Report Prepared by: Bradley R Grant - Finance Officer
Title
SUBJECT: Conduit Financing for Golden Valley Health Centers Project
REPORT IN BRIEF
Consider conducting a public hearing under the Tax and Equity Fiscal Responsibility Act (TEFRA) in connection with the proposed issuance of revenue bonds by the California Municipal Finance Authority (CMFA) in an amount not to exceed $9,500,000, for the purpose of financing and refinancing the acquisition, construction, improvement and equipping of health facilities for Golden Valley Heath Centers located at 847 West Childs Avenue, in the City of Merced, California.
RECOMMENDATION
City Council - Adopt Resolution 2016-07, a Resolution of the City Council of the City of Merced, California, approving the issuance of Revenue Bonds by the California Municipal Finance Authority for the purpose of financing and refinancing the acquisition, construction, improvement and equipping of health facilities for Golden Valley Health Centers, and certain other matters relating thereto.
Body
ALTERNATIVES
1. Approve, as recommended by staff, or
2. Approve, subject to conditions other than recommended by staff (identify specific conditions to be addressed in City Council motion), or
3. Deny further action by staff, or
4. Refer back to staff for reconsideration of specific items as requested by City Council, or
5. Continue item to a future City Council meeting (date and time to be specified in the motion).
AUTHORITY
Article II, Section 200 of the Merced Municipal Charter, Tax Equity and Fiscal Responsibility Act and internal Revenue Code of 1986, as amended (the “Code”) and the California Government Code Section 6500 (and following).
CITY COUNCIL PRIORITIES
Quality of life
DISCUSSION
Golden Valley Health Centers (GVHC) requested that CMFA serve as the municipal issuer of tax-exempt bonds in an aggregate principal amount not to exceed $9,500,000.
The CMFA was created on January 1, 2004 pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 200 municipalities have become members of CMFA.
The proceeds of the Bonds will be used to:
(a) Refund the outstanding ABAG Finance Authority for Nonprofit Corporations Certificates of Participation.
(b) Finance the renovation of approximately 4,100 square feet to
provide facilities for dental services.
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Merced must conduct a public hearing (the “TEFRA Hearing”) providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project.
IMPACT ON CITY RESOURCES
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. 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.
Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities. With respect to the City of Merced, it is expected that a portion of the issuance fee will be granted to the City and is estimated to be about $6,000.
ATTACHMENTS
1. Resolution