Agenda Item Wording:
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Public Hearing: Conduct Tax Equity and Fiscal Responsibility Act (TEFRA) hearing, adopt Resolution 2022-28 approving the form of Associate Membership Agreement between the City of Visalia and the California Enterprise Development Authority and adopt Resolution 2022-29 approving the issuance of the not-to-exceed $10,000,000 of California Enterprise Development Authority revenue bonds for the benefit of United Health Centers of the Health Centers of the San Joaquin Valley.
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Deadline for Action: 5/2/2022
Submitting Department: Community Development
Contact Name and Phone Number: Devon Jones, 4190
Department Recommendation:
1. Adopt Resolution 2022-28 approving associate membership of the City of Visalia in the California Enterprise Development Authority and approving the form of Associate Membership Agreement.
2. Conduct a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 to receive comments relating to the issuance by the California Enterprise Development Authority (the “Authority”) of not to exceed $10,000,000.00 of the Authority’s Revenue Bonds (the “Bonds”) for the benefit of United Health Centers of the San Joaquin Valley, a California nonprofit public benefit corporation (the “Borrower”).
3. Adopt Resolution 2022-29 approving the issuance of the Bonds by the Authority to finance, refinance or reimburse the cost of healthcare facilities for the benefit of the Borrower.
Background Discussion:
The Authority - The Authority is a joint exercise of powers authority (JPA) established by the California Association for Local Economic Development (CALED) whose purpose is to issue tax-exempt and taxable conduit revenue bonds to fund commercial and industrial development projects within member jurisdictions. Federal and state laws provide the ability for cities and counties to join together under cooperative agreements to form joint powers authorities to issue tax-exempt and taxable bonds to fund projects that provide a public benefit and serve the needs of residents within the jurisdictions of the participating members. Cities and counties in California utilize joint powers authorities primarily for economies of scale, to access specialized transaction knowledge and resources, and to avoid using valuable local staff time on these types of transactions.
The Authority was created by the cities of Selma, Lancaster and Eureka. There are more than 200 cities and counties who are associate members of the Authority. The Authority’s activities are dedicated to providing economic development assistance to member jurisdictions as an extension of the economic development assistance provided by CALED to its members. As an Associate Member of the Authority, the City is eligible to participate in the Authority’s programs. There is no cost to join the Authority as an Associate Member.
The Borrower - The Borrower is licensed by the State of California as a community health center and designated as a Federally Qualified Health Center (FQHC) by both the Federal and State governments. The Borrower’s service area is located in the heart of California in the Central San Joaquin Valley, serving more than 100 local communities as the premier health care provider. The Borrower operates 25 health centers, most of which offer the following services: general and family medicine, pediatrics, general dentistry, clinical laboratory, X-ray, dermatology, telemedicine, integrated behavioral health, chiropractic care, optometry, and preventative medicine programs. The Borrower has operated for more than 50 years and is committed to the lifetime wellness of the communities it serves by providing accessible, comprehensive quality health care to everyone with compassion and respect, regardless of ability to pay.
The Project - The Borrower and the Authority have requested that the City conduct a Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) hearing and approve a resolution in accordance with Internal Revenue Code Section 147(f) authorizing the issuance of tax-exempt bonds by the Authority in an amount not to exceed $10,000,000.00. A TEFRA hearing is required by the Internal Revenue Code before tax-exempt debt can be issued for the benefit of a private nonprofit corporation. The hearing gives the public an opportunity to comment on the use of tax-exempt funds by the Borrower.
The proceeds of the Bonds will be used to finance, refinance and/or reimburse the cost of construction, development, improvement, installation, equipping and furnishing of the Borrower’s health clinic located at 4038 South Mooney Boulevard, Visalia, California 93277 (the “Facility”). The proceeds of the Bonds will also be used to pay certain costs of issuance in connection with the issuance of the Bonds. The Bonds will not be deemed to constitute a debt or liability of the City, the State or any political subdivision thereof, but will be payable solely from the funds provided therefor by the Borrower. The Authority will not be obligated to pay the principal of the Bonds, or the redemption premium, if any, or interest thereon, except from funds provided from loan repayments by the Borrower.
Neither the faith and credit nor taxing power of the City, the State or any political subdivision thereof, will be pledged to the payment of the principal or redemption premium, if any, or interest on the Bonds. The issuance of the Bonds will not directly, indirectly or contingently obligate the City, the State or any political subdivision thereof to levy or to pledge any form of taxation or to make any appropriation for their payment. The City is conducting the public hearing as an accommodation to the Borrower to facilitate the Project. The City will not be the issuer of the Bonds and takes no responsibility for the financing of cost of the development, construction, installation, equipping and furnishing of the Facility.
The issuance of the Bonds as tax-exempt will reduce financing costs and debt service costs for the Borrower. In order to satisfy the requirements for the Bonds to be issued as tax-exempt, an applicable elected representative which is also a member of the Authority is required to conduct the TEFRA hearing and approve the issuance of the tax-exempt bonds in accordance with Section147(f) of the Code. The City Council of the City of Visalia constitutes an applicable elected representative under Section 147(f) of the Code.
A public notice of today’s public hearing was published on behalf of the City at least seven days prior to the hearing in the Visalia Times-Delta newspaper by the law firm of Kutak Rock LLP.
Fiscal Impact:
There is no fiscal impact to the City. The adoption of the resolution approving the financing and refinancing of the Facilities and the issuance of the Bonds complies with the requirements of Section 147(f) of the Internal Revenue Code of 1986. The City does not bear any responsibility for the tax-exempt status of the interest on the Bonds, the debt service on the Bonds or any other matter related to the Bonds.
Prior Council Action: N/A
Alternatives: Per Council direction
Recommended Motion (and Alternative Motions if expected):
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I move to:
1. Adopt the attached resolution, 2022-28 approving associate membership of the City of Visalia in the California Enterprise Development Authority and approving the form of Associate Membership Agreement.
2. Conduct a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 to receive comments relating to the issuance of the Bonds by the Authority to finance, refinance and/or reimburse the cost of the Facilities.
3. Adopt the attached resolution, 2022-29 approving the issuance of the Bonds by the Authority to finance, refinance and/or reimburse the cost of the Facilities for the benefit of the Borrower.
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Environmental Assessment Status: The approval of the Bonds to finance, refinance and/or reimburse the cost of the Facilities is not subject to compliance with the California Environmental Quality Act (California Public Resources Code, Section 21100, et seq.).
Attachments: UHC City of Visalia 2022 City Council Resolution, UHC CEDA City of Visalia Resolution Joining CEDA, UHC CEDA City of Visalia AMA Associate Membership Agreement 2022