MEETING DATE:
June 24, 2025
SUBJECT:
Title
RESOLUTION NO. 2025-9454 - APPROVING THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000 FOR THE PURPOSE OF FINANCING CERTAIN EDUCATIONAL FACILITIES AND CERTAIN OTHER MATTERS RELATING THERETO FOR THE BENEFIT OF BAYPOINT PREPARATORY ACADEMY
Recommendation:
Recommendation
ADOPT a Resolution approving the issuance of revenue bonds by the California Enterprise Development Authority in an aggregate principal amount not to exceed $30,000,000 for the purpose of financing certain educational facilities and certain other matters relating thereto for the benefit of Baypoint Preparatory Academy
Body
Board or Commission Action
Not applicable
Relevant Council Strategic Theme
Not applicable
Relevant Department Goal
Not applicable
Introduction:
California Enterprise Development Authority (the “Authority” or “CEDA”) is a joint powers authority 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. The City of San Marcos (the “City”) joined CEDA as an associated member in April 2013 pursuant to Resolution No. 2013-7773.
Baypoint Preparatory Academy (“Borrower”) is a California limited liability company, the sole member of which is Baypoint Preparatory Academy (“School”), a California nonprofit public benefit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (“Code”). The Facilities to be financed with the Bonds will be owned by the Borrower and leased to and operated by the School as public charter school facilities within the City of San Marcos.
The Borrower and the Authority have requested that the City, pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), approve a resolution in accordance with Internal Revenue Code Section 147(f) authorizing the issuance of tax-exempt bonds by the Authority in an amount not-to-exceed $30,000,000 (“Bonds”). 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 Authority conducted the TEFRA hearing on June 10, 2025.
Discussion:
The School commenced operations in 2014, and manages a charter school serving approximately 170 students from grades TK through 8th grade and has an approximate enrollment of 245 students for the 2025-26 academic year. The School is accredited by Western Association of Schools and Colleges.
As noted above, the Borrower and Authority have requested that the City approve a resolution pursuant to TEFRA and Internal Revenue Code 147(f), authorizing the issuance of Bonds by the Authority in an amount not to exceed $30,000,000. The proceeds of the Bonds will be used by the Borrower to finance and/or refinance the acquisition, construction, improvement, installation, furnishing and equipping of an approximately 41,830 square foot educational facility located on an approximately 4.93 acre property at 520 E Carmel Street, San Marcos, California 92078 (“Project”). The proceeds of the Bonds will also be used to fund a reserve fund and capitalized interest with respect to the Bonds, if necessary, and to pay certain expenses incurred in connection with the issuance of the Bonds.
The issuance of the Bonds as tax-exempt bonds will reduce financing costs and debt service costs for the Borrower. To satisfy the requirements for the Bonds to be issued as tax-exempt bonds, 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 bonds in accordance with Section 147(f) of the Code. The TEFRA hearing was conducted by the Authority on June 10, 2025, following a publication of a notice of the TEFRA hearing in the San Diego Union Tribune not less than 7 days prior to the hearing, and no comments were received from the public. The City Council of the City of San Marcos constitutes an applicable elected representative under Section 147(f) of the Code; approving the issuance of the Bonds is the full extent of the participation and obligation of the City in this matter.
Fiscal Impact:
There is no fiscal impact to the City. The Bonds to be issued by the Authority for the Project will be the sole responsibility of the Borrower, and the City will have no financial or legal obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. Staff has negotiated the terms and provisions of an indemnification agreement with Borrower and the Authority to avoid any fiscal impact to the City with respect to the issuance of the Bonds and use of funds from the same, which the Borrower and the Authority have indicated is acceptable.
Attachment(s)
Resolution Approving Issuance by Authority
Prepared by: Jeffrey Jorgenson, Accounting and Treasury Manager
Reviewed by: Donna Apar, Finance Director
Approved by: Michelle Bender, City Manager