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TEFRA PUBLIC HEARING: CREATIVE EDUCATION SUPPORT ORGANIZATION, LLC
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RECOMMENDATION
At the conclusion of the public hearing, it is recommended that the City Council adopt a resolution approving the issuance of the California Statewide Communities Development Authority School Facilities Revenue Bonds in an amount not to exceed $10,000,000, on behalf of Creative Education Support Organization, LLC, a California limited liability company (the “Borrower”), the sole member of which is initially Creative Child Care, Inc., a California nonprofit public benefit corporation.
These bonds do not represent a debt of the City, nor do they obligate the City in any way.
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Summary
The purpose of this hearing is to satisfy the public approval requirement of (a) the Tax and Equity Fiscal Responsibility Act (TEFRA), Section 147(f) of the Internal Revenue Code of 1986 (the “Code”) and (b) Section 9 of the Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988. The City Council is being asked to adopt a resolution that would approve the issuance of the Bonds by the California Statewide Communities Development Authority (the “CSCD Authority”) in one or more series, and at no time exceed the aggregate principal amount outstanding of $10,000,000 (the “Bonds”).
The purpose of the bonds is to finance the acquisition, construction, expansion, remodeling, renovation, improvement, furnishing and equipping of land and facilities located at the following addresses: (a) 600 & 615 East Main Street, Stockton, California, (b) 634 East Main Street, Stockton, California, (c) 621 East Market Street, Stockton, California, and (d) 633 East Market Street, Stockton, California (the “Facilities”) to be owned by the Borrower to be used and operated, in part, as a child care center by Creative Child Care, Inc., a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Code and/or its affiliates, and in part as a public charter school known as TEAM Charter School by Transformational Education, Inc., a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Code and/or its affiliates (the “Project”) and located within the City.
These bonds are not a debt of the City, nor do they obligate the City in any manner. The role of Council in this hearing is limited to conducting the public hearing to certify the public benefit of this project for the purpose of facilitating financing for the Project by the CSCD Authority.
DISCUSSION
Background
The CSCD Authority is a Joint Powers Authority whose members include the City of Stockton and over 500 other California cities, counties, and special districts. The sole purpose of the CSCD Authority is to finance projects that promote economic development through the issuance of bonds.
The Code requires that the “applicable elected representatives” of the jurisdiction in which a project to be financed with “private activity bonds” is to be constructed, adopt a resolution approving the issuance of such “private activity bonds” after holding a public hearing, which has been noticed in a newspaper of general circulation in such jurisdiction. The City Council is being asked to hold such public hearing, which has been noticed as required by the Code. The proposed resolution would act as the approval by the “applicable elected representatives” with respect to the proposed Project. If the City Council adopts this resolution, the CSCD Authority will proceed with the Borrower’s financing of the acquisition and renovation of the Facilities.
Before Bonds can be issued, the federal tax laws under the Tax and Equity Fiscal Responsibility Act of 1982 (TEFRA) and Section 147(f) of the Code require that the CSCD Authority member 1) conduct a public hearing; and 2) approve the CSCD Authority’s issuance of the bonds.
Outside the holding of the TEFRA hearing and the adoption of the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds is required.
Present Situation
TEAM Charter School was founded in March 2011 and started operation in July 2011. Over the years, the School has grown from serving 128 kids in kindergarten through 3rd grade to now serving 452 kids in pre-kindergarten through 5th grade. TEAM Charter has provided an education model to serve kids in economically challenging areas through its specially designed education programs, as well as community participation.
The school’s students, parents, staff and community are passionately committed to providing a nurturing, loving educational environment currently serving pre-kindergarten through 5th grade, and potentially 6-8 grade children. TEAM Charter’s mission is "To cultivate healthy bodies, minds, and spirits based on compassion and love for all humanity." Emphasis will be on integrating into all subject matter, a non-biased, multicultural, socially just, quality environment embracing the rich cultural diversity of our country, leading to successful student learning outcomes.
In addition, TEAM Charter’s expansion will further the City’s efforts in revitalizing Downtown Stockton and supports the recommendations included in the Urban Land Institute Report (February 2012) and Economic Development Strategic Plan (February 2015). This project will bring more people to downtown and would create a need for more youth-oriented amenities, such as afterschool tutoring, sports, art and drama programs, music and dance lessons, and other similar services. All of these activities add vibrancy to the downtown.
As announced in the published notice, this hearing is simply an opportunity for all interested persons to speak to or to submit written comments on the proposal to issue the debt and the public benefit, nature, or location of the Project. There is no obligation on the part of the City Council to respond to any specific comments made or submitted.
Public Notice
The legal notice for the TEFRA public hearing is required to be advertised at least 14 days in advance. The notice for this hearing was published on August 4, 2015, in The Record.
FINANCIAL SUMMARY
The City has no financial liability as a result of approving the issuance of the tax-exempt bonds for the Borrower. The City’s membership in the CSCD Authority bears no cost or other financing obligation, but serves as a public acknowledgement by the host jurisdiction of the project financing. The CSCD Authority will serve as issuer of the bonds. Orrick, Herrington & Sutcliffe LLP will serve as Bond Counsel for the issue.