The Authority
The Authority is a joint 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 is a joint powers authority created by the cities of Selma, Lancaster and Eureka. There are approximately 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.
The JPA Agreement permits any other local agency in California to join the Authority as an “Associate Member.” The Authority’s Board of Directors has requested that the City become an Associate Member of the Authority. Associate membership in the Authority will assist the City as well as for-profit and nonprofit organizations located within the City in financing public purpose projects within the City. The Authority’s Associate Members enjoy nearly all the benefits of regular membership without the concomitant duties or obligations. Associate Members have ample opportunity to provide input on proposed or existing programs. Further, joining the JPA does not restrict Associate Members with respect to their independent ability to finance projects, which may or may not involve or include the Authority.
Once the City becomes an Associate Member of the Authority, the City will be eligible to participate in the Authority’s programs.
The Borrower
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 obligations by the Authority in an amount not to exceed $11,300,000. 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 Obligations will be used to finance and/or refinance the costs of the acquisition, improvement and equipping of (a) approximately 90,000 square feet of charter school educational facilities known as Western Sierra Collegiate Academy, serving approximately 800 students in grades 7-12, located at 660 Menlo Drive, Rocklin, California 95765, in the amount of approximately $11,000,000, (b) charter school educational facilities known as Rocklin Academy Gateway, serving approximately 1,140 students in grades TK-8, located at 6550 Lonetree Boulevard, Rocklin, California 95765, in an amount up to $100,000, (c) charter school educational facilities known as Rocklin Academy, serving approximately 558 students in grades K-6, located at 6532 Turnstone Way, Rocklin, California 95765, in an amount up to $100,000, and (d) educational facilities known as Rocklin Academy Preschool, serving approximately 140 students ages 3-5, located at 6552 Lonetree Boulevard, Rocklin, California 95765, in an amount up to $100,000 (collectively the “Schools” or “Facilities”). The proceeds of the Obligations will also be used to fund a reserve fund and capitalized interest with respect to the Obligations, if necessary, and to pay certain expenses incurred in connection with the issuance of the Obligations.
The Borrower is a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986 (the “Code”). The Facilities will be owned by the Borrower or by one or more limited liability companies whose sole member is the Borrower, and leased and operated by Borrower or a related or successor entity as public charter school facilities supporting the Borrower’s mission of providing a distinct educational program strengthened by community and parent involvement to achieve high standards, rich core content and innovative learning.
The Borrower commenced operations in 1998, opened its first school in 2001, and now operates five charter schools and a preschool in Rocklin, California serving approximately 2,600 students from preschool to 12th grade. The Schools seek to provide students with a challenging and comprehensive college preparatory education in small public school settings. The Schools are fully accredited from Western Association of Schools and Colleges (WASC), and its teachers are fully credentialed.
The issuance of the Obligations as tax-exempt will reduce financing costs and debt service costs for the Borrower. In order to satisfy the requirements for the obligations 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 obligations in accordance with Section147(f) of the Code. The City Council of the City of Rocklin constitutes an applicable elected representative under Section 147(f) of the Code.