HomeMy WebLinkAboutO-2014-3525 issuance of private activity tax exempt obligations by Public Finance AuthorityORDINANCE NO.
Dated: June 9, 2014
The City Council of the City of La Porte, Texas met in regula session on the 9h
day of June, 2014, with the following members present:z U-�%S•
introduced the following ordinance and moved its
passage:
ORDINANCE GIVING APPLICABLE ELECTED
REPRESENTATIVE APPROVAL IN CONNECTION WITH THE
ISSUANCE OF TAX EXEMPT OBLIGATIONS BY THE PUBLIC
FINANCE AUTHORITY.
WHEREAS, Educational Media Foundation, a California nonprofit corporation
(the 'Borrower"), intends to operate a non-commercial radio station (the "Radio
Station"), the Federal Communications Commission (FCC) License (the "License") for
which is assigned to the City of La Porte, Texas (the "City"), and the radio antenna and
other related equipment for which is located approximately 11.3 miles northwest of
Winnie, Texas, off F -M 1410 in Liberty County, Texas; and
WHEREAS, the Radio Station will offer public affairs programming,
contemporary Christian music, public service announcements and off -the -air personal
counseling by phone to listeners; and
WHEREAS, the License and the Radio Station will initially be owned and
operated by the Borrower; and
WHEREAS, the Borrower has requested the Public Finance Authority (the
"Authority") to issue its tax exempt obligations (the 'Bonds") for the benefit of the
Borrower, in one or more series and in the aggregate principal amount of approximately
$30,000,000, a portion of which will be used to refinance (a) the cost of acquiring the
License to operate the Radio Station, (b) the cost of acquiring certain related equipment
and (c) certain costs of issuing the Bonds (collectively, the "Project"); and
WHEREAS, in order to achieve interest savings, the Borrower desires that the
Bonds be issued in compliance with the requirements of the Internal Revenue Code of
1986, as amended (the "Code"), so that interest on the Bonds may be excludible from the
gross income of the owners of the Bonds; and
WHEREAS, the City Council held a public hearing at or about 6:00 p.m. on June
9, 2014 after reasonable public notice was given in accordance with applicable law, and
at such public hearing no objections were raised with respect to the proposed issuance of
the Bonds or the financing of the Project; and
WHEREAS, Section 147(f) of the Code requires, as a condition to receiving tax
exempt treatment of the interest on the Bonds, that an authorized, elected representative
approve the Project, the issuance of the Bonds and the plan of finance to be effectuated
thereby (the "Plan"), and the City Council constitutes such an authorized, elected
representative; and
WHEREAS, the City Council deems it necessary and advisable that this
ordinance be passed;
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of
LaPorte, Texas, as follows:
Section 1. The issuance of the Bonds by the Authority in one or more series
and in an aggregate principal amount not to exceed $30,000,000, the financing of the
Project and the Plan are hereby approved.
Section 2. Such approval provided in Section 1 hereof shall be solely for the
purposes of Section 147(f) of Code, and the City shall have no liabilities for the payment
of the Bonds nor shall any of the City's assets be pledged to the payment of the Bonds.
Section 3. This ordinance shall take effect and be in full force immediately
after its passage by the City Council.
On motion of Councilmember (lam seconded by
Councilmember he foregoing ordinance was duly
passed.
Nays: nu,
PASSED AND APPROVED this the 9t' day of June, 2014.
CIT
By:
Lou
Mayor
CERTIFICATE
The undersigned, duly appointed and acting City Secretary of the City of La
Porte, Texas, does hereby certify that the foregoing is a true and correct copy of an
ordinance passed by the City Council on June 9, 2014, together with an extract from the
minutes of the meeting at which that ordinance was passed to the extent pertinent thereto.
P
EST:
J�
Patrice Fogarty
City Secretary
APPROVED:
Clar T. Askin
Assistant City Attorney
yy O
PECK, SHAFFER & WILLIAMS LLP
ATTORNEYS AT LAW
65 EAST STATE STREET, SUITE 500
COLUMBUS, OH 43215
January 14, 2014
VIA EMAIL to citymanager@laportetx.gov
Corby D. Alexander, City Manager
City of LaPorte, Texas
604 West Fairmont Parkway
LaPorte, Texas 77571
Re: Educational Media Foundation
Dear Mr. Alexander:
TEL 614 224 5205
888 900 5205
FAX 614 224 0069
WWW.PECKSHAFFER.COM
Diana B. Silveira
dsilveira@peckshaffer.com
Our firm is acting as. Bond Counsel in connection with the proposed issuance of tax-
exempt bonds (the "Bonds") by the Public Finance Authority, a body corporate and politic of the
State of Wisconsin (the "Authority"), for the benefit of the Educational Media Foundation, a
California nonprofit corporation (the "Borrower"). According to the Borrower, the Borrower's
primary educational and cultural benefits include the direct broadcast of educational programs,
extensive promotion of cultural and charitable opportunities and sponsorship of and partnership
with a wide variety of local and national non-profit groups to advance community improvement.
The Authority will loan the proceeds of the Bonds to the Borrower to (a) refinance the
cost of acquiring a certain Federal Communications Commission (FCC) license for a radio
station, (b) refinance the cost of acquiring certain related equipment and (c) pay certain costs of
issuing the Bonds (collectively, the "La Porte Project"). The FCC license is assigned to the City
of LaPorte, Texas (the "City"), and the radio antenna relating to the station is located
approximately 11.3 miles northwest of Winnie, Texas, off F -M 1410 in Liberty County, Texas.
The Borrower operates radio stations in several states and is an organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), based on its
educational mission which it furthers with these stations. The Authority is empowered to issue
the Bonds for the La Porte Project pursuant to Section 66.0304 of the Wisconsin Statutes, as
amended.
Federal tax law plays a large role in tax-exempt financings, including the one required in
connection with the La Porte Project. In order to complete this tax-exempt financing and
refinance the La Porte Project in the City, the Borrower needs your assistance in meeting the
following tax law requirements:
ATLANTA CHICAGO CINCINNATI COLUMBUS COVINGTON DENVER
PECK, SHAFFER & WILLIAMS LLP
Corby D. Alexander
City of LaPorte, Texas
January 14, 2014
Page 2
First, Section 147(f) of the Code requires that a public hearing be held in the
local area where the project being financed or refinanced with tax-exempt
obligations is located, at least 14 days after publication of notice in accordance
with the Code's requirements.
Second, the Code requires that an elected representative, such as the City
Council, formally approve the issuance of the Bonds.
To satisfy these tax law requirements, the Borrower requests the City Council to cause
the notice to be published, hold (or cause to be held) a public hearing and consider an ordinance
approving the Bonds. The public hearing mandated by the Code only requires the City Council
(or its designated representative) to give interested parties the right to make statements about the
La Porte Project or the Bonds and does not require the City Council to conduct a debate or make
a determination on the merits of the La Porte Project. The approval given by the City Council is
merely needed to meet the Code requirements. Such approval does not obligate the City to make
any payments with respect to the Bonds, nor will the Bonds become the indebtedness of the City.
We have included with this letter the forms of the public notice and approval ordinance.
We hope to work with you and the City to schedule the public hearing as soon as
possible, which means that the notice will need to be published shortly as well. We would be
happy to undertake the process of getting the notice published at your direction. Thank you for
your assistance. Please do not hesitate to contact us if we may answer any questions you might
have. We look forward to completing this project with you.
Sincerely,
PECK, SHAFFER & WILLIAMS LLP
'! l r�•f' r1�.
F•
Per Diana B. Silveira
DBS/clp
Attachments
30168
file:///S:/Council Agendas/CITY COUNCIL DRAFT FOLDERS/201...
From: White, Margo [MargoWhite@andrewskurth.com]
Sent: Wednesday, February 12, 201411:04 AM
To: Dolby, Michael
Cc: Alexander, Corby
Subject: RE: Educational Media Foundation - Public Hearing and Approval Request
Michael,
The transmittal letter accurately reflects the reasons for the approval and the liability and responsibility of the City
(i.e., none).
Section 147(f) of the Internal Revenue Code (the relevant portion of which is excerpted below) requires certain
approvals in connection with tax-exempt private activity bonds. It is that approval requirement that the PFA is trying
to satisfy.
(f) Public approval required for private activity bonds
(1) In general
A private activity bond shall not be a qualified bond unless such bond satisfies the
requirements of paragraph (2).
(2) Public approval requirement
(A) In general
A bond shall satisfy the requirements of this paragraph if such bond is issued
as a part of an issue which has been approved by—
(i) the governmental unit—
(I)
nit(I) which issued such bond, or
(II) on behalf of which such bond was issued, and
(ii) each governmental unit having jurisdiction over the area in which
any facility, with respect to which financing is to be provided from the net
proceeds of such issue, is located (except that if more than 1 governmental
unit within a State has jurisdiction over the entire area within such State in
which such facility is located, only 1 such unit need approve such issue).
(B) Approval by a governmental unit
For purposes of subparagraph (A), an issue shall be treated as having been
approved by any governmental unit if such issue is approved—
(i) by the applicable elected representative of such governmental unit
after a public hearing following reasonable public notice, or
(ii) by voter referendum of such governmental unit.
(C) Special rules for approval of facility
If there has been public approval under subparagraph (A) of the plan for
financing a facility, such approval shall constitute approval under subparagraph (A)
for any issue—
(i) which is issued pursuant to such plan within 3 years after the date of
the 1 st issue pursuant to the approval, and
(ii) all or substantially all of the proceeds of which are to be used to
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finance such facility or to refund previous financing under such plan.
(D) Refunding bonds
No approval under subparagraph (A) shall be necessary with respect to any
bond which is issued to refund (other than to advance refund) a bond approved
under subparagraph (A) (or treated as approved under subparagraph (C)) unless the
average maturity date of the issue of which the refunding bond is a part is later than
the average maturity date of the bonds to be refunded by such issue. For purposes of
the preceding sentence, average maturity shall be determined in accordance with
subsection (b)(2)(A).
(E) Applicable elected representative
For purposes of this paragraph—
(i) In general The term "applicable elected representative" means with
respect to any governmental unit—
(1)
nit(I) an elected legislative body of such unit, or
(II) the chief elected executive officer, the chief elected State
legal officer of the executive branch, or any other elected official of
such unit designated for purposes of this paragraph by such chief
elected executive officer or by State law.
If the office of any elected official described in subclause (II) is
vacated and an individual is appointed by the chief elected executive officer of the
governmental unit and confirmed by the elected legislative body of such unit (if any) to
serve the remaining term of the elected official, the individual so appointed shall be
treated as the elected official for such remaining term.
(ii) No applicable elected representative
If (but for this clause) a governmental unit has no applicable elected
representative, the applicable elected representative for purposes of clause (i)
shall be the applicable elected representative of the governmental unit—
(1)
nit(I) which is the next higher governmental unit with such a
representative, and
(II) from which the authority of the governmental unit with no
such representative is derived.
From: Dolby, Michael fmailto:DolbyMWaportetx.gov]
Sent: Wednesday, February 12, 2014 10:14 AM
To: White, Margo
Cc: Alexander, Corby
Subject: FW: Educational Media Foundation - Public Hearing and Approval Request
Importance: High
Margo,
I am not familiar with this requirement for our city to approve bonds for a local radio station. Please advise as to
our liability and responsibility
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Thanks
Michael
From: Alexander, Corby
Sent: Wednesday, February 12, 2014 10:04 AM
To: Dolby, Michael
Subject: FW: Educational Media Foundation - Public Hearing and Approval Request
Here's the information that I mentioned this morning.
From: Diana B. Silveira[mailto:dsilveira@peckshaffer.coml
Sent: Tuesday, January 14, 2014 11:33 AM
To: City Manager Public E -Mail
Subject: Educational Media Foundation - Public Hearing and Approval Request
Mr. Alexander,
Per our conversation a short while ago, I have attached some correspondence describing the tax-exempt financing
I spoke with you about on the telephone. The call sign and frequency for the radio station is described on the
Federal Communications Commission (FCC) website as KHJK, 103.7 FM, broadcast through either the K -LOVE
Radio or Air1 Radio networks. You will notice in the attached documents that the maximum principal amount for
the tax-exempt bonds will be $30 million, but the portion of that total allocable to the License assigned by the FCC
to La Porte and the radio antenna for this station, which is located in Liberty County, is approximately $3,000,000.
It is mentioned in the correspondence and draft approval resolution, but I would like to reiterate that the
repayment of these bonds will be the sole responsibility of Educational Media Foundation. No taxpayer dollars will
be pledged or used to pay back the bonds, and the bonds will not be the debt of La Porte. Educational Media
Foundation will cover the cost of the public notice that is required by the Internal Revenue Code, and will also
cover any additional costs of La Porte that arise in connection with holding the public hearing and considering the
approval ordinance.
Please pass any and all of this information on to the City Council, and please feel free to contact me at any time to
answer any questions you or they may have. In the meantime, I will contact Educational Media Foundation to
have someone call you about the Community of License aspect of this radio license. Thank you for your time, and
I look forward to hearing back from you regarding scheduling the public hearing.
Thank you,
Diana
�1 U-11 tA_�
DIANA B. SILVEIRA
ATTORNEY
d s i Ive i ra @ p e c k s h affe r. co m
65 EAST STATE STREET TEL 614 233-5392
SUITE 500 888 900 5205
COLUMBUS, OH 43215 FAX 614-224-0069
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