenue bonds for the
purpose, among others, of financing or refinancing the construction of capital projects;
and
WHEREAS, Orange County School of the Arts and The Legacy Fund (collectively,
the "Borrower"), both California nonprofit public benefit corporations and organizations
described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the "Code"), have
requested that the Authority participate in the issuance of one or more series of revenue
bonds or loans in an aggregate principal amount not to exceed $46,000,000 (the "Bonds")
for the purpose of financing and refinancing the acquisition of land and improvements,
construction, and acquisition of equipment for the Borrower, located at or adjacent to the
following streets in Santa Ana, CA 92701: (i) 800 North Bush Street, (ii) 917 North Bush
Street, (iii) 625 North Grand Street, (iv) 801 North Main Street, (v) 902 North Main Street,
(vi) 906 North Main Street, (vii) 1000 North Main Street, (viii) 1010 North Main Street, (ix)
1018 North Main Street, (x) 1104 North Main Street, (xi) 1107 North Main Street, (xii)
1110 North Main Street, (xiii) 1111 North Main Street, (xiv) 1119 North Main Street, (xv)
208 East 10th Street, (xvi) 123 East 11th Street, (xvii) 916 North Spurgeon Street, (xiii)
900 North Sycamore Street, (xiv) 912 North Sycamore Street, (xx) 921 North Sycamore
Street, (xxi) 1120 North Sycamore, (xxii) 839 North Broadway (xxiii) 843 North Broadway,
(xxiv) 845 North Broadway, (xxv) 915 North Broadway, (xxvi) 919 North Broadway, (xxvii)
Resolution No. 2026-XXX
Page 1 of 4
EXHIBIT 1
200/202 West Washington Avenue, (xxviii) 201 West Washington Avenue, and (xxix) 207
West Washington Avenue (the "Project"), to be owned or leased, and operated by the
Borrower; and
WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the Bonds by
the Authority must be approved by the City because the Project is to be located within the
territorial limits of the City; and
WHEREAS, the City Council is the elected legislative body of the City and meets
the definition of "applicable elected representative" of the City (as defined in Section
147(f)(2)(E) of the Code) authorized to provide issuer and host approval of the issuance
of the Bonds under Section 147(f) of the Code; and
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 Agreement; and
WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following
notice duly given, held a public hearing regarding the issuance of the Bonds and no
comments were received, and now desires to approve the issuance of the Bonds by the
Authority.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA ANA
RESOLVES AS FOLLOWS:
Section 1. 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 constitute
issuer and host approval of the issuance of the Bonds by the Authority, for the purposes
of (a) Section 147(f) of the Code by the applicable elected representative of the
governmental unit having jurisdiction over the area in which the Project is to be located,
in accordance with said Section 147(f) and (b) Section 4 of the Agreement.
Section 2. The payment of the principal, premium, if any, and interest on the Bonds
shall be solely the responsibility of the Borrower. The City shall have no responsibility or
liability whatsoever with respect to the Bonds. The Bonds shall not constitute a debt or
obligation of the City.
Section 3. The adoption of this Resolution shall not obligate the City or any
department thereof to (i) provide any financing to acquire or construct 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 to 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.
Section 4. The officers and officials 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
Resolution No. 2026-XXX
Page 2 of 4
EXHIBIT 1
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. This Resolution shall take effect immediately upon its adoption by the
City Council and the City Clerk shall attest to and certify the vote adopting this Resolution.
ADOPTED this 2nd day of June, 2026.
Valerie Amezcua
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho, City Attorney
Y
Andrea N. Garcia
Senior Assistant City Attorney
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
ABSENT: Councilmembers
Resolution No. 2026-XXX
Page 3 of 4
EXHIBIT 1
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, JENNIFER L. HALL, City Clerk, of the City of Santa Ana, do hereby attest and certify
the attached Resolution No. 2026-XXX to be the original resolution adopted by the City
Council of the City of Santa Ana on June 2, 2026.
Date:
City Clerk
City of Santa Ana
Resolution No. 2026-XXX
Page 4 of 4
EXHIBIT 2
ORANGE COUNTY REPORTER This space for filing stamp only
- SINCE 1921 --
600 W SANTA ANA BLVD STE 812, SANTA ANA,CA 92701
Telephone(714)543-2027 /Fax (714)542-6841
KARSIN CASTON
STRADLING YOCCA CARLSON & RAUTH LLP OR#:4043893
660 NEWPORT CENTER DRIVE, SUITE NOTICE OF PUBLIC HEARING amount not expected to exceed
BEFORE THE CITY COUNCIL OF THE $31,000,000;(2)refinance a taxable loan
NEWPORT, CA-92660 CITY OF SANTA ANA,CA the proceeds of which were utilized to
The City of Santa Ana encourages the finance a working capital deficit of OCSA
public to participate in the decision- (occurring at the OCSA Locations)in an
making process.The following notice amount not expected to exceed
is being provided so that you can ask $9,000,000; and (3) finance capital
questions, make comments, and stay educational facilities including equipment
informed about projects that might be to be located at the OCSA Locations in an
important to you.We encourage you to amount not expected exceed
PROOF OF PUBLICATION
contact us prior to the Public Hearing if $6,000,000. The initial owner of the
you have any questions. facilities and working capital is OCSA
NOTICE IS HEREBY GIVEN-The City of and/or Legacy.
Santa Ana will hold a Public Hearing to The Bonds and the obligation to pay
(2015.5 C.C.P.) receive public testimony and will take principal of and interest thereon and any
action on the item described below. redemption premium with respect thereto
Decision on this matter will be final. do not constitute indebtedness or an
State Of California ) Proposed Action:The City of Santa Ana obligation of the City, the Authority, the
(the"City")will conduct a public hearing State of California, or any political
County of ORANGE )ss as required by Section 147(f) of the subdivision thereof,within the meaning of
Internal Revenue Code of 1986 (the any constitutional or statutory debt
"Code"),at which it will hear and consider limitation,or a charge against the general
Notice Type: BID-NOTICE INVITING BIDS information concerning a proposed plan of credit or taxing powers of any of them.
financing providing for the issuance by the The Bonds shall be a limited obligation of
California Enterprise Development the Authority, payable solely from certain
Authority (the "Authority") of its revenue revenues duly pledged therefor and
bonds as qualified 501(c)(3) tax-exempt generally representing amounts paid by
Ad Description: obligations under Section 145 of the Legacy.
Code, in one or more series in an Meeting Time and Date—This matter will
OCSA AND LEGACY TEFRA NOTICE aggregate principal amount not to exceed be heard on Tuesday,June 2, 2026 at
$46,000,000(the"Bonds")for the benefit 5:30 p.m. Pacific Daylight Time or as
of Orange County School of the Arts soon thereafter as the matter may be
("OCSA") and The Legacy Fund heard, in the City Council Chamber, 22
2701.
1 am a citizen of the United States and a resident of the State of California; I am benefitcy)corporatioboth �nsrnia(togethenonit publicr the Inite estedepersonsPlaza,santa wish ngato express
over the age of eighteen years,and not a party to or interested in the above "Borrower). their views on the issuance of the Bonds
entitled matter. I am the principal clerk of the printer and publisher of the The Authority will loan the proceeds of the or on the nature and location of the
p p p p Bonds to Legacy and OCSA pursuant to facilities proposed to be financed may
ORANGE COUNTY REPORTER,a newspaper published in the English one or more loan agreements to (1) attend the public hearing. Members of
refinance the outstanding amount of the the public may attend this meeting in-
language in the city of SANTA ANA,County Of ORANGE,and adjudged a California Enterprise Development person or join via Zoom. For the most
newspaper of general circulation as defined by the laws of the State of Authority 2016 Tax-Exempt Loan(Orange up to date information on how to
County School of the Arts) Series A, participate virtually in this meeting,please
California by the Superior Court of the County of ORANGE,State of California, California Enterprise Development visit https://www.santa-ana.org/agendas-
under date 06/20/1922,Case No. 13421. That the notice,of which the Authority 2016 Tax-Exempt Loan(Orange and-minutes/.
County School of the Arts) Series B, Written Comments: If you are unable to
annexed is a printed copy,has been published in each regular and entire issue California Enterprise Development participate in the meeting,you may send
of said newspaper and not in an supplement thereof on the followingdates, Authority 2016 Tax-Exempt Loan(Orange written comments by e-mail to
y pp County School of the Arts) Series C, eComment@santa-ana.org(reference the
to-wit: California Enterprise Development Agenda Item#in the subject line)or mail
Authority 2016 Tax-Exempt Loan (The to Jennifer L. Hall, City Clerk, City of
Legacy Fund) Series A, California Santa Ana,20 Civic Center Plaza—M30,
Enterprise Development Authority 2016 Santa Ana,CA 92701.Deadline to submit
Tax-Exempt Loan (The Legacy Fund) written comments is two hours prior to
Series B, and California Enterprise the start of the meeting. Comments
Development Authority 2016 Tax-Exempt received after the deadline may not be
Loan (The Legacy Fund) Series C (the distributed to the City Council but will be
05/22/2026 "2016 Bonds'), which were issued to made part of the record.
finance and refinance capital educational Where To Get More Information - All
facilities and equipment at the following staff reports regarding any item on this
locations in Santa Ana,California 92701: agenda are available for public inspection
(i)800 North Bush Street, (ii)917 North in the City Clerk's Office during regular
Bush Street,(iii)625 North Grand Street, business hours and posted on the City's
(iv)801 North Main Street,(v)902 North website the Tuesday prior to the Council
Main Street, (vi) 906 North Main Street, meeting at: www.santa-ana.org/agendas-
(vii) 1000 North Main Street, (viii) 1010 and-minutes.
North Main Street, (ix) 1018 North Main Who To Contact For Questions-Should
Executed on: 05/22/2026 Street, (x) 1104 North Main Street, (xi) you have any questions, please contact
At Los Angeles,California 1107 North Main Street, (xii) 1110 North Mishaun Watkins, Community
Main Street,(xiii)1111 North Main Street, Development Analyst, at(714)667-2256
(xiv) 1119 North Main Street, (xv) 208 or you can send an email to
I certify (or declare) under penalty of perjury that the foregoing is true and East loth Street, (xvi) 123 East 11th mwatkins@santa-ana.org.
Street, (xvii)916 North Spurgeon Street, Si tiene preguntas an espanol,favor de
correct. (xiii)900 North Sycamore Street,(xiv)912 Ilamar al Edward Rios a 714-667-2241.
North Sycamore Street, (xx) 921 North Neu can lien lac bang tieng Viet, xin
Sycamore Street, (xxi) 1120 North di&n thoai cho kristie Ha so(714)667-
Sycamore, (xxii) 839 North Broadway, 2241.
(xxiii) 843 North Broadway, (xxiv) 845 If you challenge the decision on the above
North Broadway, (xxv) 915 North matter,you may be limited to raising only
Broadway, (xxvi) 919 North Broadway, those issues you or someone else raised
(xxvii)200/202 West Washington Avenue, at the public hearing described in this
(xxviii) 201 West Washington Avenue, notice, or in written correspondence
and(xxix)207 West Washington Avenue delivered to the City of Santa Ana at, or
(collectively,the"OCSA Locations')in an prior to,the public hearing.
Signature
III III II II II II II 11 II II I II 111 �11
* A 0 0 0 0 0 7 4 0 7 4 1 3 *
EXHIBIT 2
Jennifer L.Hall,CMC
City Clerk
Publish Orange County Reporter-Legals
Section
Date:May 22,2026
5/22/26
OR-4043893#