HomeMy WebLinkAbout2016-093 I RESOLUTION NO. 2016-93
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS GOVERNING BOARD OF THE SAN BERNARDINO
3 JOINT POWERS FINANCING AUTHORITY AUTHORIZING EXECUTION OF A
4 CLOSING AGREEMENT WITH THE INTERNAL REVENUE SERVICE TO
RESOLVE POTENTIAL TAX LIABILITY.
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WHEREAS, The San Bernardino Joint Powers Financing Authority (JPFA) is a joint
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powers authority formed by the City of San Bernardino (City) and the Redevelopment Agency
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of the City of San Bernardino (RDA) in August 1989 for the purpose of financing and
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refinancing public capital improvements of the City and RDA; and
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WHEREAS, The Mayor and Common Council act as the governing board of the JPFA;
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and
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WHEREAS, On February 1, 2012, the Redevelopment Agency of the City of San
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Bernardino (RDA) was dissolved by operation of law and the City became the RDA Successor
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Agency (Successor Agency); and
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WHEREAS, the RDA had a number of bond issues and similar obligations outstanding
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upon dissolution, and the Successor Agency is responsible for debt service on these obligations,
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and
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WHEREAS, the redevelopment dissolution laws allow successor agencies to refund
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(i.e., refinance) debt obligations of the former RDA if doing so will achieve a savings in debt
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service or finance debt service spikes (Cal. Health & Safety Code § 34177.5, effective
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September 22, 2015); and
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WHEREAS, in 2015, the Successor Agency determined that, due to low current market
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interest rates, it could save millions of dollars in debt service obligations by refunding certain
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RDA obligations; and
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WHEREAS, on May 18, 2015, the Mayor and Common Council, acting as Successor
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Agency, adopted Resolution No. 2015-104, authorizing the issuance of bonds to refund certain
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I obligations of the former RDA to take advantage of reduced interest rates and avoid debt service
2 spikes due to maturing obligations; and
3 WHEREAS, among the obligations to be refunded were the $8,590,000 Subordinate
4 Tax Allocation Refunding Bonds, Series 1998B (1998B bonds), issued by the JPFA on April 2,
5 1998; and
6 WHEREAS, the 1998B bonds were issued at the request of the RDA and the RDA
7 agreed to pay the debt service on the bonds, making the debt service an enforceable obligation
8 of the Successor Agency; and
9 WHEREAS, the 1998B bonds were issued as tax-exempt obligations, based on a legal
10 opinion of bond counsel that interest on the bonds would be exempt from federal income
11 taxation; and
12 WHEREAS, the Internal Revenue Code limits the number of times tax-exempt
13 obligations can be refunded in advance of their maturity date, and
14 WHEREAS, in the course of pursuing the refunding of the prior RDA obligations, it
15 was determined that about 84 percent of the obligations that were refunded by the 1998B bonds
16 had previously been advance refunded twice and could not be advance refunded again; and
17 WHEREAS, the advance refunding of those obligations constituted a prohibited
18 advance refunding of prior tax exempt obligations and exposed the JPFA to potential tax
19 liability; and
20 WHEREAS, this potential liability needed to be resolved for the refunding transaction
21 to proceed; and
22 WHEREAS, to resolve the potential liability, the Council authorized staff to negotiate a
23 settlement agreement with the Internal Revenue Service (IRS); and
24 WHEREAS, an agreement has now been reached and a settlement agreement (Closing
25 Agreement) has been prepared by the IRS for execution by the Mayor on behalf of the JPFA;
and
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I WHEREAS, execution of the agreement by the IRS is contingent upon the payment of
2 $1,003,178.34; and
3 WHEREAS, the Successor Agency has sufficient funds to pay the settlement amount in
4 an escrow account relating to a 2005 Senior Loan Agreement secured by the former RDA's Tri-
5 City Project; and
6 WHEREAS, as a result of the Legislature's enactment of Senate Bill 107 late last year,
7 the escrowed funds are available to the Successor Agency for payment of the IRS settlement;
8 and
9 WHEREAS, the use of the escrowed funds for that purpose has been approved by the
10 State Department of Finance.
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NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
12 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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14 SECTION 1. The Mayor, as chairperson of the JPFA, is hereby authorized and
15 directed to execute on behalf of the JPFA the Closing Agreement attached to this Resolution as
16 Attachment 1 and incorporated herein by reference, and to take all other actions as may be
17 necessary for the execution and consummation of the Closing Agreement.
18 SECTION 2. This Resolution shall take effect immediately upon its adoption.
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I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS GOVERNING BOARD OF THE SAN BERNARDINO
2 JOINT POWERS FINANCING AUTHORITY AUTHORIZING EXECUTION OF A
3 CLOSING AGREEMENT WITH THE INTERNAL REVENUE SERVICE TO
RESOLVE POTENTIAL TAX LIABILITY.
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5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
6 Common Council of the City of San Bernardino at a joint regular meeting thereof, held on the
7 16`" day of May, 2016, by the following vote, to wit:
8 Council Members: AYES NAYS ABSTAIN ABSENT
9 MARQUEZ X
10 BARRIOS X
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VALDIVIA X
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SHORETT X
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NICKEL X
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RICHARD X
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16 MULVIHILL X
17 Urbo rgea a �rk
18 Y/
19 The foregoing resolution is hereby approved this d —day of M 2016.
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21 R. Carey D is, Mayor
City of San Bernardino
22 Approved as to form:
23 Gary D. Saenz, City Attorney
24 By.
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