HomeMy WebLinkAboutRS02-Redevelopment Agency
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RE~.!VELOPMENT AGENCY' . "....QUEST FOR .~OMMISSION/COUNCIL Ae,;-fION
From: Glenda Saul, Executive Director
Subject:
SAN BERNARDINO COMMUNITY HOSPITAL
- INDUCEMENT RESOLUTION, AGREEMENT
FOR BOND COUNSEL SERVICES
uept: Redevelopment Agency
Date: November 14, 1985, 1985
Synopsis of Previous Commission/Council action:
12/19/83 Adopted Resolution 83-446 - inducement resolution
Recommended motion:
(KAYOR AND COMMON COUNCIL)
A.
RESOLUTION
CONCERNING
BERNARDINO
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MOTION APPROVING ORRICK, HERRINGTON & SUTCLIFFE AS BOND COUNSEL
SAN BERNARDINO COMMUNITY HOSPITAL ISSUE
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OF THE MAYOR AND COMMON
THE ISSUANCE OF REVENUE
COMMUNITY HOSPITAL
COUNCIL OF THE CITY OF SAN BERNARDINO
BONDS TO FINANCE A PROJECT FOR SAN
B.
FOR THE
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s19n tu re
Contact person:
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GLENDA SAUL
,
Phone:
383-5081
6
Supporting data attached:
IYES
Ward:
FUNDING REQUIREMENTS:
Amount: $
N/A
Project:
NW
No adverse Impact on City:
Date:
November 18, 1985
ncil Notes:
Agenda I tern No,
R5-2
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requisite governmental approvals shall have first been
obtained,
hereby
Section 4,
desighated
Orrick, Herrington & Sutcliffe is
bond counsel to the City in connection with
the issuance of the Bonds, The fees of said bond counsel
shall be paid solely by the Hospital or from the proceeds of
the Bonds and not from any other funds or moneys of the City
nor shall the City be liable with respect to the payment
thereof, The City shall enter into a letter agreement in
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substantially the form presented to this meeting, with such
additions or deletions as are considered necessary or
appropriate by officers of the City or the Hospital and the
Mayor of the City is hereby authorized to execute said letter
agreement for and in the name of and on behalf of the City,
Section 5,
The City hereby appoints Sabo &
Gondek, a Professional Corporation, as special counsel to the
City in connection with the issuance of the Bonds. The fees
of said special counsel shall be paid solely by the Hospital
or from the pro~eeds of the Bonds and not from any other
funds or moneys of the City nor shall the City be liable with
respect to the payment thereof, It s~all be the express responsl-
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bilit~ of Sabo and Gondek to assure t~at the City's bond policy guide-
lines are strictly ad~ered to, and that all requisite nrotective
language is included in all a?~ropriate documents and resolutions.
,
u,:>on its
Sec'cion 6. T.lis resolution s:lall take effect inunediately
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l)as sage,
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CI'll-( OF SAN BERNARDL,iO - REQUL;T FOR COUNCIL AC.:ON
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STAFF REPORT
The resolution before you today is a new inducement resolution for the San Bernardino
Community Hospital project. Since so much time has elapsed since the initial
inducement of the project, a new inducement resolution is required.
Also included is an agreement from Orrick, Herrington & Sutcliffe to act as bond
counsel for this issue. The office of Sabo & Gondek will act as special counsel to
the City for the issue.
The fees for bond counsel will be on an
payment to the Corporation (hospital).
bond counsel fees.
hourly rate basis with sole liability for
The City will have no liability for payment
of
Below is a recap of the new application.
Principals:
Ray Barton, III, Secretary
Amount of financing:
Not to exceed $40,000,000
Target date of financing:
December 1985
Project:
Modernization of a 322-bed acute health care
facility; construction of a five-story
steel/concrete medical facility; acquisition of
related medical systems and equipment
Construction schedule:
18 to 24 months from the commencement of
construction
Locat ion:
1500 West Seventeenth Street, San Bernardino
Jobs:
Maintain 1,078 present positions
Estimated tax increase:
Applicant is a nonprofit corporation and ~s
exempt from property tax
lOB reserve & development fee:
1% x $40,000,000 = $400,000
Mr. Ray Barton has requested the one percent fee be waived for this project. Staff
presented the proposal to the Redevelopment Committee on November 7, 1985. The
Committee did not be1'ieve the fee should be waived.
Hospital representatives will be available to answer any questions you may have.
75-0264
0796K/SL
11/18/85
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RESOLUTION NO,
RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE
CITY OF SAN BERNARDINO CONCERNING THE ISSUANCE OF
REVENUE BONDS TO FINANCE A PROJECT FOR
SAN BERNARDINO COMMUNITY HOSPITAL
WHEREAS, the City of San Bernardino (the "City"),
is a municipal corporation and charter city duly organized
and existing under the city charter pursuant to which the
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C~ty has the right and power to make and enforce all laws and
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regulations in respect to municipal affairs and certain other
matters in accordance with and as more particularly provided
in Sections 3, 5 and 7 of Article XI of the Constitution of
the State of California and Section 40 of the charter of the
City (the "Charter"); and
WHEREAS, the Cornman Council of the City acting
under and pursuant to the powers reserved to the City under
Sections 3, 5 and 7 of Article XI of the Constitution of the
State of California and Section 40 of the Charter, finds that
the public interest and necessity require the establishment
of a program for the authorization, sale and issuance of
health facilities revenue bonds by the City for the purpose
of making loans such as that described herein; and
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WHEREAS, San Bernardino Community Hospital (the
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"Hospital") has requested the financial assistance of the
City in refinancing certain indebtedness of the Hospital and
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financing the construction of certain Hospital facilities and
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the acquisition of certain capital equipment and improvements
for the Hospital (the "Project"); and
WHEREAS, the City desires to assist the Hospital in
the financing of the Project; and
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WHEREAS, the City deems it necessary and essential
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and a proper public purpose that the Project be financed at
the earliest practicable date; the Hospital requires
satisfactory assurance from the City that the proceeds of the
sale of bonds of the City will be made available to assist in
the financing of the Project; and the City requires
satisfactory assurance from the Hospital that certain costs
of issuing such bonds will be paid by the Hospital and that
the Hospital, as part of the consideration for such financial
assistance, will provide certain health services for and
within the City during the term of such bonds,
NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF SAN
BERNARDINO, CALIFORNIA, DO HEREBY FIND, RESOLVE, DETERMINE
AND ORDER AS FOLLOWS:
Section 1.
The City shall proceed to prepare, or
cause to be prepared, the documentation necessary for the
City to issue, at one time or from time to time, an aggregate
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of not to e~ceed forty million dollars ($40,000,000)
principal aJount of hospital revenue bonds of the City (the
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"Bonds") to finance the Project; provided that, prior to
commencing JUCh preparation, the City and the Hospital shall
have entered into a letter agreement in SUbstantially the
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form attached hereto, with such additions or deletions as are
considered necessary or appropriate by officers of the City
and the Hospital, and the Mayor of the City is hereby
authorized to execute said letter agreement for and in the
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name and on behalf of the City, The Bonds shall be issued
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pursuant to Ordinance No. 3815, as amended, and, upon the
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issuance of the Bonds, the Hospital shall remit or cause to
be remitted to the City from the proceeds of the Bonds or
otherwise, one percent (1%) of the aggregate principal amount
of the Bonds,
Section 2,
The Bonds shall be payable solely from
the revenues to be received by the City pursuant to a loan or
other agreement(s) to be entered into by the City and the
Hospital in connection with the financing of the Project, and
shall not be deemed to constitute a debt or liability of the
City under any constitutional, charter or statutory debt
limitation, Neither the faith and credit nor the taxing
power of the City shall be pledged to the payment of the
principal of or interest on the Bonds.
Section 3,
Issuance of the Bonds shall be subject
to the following conditions:
(a) the City and the Hospital
shall have first agreed to mutually acceptable terms for the
Bonds and the sale and delivery thereof and mutually
acceptable terms and conditions for the loan or other
agreement(s)1 for the financing of the Project, and (b) all
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I HEREBY CERTIFY that the foregoing resolution was
duly adopted by the Mayor and Common Council of the City of
San Bernardino at a regular meeting thereof, held on the
day of
, 1985, by the following vote, to wit:
AYES:
Council Members
NAYS:
ABSENT:
City Clerk
day of
The foregoing resolution is hereby approved this __
, 1985,
Mayor of the City of
San Bernardino
Approved as to form:
, ~L-&~
?,~City Attorney
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STATE OF CALIFORNIA
COUNTY OF SAN BERNARDINO
CITY OF SAN BERNARDINO
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I, SHAUNA CLARK, City Clerk in and for the
San Bernardino, DO HEREBY CERTIFY that the foregoing
attached copy of San Bernardino City Resolution No.
a full, true and correct copy of that now on file in
office.
City of
and
is
this
IN WITNESS
affixed the official
_ day of
WHEREOF, I have hereunto set my hand and
seal of the City of San Bernardino this
, 1985.
City Clerk
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, 1985
San Bernardino Community Hospital
1500 West Seventeenth Street
San Bernardino, California 92411
Re: Hospital Revenue Bonds
Ladies and Gentlemen:
The purpose of this letter is to set forth certain
terms and conditions under which the City of San Bernardino
(the "City"), will assist in the refinancing of certain of
your indebtedness and the financing of certain health
facilities and the acquisition of certain capital equipment
for and improvements to your health facilities,
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BYI signing and returning the enclosed copy of this
letter you hereby agree to the following on behalf of
San Bernardino Community Hospital (the "Hospital"):
(1) The Hospital agrees to pay all costs involved
in the issuance of the hospital revenue bonds proposed to be
issued by the City (the "Bonds"), including by way of example
and not limitation, bond counsel's and special counsel's fees
and disbursements, fees and disbursements of any other
experts engaged by the Hospital or by the City in connection
with the issuance of the Bonds, the one percent (1%) bond
issuance fee of the City, bond printing and other printing
costs, publication costs and cost incurred in order to obtain
ratings for the Bonds. Such costs may be paid from proceeds
of the Bonds, In the event that Bonds are not issued for any
reason, the Hospital agrees to assume the City's obligations,
if any, for payment of such costs,
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(2) The Hospital agrees to pay any and all costs
incurred by the City in connection with any legal action
challenging the issuance or validity of the Bonds or use of
the proceeds I thereof.
(3) The Hospital shall have the right to approve
any contractlwhich the City proposes to execute and for
payments under which the Hospital will be responsible
pursuant to this letter agreement.
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The C~ty agrees to proceed, and to direct bond
counsel to proceed, with the planning and preparation of the
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San Bernardino Community Hospital
, 1985
Page 2
necessary proceedings for the offering of the Bonds for sale
to finance the Project. The Hospital understands that this
letter agreement does not exempt it from any requirements of
the City, or any department or agency thereof or other
governmental body, that would apply in the absence of the
proposed Bond financing, and compliance with such
requirements is an express precondition to the issuance of
the Bonds by the City.
If the foregoing is satisfactory, kindly execute
the enclosed copy of this letter and return it to the City of
San Bernardino, Attention: Mayor Evlyn Wilcox.
Very truly yours,
CITY OF SAN BERNARDINO
By
Mayor
CONFIRMED AND ACCEPTED:
SAN BERNARDINO COMMUNITY HOSPITAL
By:
Dated:
PART I GENERAL1 AND BUSINESS INFORMATION
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The legal name of the Applicant Is "The San Bernardino Community
Hospital". I
The Applicant provides general acute care hospital services to the San
Bernardino community.
The malllng1address and principal place of business of the Applicant are as
follows: I
The San Bernardino Community Hospital
1500 West Seventeenth Street
San Bernardino, California 92411
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2,092-1/860
12/13/83
APPLICATION OF THE SAN BERNARDINO
COMMUNITY HOSPITAL
FOR INDUSTRIAL REVENUE BOND FINANCING
1.4 Employer Tax I.D. No. 95-1643373.
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Ray H. Barton, ill, Administrator and Chief Executive Officer of the
Applicant, is the principal contact for the Applicant.
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Telephone Number (714) 887-6333.
The APPlicJt is a nonprofit community hospital
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1.7.1 The Applicant is organized and existing pursuant to the Nonprofit
Corporation Law of the State of California.
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1.7.2 The Applicant was duly organized on April 20, 1938, by the filing of
Articles of Incorporation.
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1.7.3 The Applicant is not legally or organizationally affiliated with any
other 'corporation or legal entity.
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The Applicant is a nonprofit corporation which is operated by a Board of
Directors composed of professional, business and civic leaders from the San
Bernardino community area who volunteer their time and experience to the
community hospital. No member of the Board of Directors of the Applicant
nor any other member of the public has a financial or equity interest in
business operations of the Applicant.
Key officers1and Directors of the Applicant.
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1.9.1 Principal Officers:
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A.l.:n L. Ru~...., nt.D.
B1l;;V1b.... ,1")_.:......
M...u .I~I R...:l~l
Ray H. Barton, ill
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{(1'/1",: oJ', cl',<i c^;f2;G/C^fd'o t;J ..
'1-,- & /'[},u/ //j;j/' IJy IJc J/_ {:-/
1.5
1.6
1.7
1.8
1.9
Ii' .:...r~eftt
"'I - .sl1sRt
T, er
Secretary
(8Eil:-jl-!-'NJ$
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1.9.2 The Directors of the Applicant and their professional, business or
civic affiliation are as follows:
Robert H. Ballard, M.D. Physician in private practice In
San Bernardino
Abe E.1 Bettran Part owner of a development company
Robert C. M. Bowne, M.D. Physician in private practice In
I San Bernardino
Stephen J. Estes, M.D. Physician in private practice In
I . San Bernardino
Clarence Goodwin Public school superintendent and
I school administrator
George Gorlan Part owner in a stock brokerage
I and investment firm
Rodrick J. Hinshaw, M.D. Physician in private practice in
I San Bernardino
Robert G. Hougland, M.D. Physician in private practice in
I San Bernardino
Harold Hunt Retired insurance broker and currently
I a full-time student
John J. Kohut, M.D. Physician in private practice in
I San Bernardino
Ward Matthews Judge
David Nourok, M.D. Physician in private practice in
I San Bernardino
John M. pfau Former president of California
I State University at
San Bernardino (retired)
Jerrold Polterock, M.D. Physician in private practice in
I San Bernardino
Marvin Reiter C.P.A. in private practice in
I San Bernardino
Alvin L. Russon, M.D. Physician in private practice in
I San Bernardino
Nancy Sedlak Retired businesswoman; former owner
of private nursing school
Terrill L. Spoor Retired general contractor
1.10 The Applicarlt is a nonprofit corporation and therefore the identification of
other business affiliations of the Directors of the Applicant is not
applicable. I
1.11 Employees
1.11.1 The Abplicant currently has 1,078 employees who are all employed In
the City of San Bernardino. The financing of the Project will
significantly assist the Applicant in maintaining and improving the
highest standards of medical care available which will undoubtedly
result I in the creation of additional health care related employment
opportunities in both professional and technical occupations and in
varioUs semi-skilled occupational categories as welL
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1.11.2 The Applicant currently provides acute care hospital services from
one facility which Is located in San Bernardino, Calltornla.
1.12 Expert Professional services In connection with this Application for
Industrial Revenue Bond Financing will be provided by the following:
1.12.1 Ernst &. Whinney shall serve as the firm of accountants for the
Applicant and the contact person with said firm is Tom Maloof at
(213) 621-1666.
1.12.2 The la~ firm of Musick, Peeler and Garrett is the attorney for the
Applicant and Robert D. Girard is the principal attorney of said firm
with responsibility for the proposed project at (213) 629-7721.
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1.12.3 The Law Orrices of Timothy J. Sabo shall serve as Bond Counsel to
the City with regard to the tax-exempt financing of the Project.
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1.12.4 Principal Architect and Structural Engineer - The Austin Company,
18800 ,Von Karman, Irvine, California 92713, principal contact for
Project is Edward Westland (714) 752-9500.
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1.12.5 Hospital Administration Planning Consultant - Pacific Health
Resources, Robert Flanagan, President (213) 742-6443.
The principal I banking accounts of the Applicant are held by Crocker Bank,
San Bernardino, California, the officer of said bank responsible for such
account is Gilbert Carrion Vice-President.
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The source of funding for the Project will be from the proceeds of a private
placement or 'public offering of a tax-exempt bond or other obligation with a
hereafter to be obtained lender.
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1.13
1.14
PART IT BOND ISSUE
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2.1 The estimated total amount of the financing package and the proposed use
of bond proceeds are as follows:
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2.1.1 Project cost - $35,348,000
2.1.2 Legal, Iprinting and related fees - $300,000
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2.1.3 Financing costs and fees - $1,400,000
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2.1.4 Capitalized interest - $5,250,000
2.1.5 Other Imiscellaneous costs - $202,000
2.1.6 Land JCqUiSition - $ -0-
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ITotal: $4";1...,,')110 J!O,Ob(),OOO
2.2 The estimated target date for the financing for the Project is presently
anticipated to be In 1984, with construction to commence as soon as possible
after the financing package Is completed. The principal architect and
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structural engineer for the Project hIlS estimated that the construction of
the proposed health care facility should take approximately ehthteen (t 8) to
twenty-four (24) months to construct and be placed into operation.
It Is proposed that, the financing for the Project be In the form of a
construction loan during the construction period which would have the
traditional construction loan provisions In that drawdowns would be
permitted lIS 'construction proceeds upon submission of requisition vouchers
to the lender. Upon the completion of construction and the certification
that all improvements have been completed, the lender will then permit an
Interest rate adjustment and a principal amount increllSe, as warranted, and
convert the construction loan to a permanent financing.
The present I proposal anticipates that the tllX-exempt bonds or other
obliga tions will either be sold to a com mercial bank or other such lender
through a private placement or that a public oCCering or sale of bonds for
the Project will occur in 1984. -
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PART ill FINANCIAL INFORMATION
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2.3
2.4
3.1 The audit repOrts and financial statements for the Applicant are included IlS
Exhibit "A" hereto, and have been prepared by John D. Goddard, an account
corporation and the firm of Ernst &. Whinney lIS set forth In Section 1.12.1
hereof. I
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3.2 The Applicant is a nonprofit corporation which is engaged In the business of
providing acute hospital care services pursuant to the laws of the State of
California. The Applicant is a large community hospital which provides a
full range of health care services including emergency services in a three
hundred twenty-two (322) bed facility.
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PART IV PROJECT INFORMATION
4.1 The Project IlS proposed by the Applicant will substantially modernize the
three hundred twenty-two (322) bed acute care hospital facilities which it
operates in the City of San Bernardino. The existing physical plant of the
hospital is comprised of several obsolete wood frame buildings which were
constructed at various times IlS the hospital grew during the pllSt. The
design of many of the existing structures is not adaptable to rehabilitation.
In addition, the noor plans of some buildings in which health care services
are currently, provided cannot be easily adapted to modern health care
practices. There are also severe maintenance problems in some of these
buildings and the safety of patients from fire hazards is of some concern.
The APPlican~ hIlS proposed to construct a new eight d1 story steel/concrete
structure which shall have approximately two hundred twenty thousand
(220,000) square feet of noor area. This structure will incorporate modern
mechanical systems, elevators and fire control systems. The Project will
also include the construction of new parking facilities, landscaping and the
appropriate remodeling of existing structures which will remain in use after
the completion of the Project.
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The construction of the Project will enable the Applicant to continue to
provide the highest possible standard of health care services to the San
Bernardino community well into the next century.
4.2 The components and the estimated total cost of the functional parts of the
Project are as follows:
(the Project shall be constructed
on the existing site of the Applicant's
hospital facility)
(Building is to be steel/concrete
construction with dry wall
interior, elevators, fire control
systems and a complete mechanical
system)
4.2.1 Land - ...{}-
4.2.2 Buildi'ngs - $26,000,000
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4.2.3 Site :
Preparation - $2,291,000
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(offsite storm drains,
utility connections, grading
for buildings and parking lots)
4.2.4 Other equipment -
(a) I Fixed equipment - $2,050,000
Cfixturization for
acute care hospital facility)
(b) Kitchen - $390,000
(c) Movable equipment - $1,950,000 (furniture, beds, carts,
etc.)
4.2.5 Architectural and engineering services - $1,900,000
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4.2.6 Miscellaneous items
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(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Health care facilities, planning consultant
I Landscape design and installation
Site survey, soils tests and seismic survey
Signage
State of California construction inspection
I State of California Architect's Office
I (plan check)
I Legal
Construction loan interest
$ 90,000
75,000
22,000
30,000
50,000
450,000
50,000
5,250,000
Total: $6,017,000
The estimatL construction period for the Project shall span an eighteen (I8)
to twenty-four (24) month period. Commencement of construction is
anticipated to occur as soon as possible following the completion of the
financing of the Project. Given the nature of acute care hospital operations
and requirements it is not anticipated that conditional occupancy of
completed portions of the Project will be possible prior to the completion of
the main eight ~story structure. After the occupancy of the new
structure the older and obsolete portions of the acute care hospital
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facilities, as operated by the Applicant, shall be closed and demolished or
devoted to other appropriate uses.
4.4 The supervising or consulting engineer responsible for the design of the
Project on behalf of the Applicant shall be the Austin Company.
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4.5 The Project is called "The San Bernardino Community Hospital Improvement
Project".
4.6 The Project site is located on land which is part of its present facility.
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4.7 The Applicant ls the owner of the Project site.
4.8 The Project will provide approximately 220,000 square feet of modern acute
care hospital facilities sufficient to continue the three hundred twenty-two
(322) bed medical care activities of the Applicant in the City of San
Bernardino. '
4.8.1 Attached as Exhibit "8" is an 8-1/2 x 11 inch map showing the site
loca tion of the proposed Project.
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4.9 A negative declaration pursuant to the provisions of the California Environ-
mental Quality Act of 1970, as amended, will in all probability be
satisfactory I for the Project as proposed by the Applicant. However,
although such is not anticipated, any ultimate user of the Project which
would cause any alteration or a significant adverse effect upon the
environment I will be required to undertake their own environmental con-
siderations pursuant to CEQA.
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4.10 Under Senate Bill 517 (Chapter 1105 of the Statutes of 1983) no certificate
of need is anticipated to be necessary for the Project.
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4.11 The office of the State Architect of the State of California shall coordinate
all necessary permits and approvals for the construction of the Project.
4.12 The proposed Project shall comply with all applicable City of San
Bernardino, County of San Bernardino, and other state and regional plans
pertaining to acute care hospital facility construction and operation.
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4.13 It is presently anticipated that the proposed Project to be undertaken by the
Applicant will not produce any by-products or residues which would require
ultimate disposal measures or require a plan to accomplish same. Recycling
or salvage will not be a function of the proposed Project.
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PART V PUBLIC BENEFITS
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5.1 The City of San Bernardino will receive significant benefits by the initiation
of this Project as proposed by the Applicant and particularly through the
utilization of the financing method as is available under Ordinance No.
3815, as amended, of the City of San Bernardino. Due to the fact that
conventionall interest rates for construction and permanent financing for the
type of Project contemplated by the Applicant is at such an extremely high
level on conventionally borrowed funds, if available at all, the Applicant is
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unable to otherwise provide the type of modernized acute care hospital
facilities which are needed within the City of San Bernardino.
5.1.1 The Project and the modernization of its acute care hospital
facilities will assure the continued ability of the Applicant to provide
the highest possible standard of health care services. The
construction of the Project will also assure the ability of the
Applicant to continue to attract the services of the most qualified
and competitive health care professionals into the community.
5.1.2 The Jethod of financing provided for in Ordinance No. 3815 of the
City vis a vis the use of the conventional method will permit the
Applicant to complete the financing and construction of the Project
within an accelerated time frame. As the City is well aware,
conventional interest rates are at historically hi~h levels and many
sources of conventional financing do not currently have funds
available to loan at any interest rate. The method of financing
provided in Ordinance No. 3815 will provide new sources of financing
to the Applicant and such financing will be made available at lower
tax-exempt interest rates.
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5.2 The City will benefit, as can be demonstrated pursuant to Section 1 of
Ordinance No. 3815, as amended, of the City of San Bernardino, in that
employment 'opportunities will be generated by the proposed Project both
during the construction phase and after said Project is placed into operation.
The Applicant is not attempting to construct said proposed Project merely
for the financial inducement that is offered pursuant to the Ordinance, but
rather due to the long-term business and health care related facilities
requirements of the Applicant. The location of the proposed Project assures
the City that real economic and social benefits available to the community
upon its completion.
There are no detriments that can be incurred by the City with regard to this
type of financing for this Project, and the City of San Bernardino.
5.2.1 The Project is anticipated to have a beneficial inpact on the
unemployment problem in the City without imposing a financial
burden or adverse effects on areas outside the boundaries of the City
or on transient residents of the State.
5.2.2 The Project will not produce detrimental effects on or conflict with
or otherwise restrain State efforts to solve problems of legitimate
State concern.
5.2.3 The Applicant has legitimate long term health care planning related
objectives for constructing the Project including the long term health
care services revenue potential, labor pool access and other economic
factors in comparison to which the precise method of financing the
Project is of subordinate concern. However, as described in 5.1 the
financing of the Project under the method provided by Ordinance No.
3815 will provide additional financing to the Applicant at lower tax-
exempt rates and will enable the time schedule for instaliation of the
Project to be accelerated.
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5.2.4
5.2.5
5.2.6
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The City will only provide a method of financing the Project and wl11
only be paid certain fees to reimburse the City for costs incurred by
the City in connection with the financing of the Project. The City
will not realize a profit in such a manner as to compete with or rival
private firms and the Applicant is not requesting the City take any
more I action than is necessary to consummate the financing. As
described in part 5.1, certain incidental benefits will of course accrue
to the City as a result of the installation of the Project including the
numerous employment opportunities which will be created during the
actual construction phase.
In pJt 5.1, the Applicant has outlined the programs by which it is
expected that the Applicant's activity in the City will sustain the
long I term employment of local residents and the continued
maintenance of the highest standards of acute hospital care services.
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The City will receive a substantial benefit (as described in paragraph
5.t) from installation of the Project that exceeds any detriment
incurred by the City. The Project will be self supporting. Ordinance
No. 3815 and the documents pursuant to which any bonds issued by
the City to finance the Project provide or will provide that such
bonds I are limited obligations of the City to finance the Project
payable only from revenues generated by the Project, and that all
fees and expenses incurred by the City in connection with the Project
will be required to be paid by the Applicant. Indirect benefits such as
the enhancement of the health safety and welfare of the community
anticipated to exceed in value any indirect detriment to the City
such as increases in cost of police and other municipal services.
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5.2.7 The Applicant will not take any action that will result in a violation
of any applicable State standards relating to sewage disposal.
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PART VI COMMITMENTS
6.1 The Applicant by the submission of this Application agrees to comply and/or
to assist the City in complying with all State and federal laws in the
issuance of the bonds or other such tax-exempt obligations to finance the
Project, including, without limitation, making of any required application to
a governmental department, for authorization, qualification or registration
of the offer,' issuance or sale of the bonds or other tax-exempt obligations,
and any amendments thereto, and any permit or other authorization of such
governmental department, prior to the delivery by the City of such bonds or
other tax-exempt obligations.
6.2 The Applicant further commits to cause and/or to assist the City in causing
to be printed any prospectus or other written or printed communication
proposed to be published in connection with the issuance, offer or sale of
bonds or other tax-exempt obligations, prior to the delivery by the City of
such bonds or other tax-exempt obligations, and, to the extent deemed
necessary by the City, following delivery of such bonds or other tax-exempt
obligations.
6.3 The Applicant also commits to pay all expenses in connection with the
issuance, offer or sale of the bonds or other tax-exempt obligations, whether
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or not such bonds or other tax-exempt obligations are finally issued, and to
hold the City harmless from any and all expenses related thereto, to pay
items on an ongoing basis so that neither the City, nor its advisors,
attorneys, employees and the like will accumulate any claims against the
City.
6.4 The Applicant will supply any additional information, agreements and
undertakings I as the City may require as a result of conferences and
negotiations will be reproduced and supplied to the City and shall be deemed
as supplements or amendments to this Application.
PART VII SIGNATURE
7.1 The undersigned as authorized officers of the Applicant as noted below are
the officers lof the Applicant holding the prime responsibility for the
financing to be taken for the proposed Project, and each certifies that such
person has the authority to bind the Applicant to contract terms; that this
Application to the best knowledge or belief of the undersigned, contains no
false or incorrect information or data, and this Application, including
exhibits and I attachments hereto, is truly descriptive of the proposed
Project. The undersigned also represent by the execution of this Application
familiarity 'with Ordinance No. 3815, as amended, of the City of San
Bernardino.
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PART VIIl FEE SCHEDULE
I
8.1 The Applicant acknowledges that the City requires a non-refundable appli-
cation fee of $50 for each project to be considered for eligibility, to be paid
when the basic documents are requested. With the submittal of this
Application, $500 is payable to the City. If this Application is accepted, an
additional fee of $10,000 is payable for administrative costs. The Applicant
acknowledges that the commitments in Part VI above are in addition to
these fixed amounts. Thus, in the event that no closing occurs, the City
shall be reimbursed for its processing costs.
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8.2 All fees of the City may be capitalized and included in the bond issue as
acceptable to the bond purchaser.
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8.3 The Applican't acknowledges that the City derives its entire support from
the fees for its services. The total function of the City is conducted on a
self-supporting basis, and involves no State general revenues or expenditures
from taxes from the state or any of its political subdivisions. No
indebtedness or taxing power of the City is involved. Project revenues are
the sole security for bonds of the City. The federal guarantees, if any,
enhance these revenues and income and the security of the bonds.
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8.4 Pursuant to Resolution No. 81-108 of the City, as amended by Resolution
No. 81-410 of the City, one percent (1%) of the principal amount of the
bond Issue shall be deposited in the City Treasury in the Industrial Revenue
Bond Reserve'and Development Fund, which shall be used in such manner as
the Mayor and Common Council may direct from time to time.
"APPLICANT"
THE SAN BERNARDINO COMMUNITY HOSPITAL,
a nonprofit California corporation
By:
By:
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San Bernardino Community
Hospit~1 Location
~ And Major Traffic Arteries
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_ .AN .ERNARDIND CDMMUNITV HD.P'TA~
II SITE OF PROPOSED NEW FACILITY
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LAw OfCFICES
ORRICK. HERRINGTON & SUTCLIFFE
600 MONTGOMERY STREET
SAN FRANCISCO. CALIFORNIA 94111
TELEPHONE (415) 392-1122
TELECOPIER (o4o'S) 954 ,3759 TELEX 70.3520
NEW YORI<., NEw YORK 10036
1211 AVENUE OF" THE AMERICAS
TELEPHONE (212) 704-9660
SAN JOSE. CALIFORNIA 95113
55 ALMADEN BOULE""FlD
TELEPHONE (408) 298'8800
SACRAMENTO, CALIFORNIA 9S814
555 CAPitOL MALL
TELEPHONE (9IS1_7'9200
LOS ANGELES, CAL.IFORNIA 90017
~ SOUTH FLOWER STREET
TELEPHONE (213) 624'2-470
WRITE:/'l'S DIRECT DIAL NUMBER
November 4, 1985
City of San Bernardino
San Bernardino, California
Re: City of San Bernardino Proposed Financing for
San Bernardino Community Hospital
Ladies and Gentlemen:
I
We have been asked if we would be willing to serve
as bond counsel in connection with the proposed issuance of
revenue bonds' (the "Bonds".) by the City of San Bernardino to
finance const~uction of hospital facilities and a program of
capital equipment acquisition by the San Bernardino Community
Hospital ("the Corporation") and refinance certain existing
indebtedness of the Corporation. We understand that the
Bonds will bel issued in the aggregate principal amount of
approximately, $40,000,000. We would be pleased to act as
bond counsel in the proposed revenue Bond financing. This
letter will summarize and confirm the terms of our possible
engagement asl bond counsel to the City in these proceedings.
Introduction
I
We are one of the relatively few law firms with a
national reputation for expertise in municipal finance
matters, and, I as such, our firm's legal opinions concerning
the validity of the issuance of bonds and the tax-exempt
status of interest on bonds are generally accepted throughout
the country. lOur firm has practiced in this area for over
80 years, and, during this period, we have rendered opinions
on a wide variety of financings, ranging from very large bond
offerings (such as those for the State of California, the
California Housing Finance Agency, the California Educational
Facilities Authority, and the California Pollution Control
Financing Agency) to relatively small bond offerings for a
wide variety of local agencies within the State of California
and other states.
At the present time, our firm has more than
180 lawyers, and approximately 45 lawyers engaged in the
public finance practice. In addition, we have an active
practice in corporate securities and general business, real
estate, taxation, litigation, labor, and wills and estates.
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ORRICK, HE:RRINGTON & SUTCLIFFE:
City of San Bernardino
November 4, 1985
Page 2
In addition to our San Francisco office, we have offices in
New York, Sacramento, San Jose and Los Angeles.
Description of Services
In connection with the contemplated financing, our
services would include the following:
1. consultation with representatives of the
Corporation, the City, the underwriter and their respective
counsel concerning the financing, its timing, terms and
structure, including consultation on matters of California
law, federal tax law and municipal bond law as they affect
the proposed financing;
2. preparation of legal proceedings for the
authorization, sale and issuance of revenue Bonds by the
City, including preparation of necessary resolutions,
indenture, and other documents necessary for the issuance of
the Bonds; preparation of a loan agreement or agreements with
the City and the Corporation specifying the terms of the
financing, the security for the Bonds and other conditions to
the financing; preparation of the proceedings for the sale of
the Bonds; preparation of the proceedings incidental to or in
connection with the issuance of the Bonds; and coordination
of the Bond closing;
3. the rendering of a final legal opinion on the
validity and tax status of the Bonds; and
4. such other legal services as may be incidental
to the foregoing.
Our services, as contemplated by this letter, would
not include representation of the City or the Corporation in
any legal action challenging or affecting the transaction
contemplated by this letter, but if such services became
necessary, we would be pleased to perform them on such terms
as shall be mutually agreeable at the time.
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ORRICK, HERRINGTON & SUTCLIFFE
City of San Bernardino
November 4, 1985
Page 3
Fees
Our fee for the foregoing would be determined by
the extent of the services rendered by us on an hourly basis
at our full hourly rates then in effect. If, for any reason,
the City does not issue and sell the Bonds, our fee will be
determined on the basis of reduced hourly rates, which are
approximately 30% lower than our full hourly rates. Our fee
does not include our out-of-pocket expenses, such as travel
expense, long-distance telephone charges, reproduction of
documents, word processing, bound volumes, and secretarial
overtime necessary or requested because of the time demands
of the transaction, and we may bill monthly for such
out-of-pocket expenses.
In the event we are requested by the City to
perform any additional or extraordinary services not herein
contemplated, we will be entitled to apply to the City for
additional compensation for such additional services, the
amount of which shall be subject to the approval of the City,
but no such additional compensation shall be paid unless
specifically authorized in advance by the City in writing at
its discretion.
Although we will serve as bond counsel to the City
in this transaction, we understand that the City will have no
liability for our fees and expenses and that we shall look
solely to the Corporation for payment. At the request of the
City, we will be pleased to submit our invoices directly to
the Corporation for payment.
The Corporation shall pay all costs and expenses
incident to the actual cost of issuance and delivery of the
Bonds, including the cost and expense of preparing certified
copies of proceedings required by us in connection with the
Bonds, the cost of preparing the Bonds for execution and
delivery, all printing costs and any other expenses incurred
by the City or the Corporation in connection with the
issuance of the Bonds, including fees and expenses of
financial or feasibility consultants, accountants or other
experts employed by the City or the Corporation.
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ORRICK, HE:RRINGTON 0. SUTCLIFFE:
City of San Bernardino
November 4, 1985
Page 4
If the foregOing is satisfactory, please execute
the three enclosed copies of this letter and return them to
me. We will have them executed by the Corporation and will
deliver a fully executed copy of this letter to you for your
files. We will deliver one fully executed copy of this
letter to the Corporation, We look forward to working with
you on this transaction.
Very truly yours,
;A.~~.~
Molly E. Arnold
Enclosures
CONFIRMED AND ACCEPTED:
APPROVED:
CITY OF SAN BERNARDINO
SAN BERNARDINO COMMUNITY HOSPITAL
By:
By:
Title:
Title:
Dated:
Dated: