HomeMy WebLinkAboutR07-Economic Development Agency
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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
(g(Q)[?J1(
REQIIEST FOR COMMISSION/COIINCIlJSANRAC ACTION
FROM: TIMOTHY C. STEINHAUS
Agency Administrator
DATE: January 8, 1997
SUBJECT:
SAN BERNARDINO ASSOCIATED
COMMUNITIES FINANCING
AUTHORITY
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Synopsis ofPreviou!lil Commission/Collneil/Cnmmittee Aetinn(!Iil):
On March 18, 1996, the San Bernardino Associated Communities Financing Authority (SANBAC) was formed.
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(.'\an Bernardino AS1i:oeiated Commllnitie!ii: Financing Authority)
OPEN PUBLIC HEARING
CLOSE PUBLIC HEARING
MOTION A: RESOLUTION OF THE SAN BERNARDINO ASSOCIATED COMMUNITIES
FINANCING AUTHORITY (SANBAC) ESTABLISHING THE DATE AND TIME TO
HOLD REGULAR MEETINGS; APPOINTING AND SECRETARY OF SANBAC;
APPOINTING LEGAL COUNSEL TO SANBAC AND ADOPTING A CONFLICT OF
INTEREST CODE.
(San Bernardino Associated Commnnitie!il Financing Authority)
MOTION B:
RESOLUTION OF THE SAN BERNARDINO ASSOCIATED COMMUNITIES
FINANCING AUTHORITY REGARDING THE HOLDING OF A PUBLIC HEARING
AND AUTHORIZING THE SALE, ISSUANCE AND DELIVERY OF NOT TO
EXCEED $20 MILLION AGGREGATE PRINCIPAL AMOUNT OF HEALTH CARE
REFUNDING AND IMPROVEMENT REVENUE BONDS (GRANADA HILLS
COMMUNITY HOSPITAL PROJECT) 1997 SERIES A TAX EXEMPT AND 1997
SERIES B TAXABLE; AND APPROVING THE FORMS AND AUTHORIZING THE
EXECUTION AND DELIVERY OF A TRUST INDENTURE, AN INSTALLMENT
PURCHASE AGREEMENT, A SECURITY A MENT, AN ASSIGNMENT OF
RENTS AND LEASES, A PURCHASE CONT. AND CERTAIN
CERTIFICATIONS AND OTHER DOCUME TS
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TlMO Y . STEINHAUS
Agency Administrator
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Contact Person(s): Timothy c: Steinhaus
Project Area(s): N/A
Supporting Data Attached: StaffRepOlt; Resolutions
FUNDING REQUIREMENTS: Amount: $
Budget Authority:
Phone:
5081
N/A
Ward(s):
Source:
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Commi""ion/Cnuneil Nnte,,:
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COMMISSION MEETING AGENDA
MEETING DATE: 01113/1997
Agenda Item Number;, F< 7
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ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
STAFF REPORT
San Bernardino Associated Communities Financing Authority (SANBAC)
BACKGROl IND:
The Council and the Commission by appropriate actions of both bodies entered into ajoint
exercise of powers agreement establishing the San Bernardino Associated Communities
Financing Authority ("SANBAC") on March 18, 1996, as a joint powers public financing
authority. SANBAC was formed for the purpose of financing qualifying projects located in other
cities and county unincorporated areas in situations where the local staffs were not familiar with
the financing structure that was being proposed for a particular project. The Council members
are also the governing body ofSANBAC.
The Marks-Roos Joint Powers Financing Act (Govemment Code Section 6500, et seq.) allows
for two or more governmental agencies to establish a joint exercise of powers authority for the
purpose of financing projects designated by the members of the particular joint powers authority,
to make loans to other participating jurisdictions and to undertake projects within the boundaries
of other cities and within county unincorporated areas.
Certain types of financings which are defined by the Internal Revenue Code of 1986 as either
pri'(llte activity bonds or qualified non-profit corporation bonds require that a public hearing be
held pursuant to the previously adopted 1982 tax reform act (the Tax Equity and Fiscal
Responsibility Act of 1982 which is commonly referred to as "T.E.F.R.A.") for which such a
heaIing has been commonly been known.
In accordance with the Joint Powers Agreement, it is necessary to establish a regular meeting
date and time, appoint a secretary and legal counsel, and adopt a conflict of interest code by
resolution. The attached resolution carries out those actions by establishing the date and time of
regular SANBAC meetings as the first and third Mondays of each month to coincide with regular
Commission meetings; appointing the City Clerk as the Secretary; Agency counsel as legal
counsel; and adopts a conflict of interest code.
PROJECT DESCRIPTION:
The Granada Hills Community Hospital, a California non-profit corporation (the "Hospital"), is
located at 10445 Balboa Boulevard within the Granada Hills area of the City of Los Angeles and
is licensed to operate a 1 78-bed acute care general hospital with a 23-bed skilled nursing facility.
Representatives of the Hospital have approached the EDA inquiring whether SANBAC would
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COMMISSION MEETING AGENDA
MEETING DATE: 01113/1997
Agenda Item Number:
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Economic Development Agency Staff Report
SANBAC Financing Authority
January 7,1997
Page 2
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consider acting as the issuer of tax-exempt and taxable municipal bonds to refinance existing tax-
exempt and taxable debt of the Hospital and to generate additional funds for a major expansion
of the current Hospital facilities. The Hospital was first opened for acute patient care at its
present location in 1965 which remains in use today and opened its Vista Granada Skilled
Nursing Center, a separate 23 bed skilled nursing unit, in July 1988. The Hospital facilities also
include out patient and office administrative facilities located on the Hospital campus. In 1985, a
four story reinforced concrete parking structure was built, and the campus also includes
approximately 10,000 square feet of temporary metal buildings which are presently in use by the
Personnel Department of the Hospital and by certain other administrative services of the
Hospital.
The California Health Facilities Financing Authority issued tax-exempt variable rate bonds in
1985 in an amount equal to $10,200,000 (the "1985 Bonds") which are presently secured by a
direct pay letter of credit from the National Westrninister Bank. The 1985 Bonds are rated "AA"
based upon the letter of credit. The Hospital has obtained additional loans from several founders
of the Hospital and these founder loans carry a taxable interest rate of 12%. The Hospital has
also utilized loans obtained from commercial banks that carry an interest rate of 12%. The
founder loans and commercial bank loans currently have an outstanding balance of$2,535,129.
The Hospital has also utilized capitalized leases that carry interest rates ranging from 3.74% to
13.42% with a current outstanding principal balance of $300,511.
During the Northridge Earthquake of January 1994, the Hospital was the only hospital within the
near radius of the epicenter of the earthquake to be physically able to handle over 200 patients
per hour within the first hours after the earthquake for a total capacity of 1,000 patients per day
during the first several days after the earthquake. The Hospital had employed a disaster
management plan as was previously prepared which allowed for a rapid response to this crisis by
establishing temporary emergency rooms in the parking lots.
The memorable television photographs of the general earthquake damage in the aftermath of the
Northridge earthquake showed the flattened Kaiser Office Building which was located on a
separate parcel fronting on Balboa Boulevard adjacent to the Hospital. No similar damage of any
such magnitude was incurred by the Hospital. Minor damage was sustained by both the 3-story
portion of the Hospital and the parking structure, but at no time did the Hospital ever close or
limit its operations throughout the crisis.
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COMMISSION MEETING AGENDA
MEETING DATE: 01/13/1997
Agenda Item Number: I
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Economic Development Agency Staff Report
SANBAC Financing Authority
January 7,1997
Page 3
Since the time of the Northridge Earthquake the Kaiser Office Building has been razed and the
parcel was purchased by the Hospital from Kaiser Permanente for a cash down payment of
$100,000 and a note payable to First Professional Bank for $1,250,000 d~e and payable in full on
July, 2000. This note is also intended to be refinanced in the municipal bond financing proposed
to be undertaken by SANBAC.
The Federal Emergency Management Agency ("FEMA") has approved a grant to the Hospital
for $12,000,000 which is intended to upgrade the entire medical acute care portions of the
Hospital buildings to current earthquake standards for such emergency care facilities. The State
ofCalifomia through the Office of Statewide Health Planning and Development ("OSPOD") has
established earthquake standards for all medical hospital buildings within the State through the
year 2037. The Hospital intends to construct a new building to be completed by 2000 upon a
portion of the former Kaiser parcel which will house numerous clinical functions now domiciled
in older facilities and to then remodel portions of the present hospital areas into adl1}inistrative
offices and classrooms. Proceeds of the proposed new bond issue will be used to provide certain
working capital needs of the Hospital during the construction period, provide an interest reserve
while construction proceeds, and to pay for a portion of the Hospital facility construction costs
that are in excess of the FEMA grant funds.
PRPPOSED ACTION:
The City of Los Angeles through its Community and Economic Development Committee
conducted a T.E.F.R.A. public hearing on December 18,1996. The City Council of the City of
Los Angeles also adopted a resolution on December 18, 1996, granting its consent to SANBAC
to issue tax-exempt and taxable debt for the proposed financing for the Hospital. All such
approvals from the City of Los Angeles constitute actions which make the City of Los Angeles a
"Limited Member" ofSANBAC as defined in the Joint Exercise of Powers Agreement creating
SANBAC and comply with the requirements of the applicable federal tax laws and the
requirements of the California Joint Exercise of Powers Act. Attached is a copy of the
Community and Economic Development Committee Report and the Resolution of the City
Council of the City of Los Angeles.
The City of Los Angeles' has endorsed the financing of the Granada Hills Community Hospital
but does not presently have the mechanisms in place to act as the Issuer for this type of bonds.
The bonds as proposed to be issued have been rated BBB- by Standard & Poors.
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COMMISSION MEETING AGENDA
MEETING DATE: 01113/1997
Agenda Item Number:
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Economic Development Agency Staff Report
SANBAC Financing Authority
January 7,1997
Page 4
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The Hospital has agreed to pay to SANBAC an issuer's fee equal to one-half percent of the total
principal amount of the debt issued in addition to an annual administrative fee equal to one-
quarter percent per year of the debt then remaining outstanding. The fees would be equal to
approximately $100,000 as the issuer's fee and approximately $50,000 per year as the
administrative fee.
At the time of a previous action to form SANBAC, the Council and the Commission agreed to
split the issuer fee on a 50-50 basis.
Staff recomme approval and adoption of the attached resolutions.
TIMOTHY C. S INHAUS, Agency Administrator
Economic Development Agency
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COMMISSION MEETING AGENDA
MEETING DATE: 01/13/1997
Agenda Item Number: 7
12/24/98 12:11 tt714 717 2020
DEC.24.1996 8:43AM CITY OF ~ COD
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O' CONNOR&COIIPANY
NO. 4alil
141 002/008
P.2/6
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errv OF LOS ANGELES
CALI"ORNIA
J. Io4'CMalEL- c.aav
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CITY CI.ERIC
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1&18'_
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96-2201
RICHARD J: RIO"OAN
"'AYOA
~.~A~k.~ 23, 18S6
c01llZunliy DeYe:Lop..~t: Dept (V/UbJ
At::bu Rau:L Gonzalez, cont:ract Div
c1ty M:m1nlst:zoat:ive Officer
Chief LaqislaUVe AnalYSt.,
RE: '1'AX-BXEMP'1' XNSTALLMEN'1' pt/ReHASE J'INANCING BONDS 701\ 'I'm: GJl.ANAJ)A HILLS
COKHClO:'1'Y HO$P:t'l'AL
At the ..a.ti.n9 ot the counel1 hald nee.eer 18. 1996. the followinq
action was taken:
4i'tachecl rapor1: a40pt:ed..""""""""".""""""""""""""""".,,""""",,.,,"
tache4 aotion ( ) adopt-eel."""""".""""".",,""" 11 " " " " " " " " " " " " " " " "
IJC)JL\l1:JL~ ILCl()~1:~Cl.".""""""""""".""""""""""".,,""""""""'''''''''''''''' ~
Ordinance adopted."""""""""""",,""""""" ',." " " "" """ " " " " " " "" " " " " " " "
Motion adopted ~o approve CIED coat. report.................... x
Motion adopted to approve a~~ached communication...............
To the Hayor 'tor concurrence" I .. . .. . . . . . . . " . . . . . . I . . .. . . . I . . . . "
'OR'l'HWXTH... . . . . . . " . . . . . . . . . . . . , . .. . . . . . . " . . . . . . . . . . . . . . . .. . . . . x
Kay-OX- concurred..........................."......................
Appoin'tment confirmed.... . . . . .. . . . . . . . . . " , . .. " . . . . " " . . . . . . . . . . . . .
F1nc!lnq. adopted.........................."................"....
Negative ~.claratlon adop~.d...................................
Ca1:.aca'oZ'i~allY .xempt.................."....."............"...".." .
Generally exempt......".."......"................................
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city Clerk
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ateno\962201
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AN IE~UA" .....u.......:N'l' O....OIlTU..1TY - A~"I"......TIV" ACTIO" .......~QylE"
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12/24/98 12:12 tt714 717 2020
DE:C.24.1996 e:43AM CITY OF LA COD
O'CONNOR&COKPANY
Iil1 003/008
P.:3/15
1'10.400
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pile Mo. ,'-aaa~
TO TaB CQUMCI~ O~ .~.
C~TY ~ LOS AKGZLa.
Your COHXDH~TY uti IlCOI/OK%C 1ll!lVILOllxmr: COKJaTTEB
r.por~. .. follo..;
%U &l
Pub11c Commen~s ...xx
COMKCNZTY AND ECONOMIC DEVELOPHiNT eOMKZ~EE REPORT rela~ive to
Tax-ex_pt in.tallJllant pU2:cha.e ~inanc:inq bonds tor ~he Granada
Hills ccmmun1~y Ho.pital.
Racomaandation to~ Counoil action:
ADOPT the Resolution a1:~ached to the cOllllllunity Development
Dapubent transmittal dated November 12, 1"15, SUbjSClt to t.ha
review ana approval ))y the City Attorney as to tOJ:'1ll and laqality.
1P(Cleal illlpA~ .tat.llI....t! The city Administrative otfic::er (CAO)
reports that there will be no impact on the city .ince there is no
p2:oposed expenditure o~ City ~unds and the cit.y will bear no
responsibility for repayment o~ the bonds involved.
f;T1'MMA "Y
Zn his report 4ated DeCeJIlbu 12, 19915, the City Adm1,nistrative
Officer (CAO) "tates that the San Bernardino }.&sooiated c:01llllunities
Financin~ Authority (SANBAC) is proposin~ to issue t.ax-exempt.
(Serie. A) and taxable (Series B) ~onds totalinq $20 million for
the Qranada H!ll. communit.y Hospital. ~he Hospital is a California
non-profit p,*lic: ))onetit. c::orporation formed in 1965 which is
located at 10445 Bal~oa Boulevard in Granada Hills. The Hospital
provided needed medical care to the community without reqard tor
the a):Jility of patients to pay. consequently, the Hospital
provides a n~er ot benefits to the community tor which it doe.
not raceive reimbursement or for which it. receives only a no~inal
fae.
The series A, $16 million, tax exempt portion of the bonds will be
used to tund the cost of bond issuance, to refinance existinq tax
exempt debt and to provide funding' related to a new hospital winq
currantly under construction. 'rhe latter purposes include ill
manaqeaent information systam, equipment and matChing' !unds tor the
FEMA :funded c::onstruct1on costs.' The approxi1llate $4 ~illion balance
of Saries B taxa):Jle ):Jonds will be utilized for the ~undinq of
taxable debt and related bond issuance expenses.
The Znternal Revenue Code requires the local qovernmant aqency in
Which this type Of tax-exempt project will take place, to approve
the financing tor the project. Because the Hospital project. are
located within the City, COD .tatt conducted the ~.qui%Qd pUblic
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12124/88 12:12 ~714 717 2UZU
DEC.24.1996 8:44AM CITY or ~A COD
U.~U"AUMa~uarAnI
... uu., uuv
1'10.40111 P.4....6
heuiJ19 ~egarclill9 'this FZ'~poSed ~n4 isGuaDc.. It 'the cwncU 40..
Mt adopt the 1le801utlon, ~. ho.p1~al could not. .p~ocee4 with the
plannea., 1:ax-exeapt ~inanclnq.
At iu Z'.9Ul~ ...et1ng on Cac81lhar.16, 1996, 1:he Calul.uni~ ancl
Economic: ~evl.opmant (CED) committe. considered this aa1:1:er. and
oancUZ'Z'aa. in ~e recommenl!&tJ.on at t.he CAO.
Jl.espectfully submitt.ad,
COJQCUNITY
ECONOMIC DEVELOPMENT COIOCt'l"rZZ
u'
12-16-9'
at'
MOTION ADOPT!!:) TO APPROVE r.~' AU An 0 ~T~ 0
. r-,.u.,rrt~E Reru I' I::N"
t'~!.b DEe 1 ~ a96'\......IJNII~i I.... .:.:: "
LOS ANGELES CiN COUNCil
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12/24/98 12:13 tt714 717 2020
OCC.24.1996 B:44FIM CITY OF LA CDD
O'CONNOR&COIIPANY
IjjJ 005/008
1'10.400 P.S16
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RESOLUTION OF THE CITY COUNCIL .
OF THE CITY OF LOS ANGELES
APPR.OVING THE ISSUANCE AND DaIVERY Of
LEASE REVENUE BONDS BY nm
SAN BERNARDINO ASSOCIATED coMMl/NITlES FINANCING AUTHORITY
TO BENEFIT GRANADA HILLS COMMUNITY HOSPITAL
WHERSAS, tncemadonal Philanthropic Hospital Fouwfacion dba Granada Hills
Community Hospital (the "Cocpocation"). a I1Onprofit public benefit corporation. bas requested that
lbc San Bernardino Associated Communities Financing Authority ("SANBAC") to issue UX.elI'''''''1't
~ m'II1Yl1 bonds in an aggregate principal amount not to exceed $20,000,000 (the "Bonds'') for
the pucpo&e of rdlnancing existir1g debt and to PlIf the cost of acquisitiOD, constL'lICtion aM
equippbla of Idditional facilities for a health facility known as Granada Hi11s Community Hospital
located in The City of Los Angeles (the "City") which Is owned and opecaccd by the Cozporation
(the "Facilitiesj;
WHEREAS, pursuant to Section 147(1) of the lAtemal Revenue Code of 1986. as
amended (the "Codej the tinancing described above and the Issuanu of the Bonds by SANBAC
must be approved by the City because the Facilities will be located within die tcmtoriallimits ofth.
City.
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WHEREAS, the City Council is the elected legisla%ive body of the City and is one
of the applicable elected repre$enwives requlced to approve the fiAancina otthe Facilities and tbe
issuance oitha Bonds under Section 147(1) of the Code;
WHEREAS, SANBAC and the Cozporatlon have requested that the City Council
approve the refinancing of existing debt and the financing of the FacUities and the issuance of the
Bonds by SANBAC in order to satisfy the public: 'approval requirement of 147(1) of me Code;
WHEREAS, pUlSWll1t to Section 147(f) of the Code, a duly authorized representative
of the City Council bas. followini notice duly given, held a public hcarini teilltditls the refinancina
of existina debc and the financlni ortbe Facilities and the issuance ofebe Bonds; and
WHEREAS, .. summary of the bearing and other information c:oncemina the
fmanc:ina oftb4 Facilines has been made available to the City CouncU md the City Council now
desires to approve the refinancing or ~g debt and the financing oftha Facilities and the issuance
of the Bonds; .
NOW, THEREFORE, IT IS RESOLVED AS FOLLOWS:
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1. The City Council bereby approves the financing described above and the
issuance ofthc Bonds. It Is tb& pucpose md intenc of the City Council that this reso1utton constituteS
approval of the refinancing or existing debt and the financin. of the Pacilities and tho issuance of
the Bonds by SAmAC for the purposes ofSec:tion 147(1) oCthe Code by the applicable elected
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12/24/98 12:13 tt714 717 2020
DEC.24.19'36 e: 45AM CITY oF U'l CDD
O'CONNOR&COIIPANY
I;lr 008/008
NO.40lll 1"'. b/b
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representive o!tbe sovenuntncal unit bavillgJurisdktion over the area in which the Facilities Bre and
will be loclte-i,.ln ~e with said Section 141(f).
2. IoiIa ~Idcralion at commentt received at the publie Marina. tilt City Gounc:U
hatch)' approves the islulZlCa ottbo SOllds by SANBAC and the oporatiOJ1 ot SANBAC within the
City to provide ftnanc:lni for the rc&ancq. ICqUlsltion. eonstnlCtlon and cquipplnc ot the
Facilities.
3. The oftkers of the City are hcreb)' authorizl:d md directl4,jointly m4 severally,
to do any aDd all thiDgs IDd to execute aM deliver any an4 all documents which they deem necessary
or advisable in order to cany out, give effect to and =mply with the tenDS and intent of this
ResolUtfon and. ftP"ftcini uansaction approved hereby.
4. City approval pursuant to Sedion 147(1) of tho Code pursuant to this icsP1ution
sball not constitute approval for other City rcauIatoty or other tl!quircments, such as building
pcnnits.
. S. Tb1s resolution shall talce effect immediately upon Its passaae.
PASSED AND ADOPTED this /61/f da.y of ~199~ by the following vote:
AYES: /1
. NOES:.b'
ABSENT: ~
[SEAL]
City Clerk
of the City arLo. Anie1es
"'1'."""" ...,.vdlltltltl-Jlltoynl/ll
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"7
NOTICE OF SPECIAL MEETING
OF THE SAN BERNARDINO ASSOCIATED
COMMUNITIES FINANCING AUTHORITY
NOTICE IS HEREBY GIVEN that the San Bernardino Associated Communities Financing
Authority of the City of San Bernardino does hereby call and shall conduct a Special Meeting on
Monday, January 13, 1997, at 11:00 a.m. in the Council Chambers of City Hall, 300 North "D" Street,
San Bernardino, California, for the following purpose:
1. SAN BERNARDINO ASSOCIATED COMMTTNTTIES FINANCING AUTHORITY
To discuss and take possible action regarding the adoption of a resolution to establish the date
and time to hold regular meetings; appoint a secretary and legal counsel to SANBAC; and adopt
a Conflict of Interest Code; and
To hold a public hearing to discuss and authorize the sale, issuance and delivery of not to exceed
$20 million aggregate principal amount of Health Care Refunding and Improvement Revenue
Bonds (Granada Hills Community Hospital Project) 1997 Series A Tax Exempt and 1997 Series
B Taxable; and approving the forms and authorizing the execution and delivery of a Trust
Indenture, an installment Purchase Agreement, a Security agreement, an Assigrunent of Rents
and Leases, a Purchase Contract and certain certifications and other documents.
Dated this 8th day of January 1997.
STATE OF CALIFORNIA )
COUNTY OF SAN BERNARDINO) 5S
CITY OF SAN BERNARDINO. )
I HEREBY CERTIFY that notice of this Special Meeting was served by handing a copy of this notice to:
EDDIE V. NEGRETE
Councilman, First Ward
FREDERICK J. CURLIN, M. D.
Councilman, Second Ward
RITA ARIAS
Councilwoman, Tbird Ward
DAVID OBERHELMAN
Councilman, Fourth Ward
JERRY DEVLIN
Councilman, Fiftb Ward
BETTY ANDERSON
Councilwoman, Slxtb Ward
NORlNE MILLER
Councilwoman, Seventb Ward
By:
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