SR 06:128 - Laserfiche WebLink

Kaiser has requested California Communities include an estimated $91 million in this financing to provide for the Kaiser Pleasanton acquisition. In order to include the Pleasanton acquisition in the financing, the Internal Revenue Code requires the City to approve the issuance of debt at a TEFRA (Tax Equity and Fiscal Responsibility Act) hearing. This is a requirement because the proposed improvements are located in the City of Pleasanton. Each of the California Communities member cities noted above will conduct similar public hearings. A list of the Kaiser Foundation Hospitals with proposed improvements are included as Attachment B. According to bond attorneys Orrick, Herrington & Sutcliffe (Attachment C), the bonds are issued as limited obligations of California Communities, not of the City, payable solely out of the revenues and receipts derived from the applicable project or the loans by California Communities to the respective borrower with the proceeds of the bonds. Accordingly, the bonds issued for the project would be indebtedness of California Communities, and the City is not being asked to approve any of the financing documents. The disclosure prepared for the bonds would not have any information regarding the City and would not include the City's name, other than with respect to where the project is located. As such, the bond payment obligation would not be a debt of the City, nor count against the debt limit of the City. DISCUSSION By the nature of its membership with California Communities, the City recognizes there is benefit to assisting non-profits with obtaining tax-exempt financing for projects that provide public benefit to California communities. The primary way of support is by assisting with the financing of projects the California Communities deems appropriate. The benefit of the California Communities is that assistance can be provided to nonprofits without directly involving individual member cities, counties and special districts in the financing of projects. In this case, the City's role would be to approve a resolution indicating its support for issuance of bonds by California Communities for this project. This approval requires a TEFRA public hearing to allow for public comment prior to the issuance of the bonds. In December 2005, the City Council conducted a TEFRA hearing for a California Communities tax-exempt financing to facilitate information technology improvements for American Baptist Homes of the West (ABHOW), headquartered in Pleasanton. As in the ABHOW financing, the City's only action for the Kaiser financing will be the approval of the attached resolution. Further, as indicated, the City will not be mentioned in the bond documents. Staff views approval of the attached resolution as an action to assist California Communities and based on its review, the financing is consistent with the mission of California Communities. Staff has not researched the specific benefits or project budget for the proposed project. As such, staff is not specifically recommending these projects or endorsing the efforts of the project sponsor. Rather, as indicated, approval of the resolution is viewed as supporting the actions of California Communities. SR:06:128