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RESOLUTION (ID # 4450) DOC ID: 4450 A
CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
Agreement
From: Jolena E. Grider M/CC Meeting Date: 05/16/2016
Prepared by: Jolena E. Grider, (909) 384-
5355
Dept: City Attorney Ward(s): All
Subject:
Resolution of the Mayor and Common Council of the City of San Bernardino Acting as
Governing Board of the San Bernardino Joint Powers Financing Authority Authorizing
Execution of a Closing Agreement with the Internal Revenue Service to Resolve
Potential Tax Liability; and Resolution of the Mayor and Common Council of the City of
San Bernardino Acting as the Successor Agency to the Former Redevelopment Agency
of the City of San Bernardino Authorizing Payment of $1,003,178.34 to the United
States Treasury to Resolve Potential Tax Liability. (#4450)
Current Business Registration Certificate: Not Applicable
Financial Impact:
Payment of$1,003,178.34 by Successor Agency, from escrowed funds of the former
RDA available to pay enforceable obligations of the Successor Agency.
Motion: Adopt the Resolutions.
Synopsis of Previous Council Action
On May 18, 2015, the Mayor and Common Council, acting as Successor Agency to the
former Redevelopment Agency of the City of San Bernardino, adopted Resolution No.
2015-104, authorizing the issuance of bonds to refund certain obligations of the former
RDA to take advantage of reduced interest rates and avoid debt service spikes due to
maturing obligations.
On November 2, 2015 and January 19, 2016, the Mayor and Common Council in closed
session, acting as the San Bernardino Joint Powers Financing Authority, gave directive
to legal counsel to attempt to reach a settlement agreement with the United States
Internal Revenue Service of potential tax liability of the Authority that had come to the
attention of the Authority in connection with the bond refunding to be accomplished
pursuant to Resolution No. 2015-104.
Discussion
On February 1, 2012, the Redevelopment Agency of the City of San Bernardino (RDA)
was dissolved by operation of law and the City became the RDA Successor Agency.
The RDA had a number of bond issues outstanding upon dissolution. The Successor
Agency is responsible for debt service on these bonds.
The redevelopment dissolution laws allow successor agencies to refund (i.e., refinance)
Updated: 5/9/2016 by Georgeann "Gigi" Hanna A I Packet Pg. 130
5.0
4450
bonds issued by the former RDA if doing so will achieve a savings in debt service or
finance debt service spikes. (Cal. Health & Safety Code § 34177.5, effective September
22, 2015.) In 2015, the Successor Agency determined that, due to low current market
interest rates, it could save millions of dollars in debt service obligations by refunding
certain RDA bond obligations. The Agency authorized staff and its consultants and legal
counsel to pursue refunding of those obligations.
Among the bonds to be refunded were the $8,590,000 Subordinate Tax Allocation
Refunding Bonds, Series 1998B, issued on April 2, 1998 by the San Bernardino Joint
Powers Financing Authority (JPFA). The JPFA is a joint powers authority formed by the
City and the RDA in August 1989 for the purpose of financing and refinancing public
capital improvements of the City and RDA. The Mayor and Common Council act as the
governing board of the JPFA. The 1998B bonds were issued at the request of the RDA
and the RDA agreed to pay the debt service on the bonds.
The 1998B bonds were issued as tax-exempt obligations, based on a legal opinion of
bond counsel, that interest on the bonds would be exempt from federal income taxation.
The Internal Revenue Code limits the number of times tax-exempt obligations can be
refunded in advance of their maturity date. In the course of pursuing the refunding of the
prior RDA obligations, it was determined that about 84 percent of the obligations that
were refunded by the 1998B bonds had previously been advance refunded twice and
could not be advance refunded again. The advance refunding of those obligations
constituted a prohibited advance refunding of prior tax exempt obligations and exposed
the JPFA to potential tax liability. This potential liability needed to be resolved for the
refunding transaction to proceed.
To resolve the potential liability, the Council authorized staff to negotiate a settlement
agreement with the Internal Revenue Service (IRS). An agreement has now been
reached and a settlement agreement (Closing Agreement) has been prepared by the
IRS for execution by the Mayor on behalf of the JPFA. Execution of the Closing
Agreement by the IRS is contingent upon the payment of$1,003,178.34.
The Successor Agency has sufficient funds to pay the settlement in an escrow account
relating to a 2005 Senior Loan Agreement secured by the former RDA's Tri-City Project.
The funds were escrowed under a provision of the Tri-City Project 2005 Senior Loan
Agreement requiring tax increment revenues derived from the Tri-City Project to be
escrowed upon reaching a limit on amount of tax increment that the RDA was eligible to
receive from the Tri-City Project. As a result of the Legislature's enactment of Senate
Bill 107 late last year, the tax increment cap is no longer effective for purposes of paying
the Successor Agency's enforceable obligations. Therefore, the escrowed funds are
available to the Agency for payment of the IRS settlement. The use of the funds for that
purpose has been approved by the State Department of Finance.
To consummate the settlement with the IRS, two resolutions of the Mayor and Common
Council are requested: (1) As JPFA governing body, authorizing the Mayor to execute
the Closing Agreement attached to the resolution as Attachment 1; (2) As Successor
Updated: 5/9/2016 by Georgeann "Gigi" Hanna A I Packet Pg. 131
4450
Agency, authorizing the City Manager to pay the IRS the settlement amount from the
specified escrowed funds.
City Attorney Review:
Supporting Documents:
JPFA Resolution 5-16-16 (DOC)
Successor Agency Resolution 5-16-16 (DOC)
Updated: 5/9/2016 by Georgeann 'Gigi" Hanna A
Packet Pg.`132
I RESOLUTION NO.
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.
5
WHEREAS, The San Bernardino Joint Powers Financing Authority (JPFA) is a joint
6
powers authority formed by the City of San Bernardino (City) and the Redevelopment Agency
7
of the City of San Bernardino (RDA) in August 1989 for the purpose of financing and
8
refinancing public capital improvements of the City and RDA; and
9 E
WHEREAS, The Mayor and Common Council act as the governing board of the JPFA; r
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10 to
and
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11
WHEREAS, On February 1, 2012, the Redevelopment Agency of the City of San LO
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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
15 0
upon dissolution, and the Successor Agency is responsible for debt service on these obligations,
16
and
a
17
WHEREAS, the redevelopment dissolution laws allow successor agencies to refund
18 E
(i.e., refinance) debt obligations of the former RDA if doing so will achieve a savings in debt
19
service or finance debt service spikes (Cal. Health & Safety Code § 34177.5, effective ¢
20
September 22, 2015); and
21
WHEREAS, in 2015, the Successor Agency determined that, due to low current market
22
interest rates, it could save millions of dollars in debt service obligations by refunding certain
23
RDA obligations; and
24
WHEREAS, on May 18, 2015, the Mayor and Common Council, acting as Successor
25
• Agency, adopted Resolution No. 2015-104, authorizing the issuance of bonds to refund certain
1
Packet Pg. 133
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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 (199813 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
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9 WHEREAS, the 1998B bonds were issued as tax-exempt obligations,based on a legal
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to opinion of bond counsel that interest on the bonds would be exempt from federal income
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12 WHEREAS, the Internal Revenue Code limits the number of times tax-exempt 7
13 obligations can be refunded in advance of their maturity date, and o
14 WHEREAS, in the course of pursuing the refunding of the prior RDA obligations, it o
.2
2
15 was determined that about 84 percent of the obligations that were refunded by the 1998B bonds N
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16 had previously been advance refunded twice and could not be advance refunded again; and
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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 E
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
2
Packet Pg. 134
5.C.a
1 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 r
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9 WHEREAS, the use of the escrowed funds for that purpose has been approved by the d
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State Department of Finance. `n
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NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
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12 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 7t
to
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14 SECTION 1. The Mayor, as chairperson of the JPFA, is hereby authorized and
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directed to execute on behalf of the JPFA the Closing Agreement attached to this Resolution as 5
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Attachment 1 and incorporated herein by reference, and to take all other actions as may be
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necessary for the execution and consummation of the Closing Agreement. a.
17
18 SECTION 2. This Resolution shall take effect immediately upon its adoption.
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PacketPg.135
5.C.a
1 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
CLOSING AGREEMENT WITH THE INTERNAL REVENUE SERVICE TO
3 RESOLVE POTENTIAL TAX LIABILITY.
4
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 meeting thereof,
7 held on the day of , 2016,by the following vote, to wit:
8 Council Members: AYES NAYS ABSTAIN ABSENT r
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9 MARQUEZ
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10 BARRIOS Cn
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VALDIVIA
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SHORETT �0
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NICKEL
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RICHARD 5
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16 MULVIHILL
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18 Georgeann Hanna, City Clerk E
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20 The foregoing resolution is hereby approved this day of 52016.
21
22 R. Carey Davis, Mayor
City of San Bernardino
23 Approved as to form:
24 Gary D. Saenz, City Attorney
25 By:
4
Packet Pg. 136
CLOSING AGREEMENT ON FINAL DETERMINATION
COVERING SPECIFIC MATTERS
Under section 7121 of the Internal Revenue Code of 1986, as amended (the "Code"),
San Bernardino Joint Powers Financing Authority, EIN 33-0569964 (the "Issuer") and
the Commissioner of Internal Revenue (the "IRS") make this closing agreement (the
"Agreement").
WHEREAS, this Agreement is based on the following facts and representation8:
A. This Agreement is in settlement of issues raised in a request for a voluntary
closing agreement pertaining to the San Bernardino Joint Powers Financing
Authority$19,000,000 Tax Allocation Refunding Bonds Series 1998A (Central
City Merged Project Area) and the $8,590,000 Subordinated Tax Allocation
Refunding Bonds Series 1998E (Central City Merged Project Area) (the
"Bonds"), issued on April 2, 1998,
B. The Issuer makes the following representations:
1. The Bonds were issued and sold under the representation to bondholders
that the Bonds comply with all provisions of the Code such that interest on
the Bonds is not included in the bondholders' gross income.
2. On April 2, 1998, the Issuer used proceeds of the Bonds to advance refund
the Issuer's 1991 Series A bonds, 83.825%of which had advance refunded
previously issued bonds (the "Violation").
3, As a result of the Violation, the proceeds of the 1998 Bonds were used for the
impermissible advance refunding of the 1991A bonds.
C. Based on the representations of the Issuer in paragraph 5, the IRS has a basis
to conclude that interest on the Bonds is not excludable from the bondholders'
gross income pursuant to section 103(b)(1) of the Code because the 1998 Bonds
advance refunded 1991 bonds in violation of section 149(d)(3)(A)(i)(11) of the
Code,
D. The IRS has not formally asserted any claims against the Issuer or sought to tax
interest on the Bonds.
E. The Issuer and the IRS desire to resolve the violations described in paragraph C.
F. The terms of this Agreement were arrived at pursuant to negotiation between the
Issuer and the IRS and may differ from the settlement terms of other closing
agreements.
G, The Issuer makes the following additional representations:
1) Payment of the Settlement Amount defined below shall be made from sources
other than proceeds of bonds described in sections 103, 54A or 54AA of the
Code.
Pagc I of 4
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CLOSING A(-TRFF,M.F_NT between San Bernardino Joint Powers Financing Authority(EIN 33-0569964),
and the Commissioner of Internal Revenue
2) On April 25, 2016, the Issuer redeemed and retired the 19988 Bonds
described in the attached Exhibit A with funds from sources other than proceeds
of bonds described in sections 103, 54A or 54AA of the Code. The 1998A Bonds
are not subject to redemption prior to maturity on July 1, 2020
NOW, IT IS HEREBY DETERMINED AND AGREED PURSUANT TO THIS
AGREEMENT EXECUTED BY THE PARTIES HERETO UNDER SECTION 7121 OF
THE CODE THAT FOR FEDERAL INCOME TAX PURPOSES:
1. Prior to the execution of this Agreement by the IRS, the Issuer shall cause to be
electronically paid the sum of $1,003,178.34(ONE MILLION THREE
THOUSAND ONE HUNDRED SEVENTYEIGHT DOLLARS AND THIRTY FOUR
CENTS) (the "Settlement Amount") to the U.S.Treasury via the Electronic
Federal Tax Payment System and in accordance with the directions contained in
Exhibit B of this Agreement.
2, The Settlement Amount is not refundable or subject to credit or offset under any
circumstance.
3. The Settlement Amount or any portion thereof paid by or on behalf of the Issuer
shall not be deductible or amortizable for federal income tax purposes by any
person.
4. The Settlement Amount shall not be treated as income to any person benefiting
from this Agreement.
5. The bondholders shall not be required to include interest paid on the Bonds in
gross income because of the specific violation(s) identified in paragraph C.
6. The IRS may take any appropriate action, including requiring bondholders to
include interest paid on the Bonds in gross income, for any violation not
specifically listed in paragraph C that has occurred or will occur with respect to
the Bonds_
7. For purposes of any refunding of the Bonds redeemed as provided in Exhibit A,
gross proceeds of the Bonds are unspent proceeds (i.e., not allocated to any
expenditure under subsection 1.148-6(d) of the Treasury Regulations).
8. This Agreement is not based upon an examination of the Bonds by the IRS and
does not preclude or impede an examination of the Bonds,the Issuer, the
Borrower, or any Bondholder with respect to matters not addressed herein.
9. This Agreement may not be cited or relied upon by any person or entity
whatsoever as precedent in the disposition of any other case.
10. This Agreement is final and conclusive, except that:
a. The matter it relates to may be reopened in the event of fraud, malfeasance,
or misrepresentation of a material fact;
Paige 12 of 4
CLOSING AGRFF.MFNT between San Bernardino Joint Powers Financing Authority(EIN 33-0569904),
and the Commissioner of Internal Revenue
b. It is subject to sections of the Code that expressly provide that effect be given
to their provisions notwithstanding any other law or rule of law; and
c. If it relates to a tax period ending after the effective date of this agreement, it
is subject to any law enacted after the Agreement date that applies to that tax
period.
This space intentionally left blank.
Page 3 of 4
CLOSING AC-.'kELML:N'i'between Sati Bernardino Joint Powers Financing Authority(L-'IN 33-05099()4),
and the Commi%sioncr of Tnternal Rcvcnuc
By signing, the above parties certify that they have read and agreed to the terms of this
Agreement_
ISSUER: San Bernardino Joint Powers Financing Authority EIN: 33-0568964
By signing, I certify that I have the authority to execute this
Agreement on behalf of issuer
BY:
SIGNATURE
NAME (PLEASE PRINT)
TITLE
DATE
COMMISSIONER OF INTERNAL REVENUE:
BY:
SIGNATURE
Steven A. Chamberlin
Manager, Tax Exempt Bands Compliance & Program
Management
NAME AND TITLE
DATE
Page 4 of 4
(.[X)SING AGREEML--NT between San Bernardino Joint.Powers F nancing Authority(LIN 33-0569964),
and the Commis-,ioncr of Internal Revenue
Exhibit A
$3,330,000 of Subordinated Tax Allocation Refunding Bonds Series 1998E (Central City
Merged Project), issued on March 1, 1998, with a maturity date of July 1, 2020
CLOSING AOTRUMENT between San Bernardino Joint Powers Financing Authority(EIN 33-0569964),
and the Coninli—loner of Internal Rcvenue
Exhibit B
TAXPaYer Inforolatiotl Worksheet for Electronic Federal Tax Payment System Deposit
This Agreement requires the electronic deposit of an amount to the U.S. Treasury
through the Electronic Federal Tax Payment System (EFTPS) as a term for resolution of
certain identified matters related to the tax-advantaged treatment of interest paid on a
municipal obligation. This payment must be deposited in accordance with the directions
contained herein.
Please carefully review the taxpayer information listed below and immediately report any
errors to the IRS Tax Exempt Bonds employee assigned to your case. If,to the best of
your knowledge, the information is correct, then please deposit all required payments
through the EFTPS (either EFTPS-Director EFTPS- Through a Financial Institution)
accurately and in accordance with this information and the terms of this Agreement.
1. Total Amount of Tax Deposit: $1,003,178.34
2. Taxpayer's Employee Identification Number(EIN):33-0569964
3. Taxpayer Name Control (4 characters). SANG
4. Taxpayer Name (up to 35 characters): SAN BERNARDINO JOINT POWERS
FINANCI
5. Tax Type (5 characters): 80384,
6. Tax Year (2 digits): 98
7. Tax Month (2 digits): 04
Your financial institution may call the EFTPS Financial Institution Helpline for questions
or assistance at 1-800-605-9876 (Monday- Friday, 8:00 a.m. - 8:00 p.m., Eastern
Standard Time),
NOTE: If you are not enrolled in EFTPS-Director EF7PS-Through a Financial Institution, or
■ otherwise wish to use the Same Day Payment option,then please provide your financial
institution with the information listed above and direct them to accurately deposit your payments
utilizing the following routing and account numbers; Note that the Receiving ABA/Routing
Number, Receiving F1 Name, Tax Type(under Beneficiary)and Beneficiary F1 indicated
below do not change.
Receiving ABA/Routing Number: 091036164 FRS MPLS ETA
Receiving 1171 Name: US TIREAS SINGLE TX
Beneficiary; 330569964,.SANB:SAN BERNARDINOJOINTPOWERSFINAN CI*.80384;98;04
Beneficiary Fl: 20092900IRS
It the financial institution has difficulty transmitting the EFTPS same-day payment, please call
1.800-382-0045(Monday- Friday, 7:45 a.m.-430 p.m. Central Standard Time)to receive
assistance from a Customer Service Representative at the Minneapolis Federal Reserve Bank.
CLOSING: AGRELML:NT between San Bernardino Joint Powers Financing Authority(F.TN 33-0569964),
and the Commissioner of internal Rcvenue
CONSENT TO DISCLOSE TAX INFORMATION
1 hereby consent, pursuant to section 6103(c)of the Internal Revenue Code of,
1980(as amended), to the disclosure of return information(as defined in section
6103(b)(2) )relating to the Closing Agreement(Agreement)between San Bernardino
Joint Powers Financing;Authority EIN (33-0569964) (the-Taxpayer') and the
Commissioner of Internal Revenue pertaining to the San Bernardino Joint Powers
Financing; Authority$19,000,000 Tax Allocation Refunding Bands Series 1998A
(Central City Merged Project Area)and the $8,590,000 Subordinated Tax Allocation
Refunding Bonds Series 19988(Central City Merged Project Area), executed by the
Taxpayer on as follows:
The Internal Revenue Service may disclose the existence and subject matter of the
Agreement to the extent that the Internal Revenue Service deems necessary to correct any
material misstatement with respect to the Agreement in response to a public statement by
Taxpayer or an agent of Taxpayer.
Such disclosure may be made to Members of Congress, the press, and the general
public, and may be made by any means,including;press releases and notices in Internal
Revenue Service publications.
1 am aware that in the absence of this authorization, the returns and return
information of San Bernardino Joint Powers Financing Authority are confidential and
may not be disclosed except as authorized by the Internal Revenue Cade.
I certify that I have the authority to execute this consent on behalf of Taxpayer.
Taxpayer Name:
Taxpayer TIN:
1
Taxpayer Address:
1
Bv:
Title:
Signature:
Date:
® I RESOLUTION NO.
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE FORMER
3 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
I 4 AUTHORIZING PAYMENT OF $1,003,178.34 TO THE UNITED STATES TREASURY
TO RESOLVE POTENTIAL TAX LIABILITY.
5
WHEREAS, On February 1, 2012, the Redevelopment Agency of the City of San
6
Bernardino (RDA) was dissolved by operation of law and the City became the RDA Successor
7
Agency(Successor Agency); and
WHEREAS, the RDA had a number of bond issues and similar obligations outstanding
9
upon dissolution, and the Successor Agency is responsible for debt service on these obligations, 05
10 0
and LO
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11 v
to
WHEREAS, the redevelopment dissolution laws allow successor agencies to refund
12
(i.e.,refinance) debt obligations of the former RDA if doing so will achieve a savings in debt L�
C
13 service or finance debt service spikes (Cal. Health & Safety Code § 34177.5, effective _�
14 6
September 22, 2015); and
15 v
WHEREAS, in 2015, the Successor Agency determined that, due to low current market
16
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interest rates, it could save millions of dollars in debt service obligations by refunding certain o
17 N
RDA obligations; and
18
WHEREAS, on May 18, 2015, the Mayor and Common Council, acting as Successor ;
19
Agency, adopted Resolution No. 2015-104, authorizing the issuance of bonds to refund certain E
20
obligations of the former RDA to take advantage of reduced interest rates and avoid debt service a
21
spikes due to maturing obligations; and
22
WHEREAS, among the obligations to be refunded were the $8,590,000 Subordinate
23
Tax Allocation Refunding Bonds, Series 1998B (1998B bonds), issued by the San Bernardino
24
Joint Powers Financing Authority(JPFA) on April 2, 1998; and
25
WHEREAS, the JPFA is a joint powers authority formed by the City and the RDA in
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1
Packet Pg. 137
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I August 1989 for the purpose of financing and refinancing public capital improvements of the
2 City and RDA; and
3 WHEREAS, The Mayor and Common Council act as the governing board of the JPFA;
4 and
5 WHEREAS, the 1998B bonds were issued at the request of the RDA and the RDA
6 agreed to pay the debt service on the bonds, making the debt service an enforceable obligation
7 of the Successor Agency; and
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8 WHEREAS, the 1998B bonds were issued as tax-exempt obligations,based on a legal °rr'
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9 opinion of bond counsel that interest on the bonds would be exempt from federal income to
10 taxation; and o
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11 WHEREAS, the Internal Revenue Code limits the number of times tax-exempt
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12 obligations can be refunded in advance of their maturity date, and
® 13 WHEREAS, in the course of pursuing the refunding of the prior RDA obligations, it 2
14 was determined that about 84 percent of the obligations that were refunded by the 1998B bonds 0
15 had previously been advance refunded twice and could not be advance refunded again; and v
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16 WHEREAS, the advance refunding of those obligations constituted a prohibited Q
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17 advance refunding of prior tax exempt obligations and exposed the JPFA to potential tax
U
18 liability; and in
19 WHEREAS, this potential liability needed to be resolved for the refunding transaction
20 to proceed; and
a
21 WHEREAS, to resolve the potential liability, the Council authorized staff to negotiate a
22 settlement agreement with the Internal Revenue Service (IRS); and
23 WHEREAS, an agreement has now been reached and a settlement agreement (Closing
24 Agreement)has been prepared by the IRS for execution by the Mayor on behalf of the JPFA;
25 and
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2
Packet Pg. 138
5.C.b
® 1 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; a
8 and
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9 WHEREAS, the use of the escrowed funds for that purpose has been approved by the Cn
10 State Department of Finance. o
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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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N "." 14 SECTION 1. The City Manager, as Executive Director of the Successor Agency, is N
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hereby authorized and directed to execute to pay to the United States Treasury, via the
15
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Electronic Federal Tax Payment System as directed in the Closing Agreement, the sum of
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17 $1,003,178.34 using escrowed funds relating to the 2005 Senior Loan Agreement secured by the N
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former RDA's Tri-City Project, and to take all other actions as may be necessary for the
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19 consummation of the Closing Agreement.
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20 SECTION 2. This Resolution shall take effect immediately upon its adoption.
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Packet Pg.939
5.C.b
1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE FORMER
2 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AUTHORIZING PAYMENT OF $1,003,178.34 TO THE INTERNAL REVENUE
3 SERVICE TO RESOLVE POTENTIAL TAX LIABILITY.
4
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 meeting thereof,
7 held on the day of ,2016,by the following vote,to wit:
E
8 Council Members: AYES NAYS ABSTAIN ABSENT
a)
Cn
9 MARQUEZ Cn
10 BARRIOS Ul)
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11 v
VALDIVIA
12
SHORETT
13
NICKEL
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14
RICHARD
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16 MULVIHILL 4
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18 Georgeann Hanna, City Clerk
19
20 The foregoing resolution is hereby approved this day of 12016.
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21
22 R. Carey Davis, Mayor
City of San Bernardino
23 Approved as to form:
Gary D. Saenz, City Attorney
24
25 By:
4
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