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HomeMy WebLinkAbout2008/09/16 - Minutes - Special WorkshopSeptember 16, 2008 CITY OF RANCHO CUCAMONGA CITY COUNCIL MINUTES SPECIAL MEETING (WORKSHOP) A. CALL TO ORDER A special meeting of the Rancho Cucamonga City Council was held on Tuesday, September 16, 2008, in the Council Chamber at the Civic Center located at 10500 Civic Center Drive, Rancho Cucamonga, California. Mayor Kurth called the meeting to order at 4:08 p.m. Present were Councilmembers: Rex Gutierrez, Sam Spagnolo, Diane Williams, Mayor Pro Tem L. Dennis Michael, and Mayor Donald J. Kurth, M.D. Also present were: Jack Lam, City Manager; Mahdi Aluzri, Deputy City Manager/Community Development; Linda Daniels, Redevelopment Agency Director; Charles Scott, Senior Information Services Specialist; Shirr'I Griffin, Deputy City Clerk and Kathryn L. Scott, CMC, Acting City Clerk. B. ANNOUNCEMENTS/PRESENTATIONS C. PUBLIC COMMUNICATLONS No Public Communications. D. :ITEM(S) OF BUSINESS D1. Jack Lam, City Manager, introduced Linda Daniels, Redevelopment Agency Director. Linda Daniels, Redevelopment Agency Director, stated that Mountain Shadows, which is a 501(c)(3) organization is looking to acquire two different types of properties in Rancho Cucamonga; some are residential properties that serve the developmentally disabled with six and fewer residents,. and the other property is referred to as an "Adult Day Program" site where developmentally disabled residents in the community can receive services-therapy, education, and a variety of things that can assist them in their daily living activities. She said Mountain Shadows is looking to acquire fifteen (15) properties within San Bernardino County, several of which are located in Rancho Cucamonga. She said all of the facilities are in operation now by another provider, and all of them have been in operation with the exception of the Adult Day Program site between 17 and 20 years. She said the Adult Day Program site that has been in operation for approximately seven years is located north of Foothill in the industrial area between Center and Haven Avenue. Special City Council Meeting September 16, 2008 Page 2 Mrs. Daniels said in order to complete the transaction proposed by Mountain Shadows, they would like to pursue the issuance of tax exempt financing. She said it is an eligible program under the tax exempt financing and the CSCDA (California Statewide Communities Development Authority) is the proposed issuer. She said the City has used them for previous issues, and the City is a member of that JPA with the CSCDA. She said the question for the Council to consider is whether this an authorized use and is this an activity that the Council wants to consider as part of their financial transaction to acquire the properties; a public hearing must take place, which is referred to as a TEFRA (Tax Equity and fiscal Responsibility Act). She said it is a requirement by the government to have a public hearing whenever taxes and bonds are issued. Linda Daniels stated the facilities that Mountain Shadows is acquiring elsewhere in the County of San Bernardino include the cities of Rialto, San Bernardino, Redlands and Loma Linda; in addition to San Bernardino County facilities, they are also acquiring properties in Laverne and most of those communities, with the exception of Loma Linda, have either had the hearings or are in the process of scheduling those hearings. She said the applicant, Mountain Shadows, as well as Michael LaPierre from CSCDA are present to answer any questions and give brief information on Mountain Shadows itself. She said then staff would be seeking direction on the proposed TEFRA hearing and the possibility of having it scheduled at a future meeting. Mayor Kurth asked why it is necessary to come before the City Council, and Linda Daniels answered that it is a legal requirement that the local agency conduct a public hearing to consider the tax exempt financing. Councilmember Spagnolo asked what the money. would be used for, and Linda Daniels answered that the money will be used to purchase the homes as well as the Adult Day Program site. She said the form of financing is below a commercial conventional rate, and because they area 501(c)(3) nonprofit, they qualify for receiving that reduced interest rate, which makes it more affordable to them to operate the facilities. Mayor Kurth asked what the role of the City is. Linda Daniels answered to conduct the TEFRA hearing and to authorise CSCDA to issue the bonds if that is the direction of the Council. Mayor Kurth then asked about the liability of the City. Linda Daniels said there is no liability to the City from a financial aspect; there is no City, Agency or any other local funds involved; it is completely paid for by revenues and resources of the 501(c)(3); she said, however, it is a requirement that you conduct the public hearing. In response to Mayor Kurth's question, Linda Daniels said that the City is not paid to conduct the public hearing. Councilmember Michael asked who would fulfill the bond obligation in case of a default, other than the insurance company. Linda Daniels responded that the City is not on the issue at all; if there is a default on the bond, it does fall to the assets of the 501(c)(3). She said Mike LaPierre from CSCDA could elaborate on that. Linda Daniels, Redevelopment Agency Director, stated that all the homes that Mountain Shadows is looking to acquire will serve the developmentally disabled, and they are in operation now, and they will continue in operation once acquired by Mountain Shadows. Doug Cook, Mountain Shadows, stated that his son has cerebral palsy and that he moved into Mountain Shadows in 1986, where he had a life, independence, and a home that he could call his own; but they were going to close the place because they got into financial difficulties. He said he then formed a corporation, bought it, and thought he would be involved for about a year, and eleven years later in October of 2002, he was finally able, with Mike LaPierre's help and a banking team of compassionate investment bankers, to get the bond financing needed in order to buy the original sixteen homes. Doug Cook, Mountain Shadows, presented the DVD presentation on Mountain Shadows, showing the original Mountain Shadows homes where his son lives and 105 other people live in sixteen original homes. Following the DVD presentation, Doug Cook stated that due to the bond financing, his son and others shown in the DVD, will have a home at Mountain Shadows guaranteed for the next.30 or 40 years. He said the Special City Council Meeting September 16, 2008 Page 3 people who live in these homes have lived there between 15 and 20 years, except for one or lwo. Mr. Cook said he is a. consultant for Mountain Shadows, and their mission is to acquire these types of homes and guarantee the future of the homes for their residents. He said they contribute to the community in a large way. He provided stable financial information and elaborated on their $1.6 million in reserves. He said this is a labor of love for him, having spent a lot of his time and resources over the last twenty years keeping Mountain Shadows alive.. He said the target growth is about 100 homes for Mountain Shadows in the general Southern California area. He said at the completion of this transaction, assuming. the bond financing and home acquisition, they will have 40 million of those homes in place. They have opportunities to pick up homes, but they don't take homes that are marginal as far as the levels of care or even physical plant. He said when Mountain Shadows takes over the homes, they will improve the physical plant, and they will be good citizens of Rancho Cucamonga. He said the funding is a Medicare wavered .program, which means half the money comes from the Federal Government and half the money comes from the State of California. He said the Federal Government pays the State of California and requires them to work within certain parameters of care. He said the State gets the money, but they don't pay them during the budget crisis. Mayor Kurth asked how difficult it was for people to get in a home. Mr. Cook answered that there are two openings and 25 people at Mountain Shadows who want to move in; but there's five other people who live in one of these houses, and you can't put someone with one kind of needs in the same house with someone else who is going to change the life style of those people who have lived there for fifteen years. He said it is very difficult, but if the right person comes along, that opening is available to them. He said it usually takes someone who is interested in living at Mountain Shadows three to four years to get into one of the homes. He said they are always looking to serve the needs of people with disabilities. He said if they can't help, they will find somebody who can. He said after the age of eighteen, they don't qualify. Mayor Pro Tem Michael asked what assurances the City has that this home remains the kind of home that it is now, housing the disabled, and not someday become a home that is housing people with a criminal background Mike LaPierre, CSCDA, said one of the primary missions of Mountain Shadows is to care for persons with developmental disabilities. He said another step they could take to memorialize that so that these homes do not change purpose or use, if the City does agree to hold the TEFRA hearing, they would be asked to adopt a resolution following the public hearing authorizing CSCDA's issuance of bonds for Mountain Shadows; and they can work with the City to include within that resolution language which specifies these homes can only be used for this purpose in the City of Rancho Cucamonga. Mr. Cook stated that if anybody in that other category were to somehow eventually acquire the homes, they would have to retire the Mountain Shadows debt, and then they would have to come to the City to get another TEFRA hearing in order to get the new financing. He said the City would have a double layer protection. Mayor Pro Tem Michael asked if they register their homes with the local city public safety agencies (fire, police) so that the Fire Department would be aware of the kind of challenge potentially they would have in a response to some emergency. Mr. Cook stated that all the homes are individually licensed, so each 6-bed home has their own license, and they are under Department Health Services. He said they are surveyed by three different agencies during the year, but each year the Department Health Services does a survey just like they do at a hospital, and you have to meet all the requirements. He said at the same time the survey is done, the fire department comes and inspects the homes, and they have to pass the requirement of the fire department. He said the homes have agreements with the hospital to take the residents in the ER room and they know who they are and why they are there. He said they are very integrated with the community. Mike LaPierre, CSCDA, stated that the proposed issuer of the bonds would be the California Statewide Communities Development Authority, who is a Joint Powers Authority sponsored by the League of California Cities and the California State Association of Counties, to which the City of Rancho Cucamonga is a member. Special City Council Meeting September 16, 2008 Page 4 He said being a 501(c)(3) nonprofit organization, Mountain Shadows is eligible under the Federal Tax Code to access tax exempt bond financing. He said the benefit there is a much lower interest rate than you may get commercially or otherwise; he said in order to access those funds, you need 1) a governmental issuer of those bonds, such as CSCDA, and 2) the Federal tax Code, under the Tax Equity 8 Fiscal Responsibility Act or TEFRA Act of 1982, requires that a public hearing be held in the local jurisdiction which the projects reside; and ultimately that local government approve the issuance of bonds for that facility and that purpose. He said it is a public accountability procedure that the IRS set up in 1982. He said they have worked with Mountain Shadows before and at those hearings there were no issues at all; the local agencies supported them. Mr. LaPierre reiterated that these are debt obligations of the CSCDA and not the City of Rancho Cucamonga. He said the City's name does not appear in the bond offering documents anywhere other than referring to the location of the project. He said the City is not liable for repayment of the debt should something go wrong. ACTION: The City Council directed staff to work with CSCDA and set the next available meeting for a TEFRA hearing. «.,,,. ' ~ . E. ADJOURNMENT The meeting adjourned at 4:59 p.m. Res ectfully submitted, ~li~t, ~~co~- Ka ryn L. Scott, CMC Acting City Clerk/Records Manager Approved: November 19, 2008