SR-10-A (39)
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council Meeting of December 14, 1993
city of Santa Monica
TO: Mayor and City council
FROM: city staff
SUBJECT: Recommendation to Adopt a Resolution Approving an
Installment Purchase Tax-Exempt Financing to be
Undertaken by the California statewide Communities
Development Authority to Assist Saint John's Hospital
and Health Center to Finance certain Health Care
Facilities
INTRODUCTION
sisters of Charity of Leavenworth Health Services corporation, a
Kansas not-for-profit corporation (the "corporation"), which owns
saint John's Hospital and Health Center (the "Health Center"),
has requested the California Statewide communi ties Development
Authority (CSeDA) to act as issuer in connection with a
tax-exempt financing with a principal amount not to exceed $65.0
million (the "Financing") for the purpose of financing certain
capital projects at the Health Center.
For the CSCDA to so act
as issuer, the City of Santa Monica is required to hold a pUblic
hearing with respect to the Financing on the issuance of the
obligations and approve the Financing.
This staff report
recommends that the city council take these actions.
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BACKGROUND
The CSCDA was initially established in 1987 by the California
state Association of Counties (CSAC) and various counties as a
joint powers entity, named the California Counties Industrial
Development Authority. In 1988, the League of California cities
joined as a sponsor of the Authority, membership was expanded to
include cities and the name was changed to the CSCDA.
The purpose of the CSCDA is to pursue programs that improve the
quality of life and economic vitality of communities throughout
the state. One of the programs offered by the CSCDA is the
issuance of tax-exempt obligations on behalf of non-prOfit 501
(c) (3) organizations located in member jurisdictions to reduce
financing costs (the IICSCDA 501 (c) (3) Program"). To date, the
CSCDA has issued over $2 billion in financing for a number of
501(c) (3) non-profit corporations.
The City joined CSCDA in connection with the CSCDA financing to
benefit Santa Monica Hospital and Medical Center last summer.
Presently, about 40 counties, 100 other cities and 35 districts
are also CSCDA members.
For a non-profit corporation within the boundaries of Santa
Monica to participate in CSCDA's 501(c) (3) Program, CSCDA's
joint powers agreement and the Federal Internal Revenue Code
requires that the city approve the Financing. There are no
financial obligations or risks associated with the City'S
membership in the CSCDA, or any tax-exempt obligations issued by
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the CSCDA. For a non-profit corporation to secure financing
through the CSCDA, the non-profit corporation must demonstrate a
strong credit rating and that its project will result in a public
benefit.
ST. JOHN'S HOSPITAL AND ITS SERVICES TO THE COMMUNITY
The Corporation is a Kansas not-for-profit corporation qualified
to do business in California. The Corporation owns eight
hospitals in four states including saint John's Hospital and
Health Center in Santa Monica. The Corporation is the "parent"
corporation of a California nonprofit public corporation which
operates the Health Center. The Corporation has consistently
maintained an Aa rating with Moody's Investors Service since
1985.
As part of its Community Service Plan, saint John's provides
services to vulnerable populations including the children,
elderly, homeless and poor of the Santa Monica community. saint
John's deploys a variety of resources to fulfill community needs
including:
o direct financial assistance for acute medical and
psychiatric carei
underwriting portions of
community-based agencies;
the
care
provided
by
o
o subsidies of health center educational, screening and
medical programs for those programs for those programs
which cannot pay for themselves.
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The following is a brief outline of some of these services.
with respect to services to the children and families of the
Santa Monica community, Saint John's has established the Thera-
peutic Preschool as part of its Child Study Center. The program
is aimed at preparing children, who were prenatally exposed to
drugs, and to integrate them into the public school system by
offering specialized preschool educational programs in concert
with its program for developmentally disabled preschool children.
Throughout grades K-6 in the Santa Monica-Malibu Unified School
District, Saint John's sponsors a Health Champions Programs which
has as its purpose to teach children about health issues, to
screen for health problems and to encourage healthy habits for
youngsters. Additionally, Saint John's conducts, free of charge,
mental health counseling and therapy programs for adolescents and
families.
with respect to the homeless, indigent and poor, Saint John's
offers several specialized charitable programs. In concert with
westside Women's Health Center, Saint John's provides maternity
services to Santa Monica women who lack health insurance.
Donated services include comprehensive prenatal care, counseling,
delivery and after care. The profile of these women can be
described as the "working poor" with incomes less than $15,000;
ninety percent are Hispanic and the average age is 23. The
Venice Clinic, a free clinic that serves as the "family doctor"
for those without access to private physicians, refers patients
requiring outpatient diagnostic or treatment services to Saint
John's for free care. saint John's Homeless Mentally III
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Outreach Program, which is staffed with mental health
professionals, seeks out homeless people with mental disabilities
and stabilizes their circumstances via psychiatric treatment,
shelter, medical care and financial assistance.
In addition to maintaining an active speakers bureau for health
issues related to senior citizens, saint John's annually provides
free flu shots and prostate screening for senior citizens. saint
John's also provides free lab and x-ray services to elderly
patients referred by the Senior Health and Peer Counseling
Center. Finally, the Health Center is also a center for the care
of senior citizens, with approximately 60% of the Health Center's
patient service revenue coming from Medicare and Medicare-
sponsored HMO's.
In total, for the above non-traditional charity programs, the
Health Center has contributed approximately $2.1 million in
community support for its 1993 fiscal year. Saint John's has
provided charity care in 1993 and 1992 of approximately $3.173
and $3.761 million, respectively. In addition, charges un-
collected under terms of governmental indigent programs were
$2.539 and $2.834 million in 1993 and 1992, respectively.
THE PROPOSED FINANCING
The purpose of the proposed Financing, not to exceed $65.0
million, is to fund a portion of the anticipated capital
expenditures required during fiscal years 1994-1996 to renovate
and upgrade portions of the existing facilities, and to replace
existing equipment as it reaches obsolescence or becomes
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technologically deficient. In addition, Saint John's is
currently in the planning process with respect to a new
centralized ambulatory care center. Proceeds of the Financing
may be used in connection with the development of that center.
At the present time, saint John's expects to construct and equip
that center with donated funds, with proceeds of the Financing
being used to reimburse the Corporation for funds expended to
purchase land for, and design costs of, the center.
REQUIRED PUBLIC HEARING
The Federal Internal Revenue Code requires that a public hearing
be held concerning the Financing, and the nature of the proposed
uses of the proceeds of the Financing. The required hearing has
been publicly noticed. Upon conclusion of the public hearing, it
is recommended that Council approve the attached resolution
approving the Financing.
STRUCTURE OF THE FINANCING AND CITY BUDGET/FINANCIAL IMPACT
The Financing will be structured in a certificates of
participation format virtually identical to the CSCDA/UniHealth-
Santa Monica Hospital and Medical Center transaction previously
approved by Council on April 27, 1993.
The City of Santa Monica will not be directly or contingently
obligated in any pecuniary fashion by the Financing. The
Financing will not create any direct or contingent liability for
the City of Santa Monica.
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RECOMMENDATION
It is recommended that the council adopt the attached Resolution
approving an installment purchase financing to benefit saint
John'S Hospital and Health Center.
Prepared By:
Mike Dennis, Director of Finance
Linda Moxon, Deputy City Attorney
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