sr-121410-9aCity Council Meeting: December 14, 2010
Agenda Item: 9A
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Public Hearing and Adoption of Resolution Approving the Issuance of
Revenue Obligations by the California Municipal Finance Authority to
Benefit New Roads School, New Visions Foundation, and/or a Related
Entity
Recommended Action
Staff recommends that the City Council:
1) Hold a public hearing under the requirements of the Tax and Equity Fiscal
Responsibility Act ("TEFRA") and the Internal Revenue Code of 1986, as
amended.
2) Adopt a resolution approving the issuance of tax-exempt obligations by the
California Municipal Finance Authority ("CMFA") for the benefit of New Roads
School, New Visions Foundation, and/or a related entity ("New Roads").
Executive Summary
In order for New Roads to issue tax-exempt obligations to finance the costs to acquire,
construct, improve, furnish and equip certain property located at 3131 Olympic
Boulevard in Santa Monica, the City of Santa Monica must hold a public hearing and
approve the issuance of the obligations by the CMFA.
Discussion
New Roads is proposing that the CMFA issue on its behalf $14 million of tax-exempt
revenue obligations to finance the costs to acquire, construct, improve, furnish, and
equip certain properties located at 3131 Olympic Boulevard in Santa Monica, and owned
by New Roads School, New Visions Foundation, and/or a related entity (the
"Borrower"), each an organization described in Section 501(c)(3) of the Code.
1
As required by law, this public hearing has been public noticed for fourteen days.
The CMFA was formed in 2004 pursuant to a joint exercise of powers agreement, to
assist local governments, non-profit organizations and businesses with the issuance of
taxable and tax-exempt bonds aimed at improving the standard of living of California.
The CMFA is a public entity, separate and apart from each member, and the debts and
obligations of the CMFA do not constitute debts, liabilities or obligations of the
members.
The obligations to be issued by the CMFA for the benefit of New Roads will be the sole
responsibility of New Roads. The City will have no financial, legal, moral obligation,
liability or responsibility for the repayment of the obligations. All financing documents
with respect to the issuance of the obligations will contain clear disclaimers that the
obligations are not obligations of the City or the State of California, but are to be paid for
solely from funds provided by New Roads. In addition, the City's financial advisor and
CMFA's bond counsel have prepared written options indicating that the City of Santa
Monica would not have any financial liability for the tax-exempt obligations, nor would
any possible subsequent difficulties concerning payment of debt service on the
obligations adversely impact the City's credit rating.
2
Financial Impacts & Budget Actions
Approving the issuance of obligations by CMFA on behalf of New Roads has no
financial or budgetary impact. CMFA will reimburse the, City for staff costs associated
with the public hearing by granting the City 25% of the issuance costs associated with
the bond issuance. The grant to the City is expected to be approximately $8,000.
Prepared by: Candace Tysdal, Assistant Director of Finance
Approved:
Carol Swindell
Director of Finance
Forwarded to Council:
Rod Gould
City Manager
Attachment:
A. Resolution of the City Council of the City of Santa Monica Approving the
Issuance of Revenue Obligations by the Califorhia Municipal Finance Authority to
Benefit New Roads School, New Visions Foundation, and/or a Related Entity.
3
Reference Resolution No.
10553 (CCS).