TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: JANUARY 9, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
TAX EQUITY AND FISCAL RESPONSIBILITY ACT OF 1982 HEARING TO APPROVE THE ISSUANCE OF $10.5 MILLION IN TAX EXEMPT FINANCING BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE BENEFIT OF SCRIPPS-PITZER PROPERTY HOLDINGS, LLC.
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SUMMARY
Scripps-Pitzer Property Holdings, LLC (the "Borrower") requests approval of tax-exempt financing in an amount not to exceed $10.5 million. Financing is being made available through the California Municipal Finance Authority (CMFA). The federal Tax Equity and Financial Responsibility Act (TEFRA) requires that a public hearing be held by the governing body of the jurisdiction in which the project is located, and that the local jurisdiction approve the proposed financing. The City has held such hearings in the past for the Webb Schools, Mt. San Antonio Gardens, Pilgrim Place, Western Christian Schools, Pomona College, Keck Graduate Institute and Harvey Mudd College. Approval of the proposed financing will not impose any financial responsibilities on the City.
RECOMMENDATION
Recommended Action
Staff recommends the City Council adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CLAREMONT, CALIFORNIA, APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY 2024 TAX EXEMPT LOAN (SCRIPPS-PITZER PROPERTY HOLDINGS, LLC) IN A MAXIMUM AGGREGATE PRINCIPAL AMOUNT OF $10,500,000 FOR COSTS OF THE ACQUISITION, CONSTRUCTION, RENOVATION, RETROFITTING, EQUIPPING AND IMPROVEMENT OF EDUCATIONAL FACILITIES OF SCRIPPS-PITZER PROPERTY HOLDINGS, LLC, PITZER COLLEGE AND SCRIPPS COLLEGE, ALL LOCATED WITHIN THE CITY, AND CERTAIN OTHER MATTERS RELATING THERETO.
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ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
A. Request further information from staff.
B. Take no action.
FINANCIAL REVIEW
The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation, acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Claremont, it is expected that 25 percent of the issuance fee will be granted by the CMFA to the City's General Fund. Such grant may be used for any lawful purpose of the City. The Borrower will be the beneficiary of a charitable donation through a 25 percent reduction in issuance fees.
As noted in this report, the City's approval of the issuance of the bonds will place no financial obligations upon the City. The staff cost to prepare this report and administer this program is estimated at $741 and is included in the operating budget of the Financial Services Department.
ANALYSIS
Scripps-Pitzer Property Holdings LLC ("SPPH"), a California limited liability company, is owned equally by Scripps College and Pitzer College and was formed for the purpose of owning, developing and managing real assets associated with the Keck Joint Science Department ("KJSD"). SPPH has requested that the California Municipal Finance Authority participate in the issuance of one or more series of tax-exempt bonds and, if necessary, taxable bonds, in an aggregate principal amount not to exceed $10,500,000 (collectively, the "Bonds") pursuant to a plan of finance for financing and refinancing all or a portion of the costs of acquisition, construction, renovation, retrofitting, equipping and improvement of certain educational facilities, including related administrative facilities, site improvements, and parking, located or to be located in the City of Claremont, including but not limited to additional construction, equipping, improvement and furnishing of a new Science Center facility located at Ninth Street and Amherst Avenue and having the address 900 Amherst Avenue.
The CMFA was created on January 1, 2004 pursuant to a joint powers agreement to promote economic cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 320 municipalities have become members of CMFA, including the City of Claremont.
The CMFA was formed to assist local governments, non-profit organizations, and businesses with the issuance of taxable and tax-exempt financing aimed at improving the standard of living in California. The CMFA' s representatives and its Board of Directors have considerable financing experience.
The Joint Exercise of Power Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities, and obligations of the CMFA do not constitute debts, liabilities or obligations of the member executing such agreement.
The bonds to be issued by the CMFA will be the sole responsibility of the Borrower, and the City will have no financial, legal, 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 an obligation of the City.
Participation by the City in the approval of this financing will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the bonds will be required.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City's strategic and visioning documents and finds that it does not apply to any of the City's planning documents.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director
Attachment:
Scripps-Pitzer TEFRA Resolution