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TEFRA PUBLIC HEARING: CONDUIT FINANCING FOR THE UNIVERSITY OF THE PACIFIC PROJECT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving the issuance of revenue bonds by the California Municipal Finance Authority (“CMFA”), a joint exercise of powers authority and public entity of the State of California, in an amount not to exceed $38,000,000, (the “Bond”), on behalf of the University of Pacific (the “UOP”), to finance and refinance all or a portion of the acquisition, construction, improvement and equipping of educational and related facilities located at 3601 Pacific Avenue, in the City of Stockton, California (the "Project").
a. Note: The bonds will not represent a debt of the city, nor do they obligate the City in any way.
2. It is further recommended that the City Manager be authorized to take appropriate actions necessary to carry out the purpose and intent of the resolution.
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Summary
The University of the Pacific is a California nonprofit public benefit corporation located in the City of Stockton. The proceeds of the Bonds will be used to finance and refinance the acquisition, construction, improvement and equipping of certain educational and related facilities located at the “Stockton Campus”, in Stockton, California,
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”). The City Council is being asked to adopt a resolution that would approve the issuance of the California Municipal Finance Authority revenue bonds (on behalf of UOP), series 2016 in an aggregate principal amount not to exceed $38,000,000. Such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following).
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Stockton 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. These bonds are not a debt of the City, nor do they obligate the City in any manner. The role of the City 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 CMFA Authority.
DISCUSSION
Background
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 240 municipalities, including the City of Stockton, have become members of CMFA.
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.
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
The University of the Pacific, a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, requested that the CMFA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $38,000,000 of tax-exempt revenue bonds. The proceeds of the Bonds will be used by the University to: (1) finance and refinance all or a portion of the acquisition, construction, improvement and equipping of educational and related facilities, including related administrative facilities, athletic facilities, site improvements, and parking, including but not limited to construction of facilities for student housing to be known as Upper Division Housing, to be located at the University’s campus at 3601 Pacific Avenue, Stockton, California 95211 (the “Stockton Campus”), and other improvements located on the Stockton Campus; and (2) pay costs of issuance and certain interest with respect to the Bonds. The facilities are to be owned and operated by the University (see Attachment A for a vicinity map).
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 September 12, 2016, in The Record.
FINANCIAL SUMMARY
The City has no financial liability as a result of approving the issuance of the bonds for the University. Authorizing the issuance of the bonds does not create any financial obligations, but only serves as a public acknowledgement by the local jurisdiction of the project financing. Due to the City’s membership in SMFA, as part of the issuance of the bonds an estimated amount of $9,000 will be contributed to the City’s general fund.
Attachment A - Vicinity Map