|
DATE: |
October 19, 2021 |
18 |
SUBJECT
Title
NOTICED PUBLIC HEARING: ISSUANCE OF REVENUE OBLIGATIONS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY FOR THE BENEFIT OF COMMUNITY HEALTH SYSTEMS, INC. IN AN AGGREGATE MAXIMUM AMOUNT NOT TO EXCEED $7,000,000 (DISTRICT: 5)
Body
OVERVIEW
The County has received a request from the California Enterprise Development Authority (“CEDA” or “Authority”) to conduct a public hearing as required by the Internal Revenue Code and to approve the Authority’s issuance of one or more series of tax-exempt and/or taxable revenue obligations in an aggregate principal amount not to exceed $7,000,000 (the “Revenue Obligations”), for the benefit of Community Health Systems, Inc. (the “Borrower”), a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986. The Borrower has applied for the financial assistance of the Authority. A portion of the proceeds (not to exceed $3,500,000) will be used to finance and refinance the cost of acquisition, construction, improvement, furnishing and equipping of property located at 1328 South Mission Road, Fallbrook, California 92028, consisting of a commercial medical office building, and paying certain costs of issuance in connection with the financing and other related costs. The remaining portion of the proceeds will be used to finance and refinance the cost of acquisition and improvements of a second commercial medical office building located outside of San Diego County.
The Authority is authorized to assist in financing of nonprofit public benefit organizations or for-profit corporations with a public benefit project wishing to issue or reissue Revenue Obligations, including the Borrower. In order to initiate such a financing, the Borrower is asking the County of San Diego, a member jurisdiction in which the project resides to: (1) conduct a public hearing to satisfy the public approval requirement of Section 147(f) of the Internal Revenue Code; and (2) approve the Authority’s reissuance of the Revenue Obligations. Although the Authority will be the issuer of the Revenue Obligations for the Borrower, the financing cannot proceed without the approval of one of the applicable legislative bodies.
Today’s recommendations will provide the Authority with the required authorization to pursue its determination to issue the Revenue Obligations on behalf of the Borrower.
RECOMMENDATION(S)
CHIEF ADMINISTRATIVE OFFICER
1. Pursuant to Section 147(f) of the Internal Revenue Code, hold a public hearing regarding the financing of the Project.
2. Adopt a Resolution entitled:
RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO APPROVING THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF ITS REVENUE OBLIGATIONS FOR THE BENEFIT OF COMMUNITY HEALTH SYSTEMS, INC. IN AN AGGREGATE MAXIMUM STATED PRINCIPAL AMOUNT OF $7,000,000 FOR THE PURPOSE OF FINANCING AND REFINANCING THE COST OF THE ACQUISITION, CONSTRUCTION, IMPROVEMENT, FURNISHING AND EQUIPPING OF FACILITIES, PROVIDING THE TERMS AND CONDITIONS FOR SUCH REVENUE OBLIGATIONS AND OTHER MATTERS RELATING THERETO.
EQUITY IMPACT STATEMENT
California Enterprise Development Authority was established to assist in financing of nonprofit public benefit organizations or for-profit corporations with a public benefit project wishing to issue or reissue revenue obligations. The revenue obligations issued will be used to finance and refinance the cost of acquisition, construction, improvement, furnishing and equipping of property located at 1328 South Mission Road, Fallbrook, California 92028, consisting of a commercial medical office building. This facility will assist the Borrower to deliver quality healthcare services to vulnerable communities.
FISCAL IMPACT
If approved, the proposal will result in approximately $1,030 of unanticipated revenue to be used to reimburse the County for costs associated with this non-County financing.
The Borrower will be responsible for the payment of all present and future costs in connection with the financing. The County will incur no obligation of indebtedness as a result of these actions.
BUSINESS IMPACT STATEMENT
N/A
Details
ADVISORY BOARD STATEMENT
The Debt Advisory Committee, composed of the Assistant Chief Administrative Officer, the Deputy Chief Administrative Officer/ Chief Financial Officer, Auditor and Controller, and the Treasurer-Tax Collector, concurs with this recommendation.
BACKGROUND
California Enterprise Development Authority (“CEDA”)
The California Enterprise Development Authority provides tax-exempt loans and leases for qualified projects located throughout the State of California. The Authority’s mission is to support economic development, job creation, and social programs throughout the State of California. By assisting nonprofit corporations with various tax-exempt financing programs, the Authority is able to support programs that improve the health and welfare of California residents. The Authority finances a broad range of facilities including nonprofit projects such as education, health care and cultural facilities, affordable multi-family and senior housing, manufacturing facilities and equipment, solid waste, water, wastewater treatment facilities and infrastructure projects and government sponsored financing.
Community Health Systems, Inc. (the “Borrower”)
The Borrower was established as Inland Empire Community Health Center to deliver quality healthcare services to vulnerable communities. Since 1984, the Borrower has been a champion for health services, including women’s health and prenatal care, pediatric services, dental and vision care, chiropractic care and behavioral health services. The Borrower is a Federally Qualified Health Center, operating six community health centers in the tri-county area of: San Bernardino, Riverside, and San Diego.
Project
The proceeds of the revenue obligations loaned to the Borrower will be applied to finance and refinance the cost of the acquisition, improvement and equipping of a commercial medical office building located at 1328 South Mission Road, Fallbrook, California 92028 and 18601 Valley Boulevard, Bloomington, California, 92316. Public approval will be provided by both of the local jurisdictions wherein the project is located.
County Involvement
Section 147(f) of the Internal Revenue Code requires that an applicable elected body, with respect to the Project, hold a public hearing and approve the issuance and delivery of the Revenue Obligations. The Board of Supervisors of the County of San Diego, as an applicable elected body, is requested to: (1) hold a public hearing at which all those interested in speaking with respect to the financing of the Project can be heard and (2) approve the issuance of the Revenue Obligations. The Borrower shall be responsible for the payment of all present and future costs in connection with the issuance of the Revenue Obligations.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
Today’s proposed action supports the Operational Excellence Strategic Initiative in the County of San Diego’s 2021-2026 Strategic Plan by supporting and allowing the issuance of revenue obligations by CEDA for the Borrower to finance and refinance the cost of the acquisition, improvements and equipping of real property.
Respectfully submitted,
HELEN N. ROBBINS-MEYER
Chief Administrative Officer
ATTACHMENT(S)
1. County Resolution
2. Notice of Public Hearing
3. CEDA Project Application for Bond