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Home My WebLink AboutR8-Economic Development Agency . . . ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REOUEST FOR COMMISSION/COUNCIL ACTION FROM: RONALD E. WINKLER Development Director SUBJECT: HEALTH CARE REFUNDING AND IMPROVEMENT REVENUE CERTIFICATES :A T~~_____~~:::~~:_:_:~__________________@@_lEjf____________________________________________________________ SvnoDSis of Previous Commission/Couneil/Committee Action(s): None. Recommended Motion(s): (San Bernardino Associated Communities Finanein.. Authoritv) MOTION: RESOLUTION OF THE SAN BERNARDINO ASSOCIATED COMMUNITIES FINANCING AUTHORITY AUTHORIZING THE SALE, ISSUANCE AND DELIVERY OF NOT TO EXCEED $20 MILLION AGGREGATE PRINCIPAL AMOUNT OF HEALTH CARE REFUNDING AND IMPROVEMENT REVENUE CERTIFICATES (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 AGREEMENT, AN INSTALLMENT PURCHASE AGREEMENT, A SECURITY AGREEMENT, A PURCHASE CONTRACT AND CERTAIN CERTIFICATIONS AND OTHER DOCUMENTS Contact Person(s): Ronald E. Winkler/ Phone: 5081 Project Area(s): N/A Ward(s): N/A Supporting Data Attached: IllI Staff Report IllI Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Ltr/Memo FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A Budget Authority: N/ A SIGNATURE: ~!~-U~ Development Administrator Commission/Council Notes: Res 97- Jtlt 3 --~._.------------------------------------------------------------------.----------------------------------------- REW:lag:04-21-04.cdc COMMISSION MEETING AGENDA MEETING DA~ ...... ,.... N:....~!p /17 . . . ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Health Care Refundinl! and Improvement Revenue Certificates BACKGROUND: San Bernardino Associated Communities Financing Authority ("SANBAC") on January 13, 1997, approved the issuance of not to exceed $20,00,000 of revenue bonds (the "Bonds") to benefit Granada Hills Community Hospital (the "Hospital") for various projects (the "January 13, 1997 Resolution")(see attached Staff Report dated January 7, 1997 and January 13, 1997 Resolution). The January 13, 1997 Resolution approved a legal structure which required that title to the Hospital 1acilities vest in SANBAC while the Bonds were outstanding (estimated to be 30 years). Recent discussions the Hospital has held with the Federal Emergency Management Agency ("FEMA"), which has approved a $12,000,000 grant to the Hospital, has indicated that if title vests with SANBAC while the Bonds are outstanding, future FEMA grants would not be approved. Hospital Counsel, Knonowiecki & Rank, has discussed this in more detail in their attached letter. As a result of this concern, the Hospital has asked that the legal structure be changed from the issuance of Bonds to the issuance of certificates of participation ("COPs") wherein title to the Hospital fucilities would not have to vest in SANBAC while the COPs are outstanding. Bond Counsel, Sabo & Green, has converted the previously approved Trust Indenture to a Trust Agreement to provide . for the issuance of COPs by SANBAC. It has changed the other legal documents as necessary for the new COPs structure and Disclosure Counsel, Fulbright & Jaworski, has prepared the proposed form of Purchase Contract and Official Statement to reflect the COP structure. PROJECT DESCRiPTION: The Hospital, a California non-profit corporation, is located at 10445 Balboa Boulevard within the Granada Hills area of the City of Los Angeles and is licensed to operate a 178-bed acute care general hospital with a 23-bed skilled nursing fucility. 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 fucilities also include out patient and office administrative fucilities 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. ------------------------------------------------------------------------------------------------------------.----- REW:lag:04-21-04.cdc COMMISSION MEETING AGENDA MEETING DATE: 04/21/1997 1 Agenda Item Number: ,--.. . . . ECONONUC DEVELOPMENT AGENCY STAFF REPORT Health Care Refunding and Improvement Revenue April 17, 1997 Page Number -2- 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 Westminister Bank. The 1985 Bonds are rated "AA" based upon the letter of credit. The outstanding principal amount of 1985 Bonds is currently $5,000,000. The Hospital has obtained additional loans from several founders of the Hospital and these founder loans carry a taxable interest rate of 12%. The founder loans currently have an outstanding balance of $1,460,000. The outstanding principal amount of 1985 Bonds and the founder loans are intended to be paid offwith a portion of the proceeds of the COPs financing. 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. 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 $1 00,000 and a note payable to First Professional Bank for $1,250,000 due and payable in full on July, 2000. This note has a current principal outstanding balance of $1,140,000 and is also intended to be refinanced in the certificates of participation financing proposed to be undertaken by SANBAC. 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 of California 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 administrative offices and classrooms. Proceeds of the proposed new COPs issue will be used REW:lag:04-2I-04.cdc COMMISSION MEETING AGENDA MEETING DATE: 04121/19(~ Agenda Item Number: . . . ECONONUCDEVELOPMENT AGENCY STAFF REPORT Health Care Refunding and Improvement Revenue April 17, 1997 Page Number -3- --------------------------------------------------------------------------------------------- needs of the Hospital during the construction period, provide an interest reserve while construction proceeds, and to pay fur a portion of the Hospital facility construction costs that are in excess of the FEMA grant funds. PROPOSED ACTION: The Hospital requests that SANBAC, at its April 21, 1997 meeting, adopt a Resolution (attached) approving not to exceed $20,000,000 of COPs and approving the form of Trust Agreement, Installment Purchase Agreement, Security Agreement, Purchase Contract and Official Statement (attached). Based on the foregoing, staff recommends adoption of the attached resolution. RONALD . WINKLER, Director Development Department ------------------------------------------------------------------------------------------------------------------ REW:lag:04-21-04.cdc COMMISSION MEETING AGENDA MEETING DATE: 0412111997 Agenda Item Number: ~