SR 07-18-2023 12A
City Council
Report
City Council Meeting: July 18, 2023
Agenda Item: 12.A
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue
Subject: Public Hearing and Adoption of Resolution Approving the California
Enterprise Development Authority (CEDA) to Issue Revenue Obligations for
New Roads School
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 California Enterprise Development
Authority Revenue Obligations (the “Obligations”) in an amount not-to-exceed
$25,000,000 for the benefit of New Roads School, a California nonprofit public
benefit corporation, or a related or successor entity (the “Borrower”); and
3. Adopt a finding of no possibility of significant impact pursuant to Section
15061(b)(3) (Common Sense Exemption) of the California Environmental Quality
Act (CEQA) Guidelines
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Summary
The California Enterprise Development Authority (CEDA), a joint powers authority
established by the California Association for Local Development, of which the City is a
member, proposes to issue revenue obligations (bonds) in an amount not -to-exceed
$25,000,000 for the benefit of New Roads School (Borrower) located at 3131 Olympic
Boulevard in Santa Monica. Under the requirements of the Tax and Equity Fiscal
Responsibility Act (TEFRA) and the Internal Revenue Code of 1986 (Code), as
amended, the City must hold a public hearing to approve issuance of the bond s by
CEDA. Proceeds of the obligations will be used to:
(a) finance or refinance the cost of acquisition, construction, development,
improvement, renovation, furnishing and equipping of the Borrower’s educational
campus consisting of:
(i) an approximately 2.6 acre campus located at 3131 Olympic Boulevard,
Santa Monica, California 90404, and
(ii) an approximately 9,700 square foot building located at 1836 Franklin
Street, Santa Monica, California 90404 (collectively, the Facilities), and
(b) pay certain costs of issuance in connection with such financing or refinancing.
The City Council previously approved issuance of these bonds on October 26, 2021
(Resolution Number 11382 City Council Series). However, the bonds were not issued
within the period of time allowed in accordance with the Code. Therefore, a new
approval is necessary to satisfy the requirements for the bonds to be issued as tax-
exempt.
This approval does not obligate the City financially in any way, but is the requirement
imposed by the Federal government to verify that projects meet a legitimate public
purpose in order to have the advantage of exemption from Federal taxes.
Discussion
The Borrower, New Roads School, was established in 1995 and currently serves over
520 students in grades K-12. The Borrower is a California nonprofit public benefit
corporation and an organization described in Section 501(c)(3) of the Internal Revenue
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Code of 1986, as amended (the Code). The Borrower was established as a model for
education in the ethnically, racially, culturally and socioeconomically diverse community
of greater Los Angeles and operates in an approximately 73,150 square foot
educational campus located at 3131 Olympic Boulevard, Santa Monica, California
90404. The Borrower regards education as an active and ongoing quest to develop the
habits of mind, character, awareness and participation that will allow young people to
thrive as they begin to take a larger role in making their communities and their world.
Approximately 30% of the Borrower’s tuition budget is dedicated to needs-based
financial aid, enabling the Borrower to provide financial assistance to more than 50% of
its families.
CEDA is a joint powers authority established by the California Association for Local
Economic Development whose purpose is to issue tax-exempt and taxable conduit
revenue bonds to fund commercial and industrial projects within member jurisdictions.
In order to satisfy the requirements for the obligations to be issued as tax-exempt, the
City as a member of CEDA is required to conduct the TEFRA hearing and approve the
issuance of the obligations in accordance with Section 147(f) of the IRS Code. The City
Council previously approved issuance of these bonds on October 26, 2021 (Resolution
Number 11382 City Council Series). However, the bonds were not issued within the
period of time allowed in accordance with the Code. Therefore, a new approval is
necessary to satisfy the requirements for the bonds to be issued as tax -exempt.
The Bonds to be issued by the CEDA on behalf of the Borrower will be the sole
responsibility of the Borrower, and the City will have no financial, legal, or moral
obligation, liability or responsibility for the repayment of the bonds. All financing
documents with respect to the issuance of the Bonds will contain clear disclaimers that
the bonds are not obligations of the City or the State of California but are to be paid for
solely from funds provided by the Borrower.
As required by law, a public hearing notice was published in The Santa Monica Daily
Press at least 7 days prior to the hearing date.
Past Council Actions
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Meeting Date Description
10/26/2021
(Attachment A)
The City Council previously approved issuance of these
bonds on October 26, 2021, per Resolution Number 11382
Environmental Review
Approval of the bonds is exempt from the California Environmental Quality Act (CEQA)
pursuant to Section 15061(b)(3) of the CEQA Guidelines. The approval of bonds is
covered by the common sense exemption which states that CEQA does not apply
“where it can be seen with certainty that there is no possibility that the activity in
question may have a significant impact on the environment”.
Financial Impacts and Budget Actions
The issuance of the bonds will have no financial impact to the City. The Authority will act
as issuer and perform all of the necessary legal and administrative responsibilities
associated with the financing. The Obligations are special, limited obligations of the
Authority payable solely through the repayment of the loans from the Auth ority which
repayment is used to pay the principal of and interest on the Obligations. The
Obligations issued by the Authority are not an obligation of the City or any member of
the Authority. Neither the faith or credit, nor the taxing power of the City, any member of
the Authority, the State or any political subdivision is pledged to the repayment of the
Obligations.
Prepared By: David Carr, Assistant City Treasurer
Approved
Forwarded to Council
Attachments:
A. Attachment A - New Roads School Santa Monica City Council Resolution 11382
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B. New Roads School Santa Monica City Council Resolution 070623 (001)
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4822-1978-1362.1
City Council Meeting: October 26, 2021 Santa Monica, California
RESOLUTION NUMBER(CCS)
(City Council Series)
A RESOLUTION OF THE CITY OF SANTA MONICA CITY COUNCIL
APPROVING THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT
AUTHORITY OF ITS REVENUE OBLIGATIONS FOR THE BENEFIT OF NEW ROADS
SCHOOL AND/OR A RELATED ENTITY IN AN AGGREGATE AMOUNT NOT TO
EXCEED $25,000,000 FOR THE PURPOSE OF FINANCING OR REFINANCING THE
COST OF ACQUISITION, DEVELOPMENT, CONSTRUCTION, INSTALLATION,
EQUIPPING AND FURNISHING OF CERTAIN FACILITIES, AND OTHER MATTERS
RELATING THERETO
WHEREAS, New Roads School, a nonprofit public benefit corporation (the
“Borrower”), duly organized and existing under the laws of the State of California (the
“State”), has requested that the California Enterprise Development Authority (the
“Authority”) issue, from time to time, pursuant to a plan of finance, its t ax-exempt and/or
taxable revenue obligations in an aggregate principal amount not to exceed $25,000,000
(the “Obligations”) for the benefit of the Borrower, pursuant to Chapter 5 of Division 7 of
Title 1 of the Government Code of the State (commencing with Section 6500) (the “Act”)
to (a) finance or refinance the cost of acquisition, construction, development,
improvement, renovation, furnishing and equipping of the Borrower’s educational campus
consisting of (i) an approximately 2.6 acre campus located at 3131 Olympic Boulevard,
Santa Monica, California 90404 and bordered by Olympic Boulevard to the south,
Nebraska Avenue to the north, Franklin Street to the east and Berkeley Street to the west,
12.A.a
Packet Pg. 998 Attachment: Attachment A - New Roads School Santa Monica City Council Resolution 11382 [Revision 1] (5836 : Public Hearing and Resolution
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4822-1978-1362.1
including approximately 73,150 square feet of improvements including classrooms, a
theater, science labs, offices, outdoor play and sports areas, parking, and related and
ancillary facilities, and (ii) an approximately 9,700 square foot building located at 1836
Franklin Street, Santa Monica, California 90404 (collectively, the “Facilities”), and (b) pay
certain costs of issuance in connection with such financing or refinancing; and
WHEREAS, the Borrower is an organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended (the “Code”) and will own and operate
the Facilities in connection with its philosophy of providing an inspired college preparatory
program for students in grades K-12 where an authentically diverse student population
develops personal dedication to learning, a respect to independent thinking and an
expanding curiosity about the world and its people; and
WHEREAS, the issuance of the Obligations must be approved by the
governmental unit on behalf of which the Obligations are issued and a governmental unit
having jurisdiction over the territorial limits in which the Facilities are located pursuant to
the public approval requirement of Section 147(f) of the Code; and
WHEREAS, the Facilities are located within the territorial limits of the City of
Santa Monica (the “City”), and the City Council (the “City Council”) is the elected
legislative body of the City and is the “applicable elected representative” required to
approve the issuance of the Obligations under Section 147(f) of the Code; and
WHEREAS, the Authority and the Borrower have requested that the City Council
approve the issuance of the Obligations and the financing or refinancing of the Facilities
with the proceeds of the Obligations solely for purposes of complying with Section 147(f)
12.A.a
Packet Pg. 999 Attachment: Attachment A - New Roads School Santa Monica City Council Resolution 11382 [Revision 1] (5836 : Public Hearing and Resolution
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4822-1978-1362.1
of the Code; and
WHEREAS, a public hearing was held by the City Council on October 26, 2021,
at the meeting which commenced at the hour of 5:30 p.m., City Hall Council Chamber,
1685 Main Street, Santa Monica, California, following a duly published notice thereof in a
newspaper of general circulation in the City of Santa Monica, and all persons desiring to
be heard have been heard; and
WHEREAS, it is intended that this Resolution shall comply with the public
approval requirements of Section 147(f) of the Code; provided, however, that this
Resolution is neither intended to nor shall it constitute an approval by the City Council of
the Facilities for any other purpose, including, but not limited to, compliance with the
California Environmental Quality Act (California Public Resources Code, Section 21100,
et seq.) (“CEQA”);
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the
City Council of the City of Santa Monica, State of California as follows:
Section 1. The City Council hereby finds and determines that all of the recitals are
true and correct. The City Council, as the “applicable elected representative” of the
governmental unit on behalf of which the Obligations will be issued and having jurisdiction
over the area in which the Facilities are located, hereby approves the issuance, from time
to time, pursuant to a plan of finance, of the Obligations by the Authority, which
Obligations may be tax-exempt and/or taxable as approved by the Authority in its
resolution, in an amount not to exceed $25,000,000 to finance or refinance the costs of
the Facilities. This resolution shall constitute approval of the issuance of the Obligations
12.A.a
Packet Pg. 1000 Attachment: Attachment A - New Roads School Santa Monica City Council Resolution 11382 [Revision 1] (5836 : Public Hearing and Resolution
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4822-1978-1362.1
within the meaning of Section 147(f) of the Code and shall constitute the approval of the
issuance of the Obligations within the meaning of the Act; provided, however, that this
Resolution shall not constitute an approval by the City Council of the Facilities for any
other purposes, including compliance thereof with CEQA, nor does it constitute an
approval of the underlying credit or financial structure of the Obligations. The City Council
shall not bear any responsibility for the issuance of the Obligations, the tax-exempt status
of the Obligations, the repayment of the Obligations or any other matter related to the
Obligations.
Section 2. All actions heretofore taken by the officers, employees and agents of
the City with respect to the approval of the issuance of the Obligations are hereby
approved, confirmed and ratified, and the officers and employees of the City and their
authorized deputies and agents are hereby authorized and directed, jointly and severally,
to do any and all things and to execute and deliver any and all certificates and documents
which they or bond counsel may deem necessary or advisable in order to consummate
the issuance of the Obligations and otherwise to effectuate the purposes of this
Resolution.
Section 3. The adoption of this Resolution shall not obligate the City or any
department thereof to (i) provide any financing for the Facilities; (ii) approve any
application or request for or take any other action in connection with any planning
approval, permit or other action necessary for the acquisition, rehabilitation or operation
of the Facilities; or (iii) make any contribution or advance any funds whatsoever to the
Authority.
12.A.a
Packet Pg. 1001 Attachment: Attachment A - New Roads School Santa Monica City Council Resolution 11382 [Revision 1] (5836 : Public Hearing and Resolution
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4822-1978-1362.1
Section 4. This Resolution shall take effect from and after its adoption.
APPROVED AS TO FORM:
Joseph Lawrence
INTERIM CITY ATTORNEY
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Santa Monica held on this October 26, 2021, by the following vote:
Sue Himmelrich, Mayor
of the City of Santa Monica
I, Denise Anderson-Warren, City Clerk of the City of Santa Monica, do hereby
certify that Resolution No. _____ (CCS) was duly adopted at a meeting of the Santa
Monica City Council held on the 26th day of October, 2021, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Attest:
Denise Anderson-Warren
City Clerk
12.A.a
Packet Pg. 1002 Attachment: Attachment A - New Roads School Santa Monica City Council Resolution 11382 [Revision 1] (5836 : Public Hearing and Resolution
Adopted and approved this 26th day of October 2021.
__________________________
Sue Himmelrich, Mayor
I, Denise Anderson-Warren, City Clerk of the City of Santa Monica, do hereby
certify that Resolution No. (CCS) was duly adopted at a meeting of the Santa
Monica City Council held on the 26th day of October 2021, by the following vote:
AYES: Councilmembers Brock, Davis, Ge la Torre, Parra,
Mayor Pro Tem McCowan, Mayor Himmelrich
NOES: None
ABSENT: &RXQFLOPHPEHU1HJUHWH
ATTEST:
_____________________________________
Denise Anderson-Warren, City Clerk
12.A.a
Packet Pg. 1003 Attachment: Attachment A - New Roads School Santa Monica City Council Resolution 11382 [Revision 1] (5836 : Public Hearing and Resolution
Attachment A
City Council Meeting: July 18, 2023 Santa Monica, California
RESOLUTION NUMBER _______ (CCS)
(City Council Series)
A RESOLUTION OF THE CITY OF SANTA MONICA CITY COUNCIL APPROVING
THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY
OF ITS REVENUE OBLIGATIONS FOR THE BENEFIT OF NEW ROADS SCHOOL
AND/OR A RELATED ENTITY IN AN AGGREGATE AMOUNT NOT TO EXCEED
$25,000,000 FOR THE PURPOSE OF FINANCING OR REFINANCING THE COST OF
ACQUISITION, DEVELOPMENT, CONSTRUCTION, INSTALLATION, EQUIPPING
AND FURNISHING OF CERTAIN FACILITIES, AND OTHER MATTERS RELATING
THERETO
WHEREAS, New Roads School, a nonprofit public benefit corporation (the
“Borrower”), duly organized and existing under the laws of the State of California (the
“State”), has requested that the California Enterprise Development Authority (the
“Authority”) issue, from time to time, pursuant to a plan of finance, its tax-exempt and/or
taxable revenue obligations in an aggregate principal amount not to exceed $25,000,000
(the “Obligations”) for the benefit of the Borrower, pursuant to Chapter 5 of Division 7 of
Title 1 of the Government Code of the State (commencing with Section 6500) (the “Act”)
to (a) finance or refinance the cost of acquisition, construction, development,
improvement, renovation, furnishing and equipping of the Borrower’s educational campus
consisting of (i) an approximately 2.6 acre campus located at 3131 Olympic Boulevard,
Santa Monica, California 90404 and bordered by Olympic Boulevard to the south,
Nebraska Avenue to the north, Franklin Street to the east and Berkeley Street to the west,
including approximately 73,150 square feet of improvements including classrooms, a
theater, science labs, offices, outdoor play and sports areas, parking, and related and
ancillary facilities, and (ii) an approximately 9,700 square foot building located at 1836
12.A.b
Packet Pg. 1004 Attachment: New Roads School Santa Monica City Council Resolution 070623 (001) [Revision 2] (5836 : Public Hearing and Resolution
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Franklin Street, Santa Monica, California 90404 (collectively, the “Facilities”), and (b) pay
certain costs of issuance in connection with such financing or refinancing; and
WHEREAS, the Borrower is an organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended (the “Code”) and will own and operate the
Facilities in connection with its philosophy of providing an inspired college preparatory
program for students in grades K-12 where an authentically diverse student population
develops personal dedication to learning, a respect to independent thinking and an
expanding curiosity about the world and its people; and
WHEREAS, the issuance of the Obligations must be approved by the
governmental unit on behalf of which the Obligations are issued and a governmental unit
having jurisdiction over the territorial limits in which the Facilities are located pursuant to
the public approval requirement of Section 147(f) of the Code; and
WHEREAS, the Facilities are located within the territorial limits of the City of Santa
Monica (the “City”), and the City Council (the “City Council”) is the elected legislative body
of the City and is the “applicable elected representative” required to approve the issuance
of the Obligations under Section 147(f) of the Code; and
WHEREAS, the City originally approved issuance of such bonds at a public
hearing held by the City Council on October 26, 2021, and
WHEREAS, the bonds were not issued within the time period after approval
specified under Section 147 of the Code, and
12.A.b
Packet Pg. 1005 Attachment: New Roads School Santa Monica City Council Resolution 070623 (001) [Revision 2] (5836 : Public Hearing and Resolution
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WHEREAS, the Authority and the Borrower have requested that the City Council
again approve the issuance of the Obligations and the financing or refinancing of the
Facilities with the proceeds of the Obligations solely for purposes of complying with
Section 147(f) of the Code; and
WHEREAS, a public hearing was held by the City Council on July 18, 2023, at the
meeting which commenced at the hour of 5:30 p.m., City Hall Council Chamber, 1685
Main Street, Santa Monica, California, following a duly published notice thereof in a
newspaper of general circulation in the City of Santa Monica, and all persons desiring to
be heard have been heard; and
WHEREAS, it is intended that this Resolution shall comply with the public approval
requirements of Section 147(f) of the Code; provided, however, that this Resolution is
neither intended to nor shall it constitute an approval by the City Council of the Facilities
for any other purpose, including, but not limited to, compliance with the California
Environmental Quality Act (California Public Resources Code, Section 21100, et seq.)
(“CEQA”);
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the
City Council of the City of Santa Monica, State of California as follows:
SECTION 1. The City Council hereby finds and determines that all of the recitals
are true and correct. The City Council, as the “applicable elected representative” of the
governmental unit on behalf of which the Obligations will be issued and having jurisdiction
over the area in which the Facilities are located, hereby approves the issuance, from time
to time, pursuant to a plan of finance, of the Obligations by the Authority, which
Obligations may be tax-exempt and/or taxable as approved by the Authority in its
12.A.b
Packet Pg. 1006 Attachment: New Roads School Santa Monica City Council Resolution 070623 (001) [Revision 2] (5836 : Public Hearing and Resolution
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resolution, in an amount not to exceed $25,000,000 to finance or refinance the costs of
the Facilities. This resolution shall constitute approval of the issuance of the Obligations
within the meaning of Section 147(f) of the Code and shall constitute the approval of the
issuance of the Obligations within the meaning of the Act; provided, however, that this
Resolution shall not constitute an approval by the City Council of the Facilities for any
other purposes, including compliance thereof with CEQA, nor does it constitute an
approval of the underlying credit or financial structure of the Obligations. The City Council
shall not bear any responsibility for the issuance of the Obligations, the tax-exempt status
of the Obligations, the repayment of the Obligations or any other matter related to the
Obligations.
SECTION 2. All actions heretofore taken by the officers, employees and agents
of the City with respect to the approval of the issuance of the Obligations are hereby
approved, confirmed and ratified, and the officers and employees of the City and their
authorized deputies and agents are hereby authorized and directed, jointly and severally,
to do any and all things and to execute and deliver any and all certificates and documents
which they or bond counsel may deem necessary or advisable in order to consummate
the issuance of the Obligations and otherwise to effectuate the purposes of this
Resolution.
SECTION 3. The adoption of this Resolution shall not obligate the City or any
department thereof to (i) provide any financing for the Facilities; (ii) approve any
application or request for or take any other action in connection with any planning
approval, permit or other action necessary for the acquisition, rehabilitation or operation
12.A.b
Packet Pg. 1007 Attachment: New Roads School Santa Monica City Council Resolution 070623 (001) [Revision 2] (5836 : Public Hearing and Resolution
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of the Facilities; or (iii) make any contribution or advance any funds whatsoever to the
Authority.
SECTION 4. This Resolution shall take effect from and after its adoption.
APPROVED AS TO FORM:
Douglas Sloan, City Attorney
12.A.b
Packet Pg. 1008 Attachment: New Roads School Santa Monica City Council Resolution 070623 (001) [Revision 2] (5836 : Public Hearing and Resolution