Riverside signs off on up to $45 million in California Baptist University bonds under federal tax rule; notice error prompts second hearing
The Oct. 20 resolution, adopted only to meet a federal tax-law requirement, approves a state financing authority's issuance of the bonds on the university's behalf, with no repayment obligation for the city. A notice error sent the hearing back to the council Nov. 10.
The Riverside City Council held a public hearing Oct. 20 and adopted a resolution approving the issuance of up to $45 million in bonds by a state financing authority for building projects at California Baptist University. The city does not issue the bonds itself.
The bonds would be issued by the California Municipal Finance Authority, which is a joint powers authority, and the proceeds lent to the university, according to a Finance Department report. Repaying them would be up to CBU alone.
The report says the city takes on no financial or legal responsibility for the debt. The council acted only to satisfy the federal Tax Equity and Fiscal Responsibility Act, known as TEFRA.
What the money would build
A city presentation lists three projects at the main campus, 8432 Magnolia Ave., and the Health Sciences Campus, 3532 Monroe St.:
- A new two-story, 23,000-square-foot dental hygiene building.
- Renovation and retrofit work for CAVAD and additional academic programs.
- Improvements to 3,600 square feet of existing space and a 1,060-square-foot film and broadcast addition.
The presentation says some of the money may refinance earlier bonds. According to the hearing notice, proceeds can also cover interest, reserve funds, bond insurance and the cost of issuing the debt.
Why the city votes
The federal tax code's Section 147(f) requires a local government to hold a hearing and sign off before private-activity bonds can be sold as tax-exempt, the presentation says.
The authority was formed in 2004 and has more than 350 member municipalities, the report says. It shares part of its issuance fees with members, and staff expects some of the fee from this deal to be granted to Riverside's general fund.
No one spoke at the hearing. Councilmember Mill moved to adopt the resolution and Councilmember Conder seconded it.
Draft minutes, which are awaiting council approval, record the adoption as Resolution No. 24437 but do not list a vote tally. Councilmember Cervantes arrived later in the meeting.
Second hearing
The item returned on the council's Nov. 10 agenda. A Finance Department report for that meeting says a technical error meant the hearing notice never ran in the Press-Enterprise.
The authority alerted the city, and the hearing was scheduled again so the public would receive proper notice, the report says.
The records reviewed do not show the outcome of the Nov. 10 hearing. Minutes of that meeting had not been posted.
