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REPORT <br />8.A. - Page 1 <br />To the Honorable Mayor and City Council <br />From the City Manager <br />July 24, 2017 <br />SUBJECT <br />Public hearing regarding the issuance of tax-exempt notes by the California Public <br />Finance Authority for the benefit of Verity Health System of California, Inc. <br />RECOMMENDATION <br />1. Conduct a public hearing on the issuance of tax-exempt notes (the 2017 Notes) <br />by the California Public Finance Authority (CaIPFA) for the benefit of Verity <br />Health System of California, Inc. (Verity Health) in an aggregate amount not to <br />exceed $25,000,000 to finance and refinance working capital needs of Verity <br />Health for operating costs at its headquarters located in the City of Redwood City <br />and at health care facilities in other communities in California operated by Verity <br />Health and its affiliates; <br />2. Adopt a resolution (Attachment 1) approving the issuance of the 2017 Notes by <br />CaIPFA <br />BACKGROUND <br />Before coming under the leadership of Verity Health in December 2015, the hospitals, <br />medical foundation and other affiliates were led by the Daughters of Charity <br />(Daughters). The Daughters began their healthcare mission in California in 1858 with <br />the opening of Los Angeles Infirmary, now known as St. Vincent Medical Center. The <br />Daughters ministered to ill, poverty-stricken individuals for more than 150 years. The <br />Daughters of Charity Health System was formed in 2002 and eventually included a total <br />of five hospitals and other related affiliates (collectively, the Daughters of Charity Health <br />System). <br />In recent years, however, operating losses plagued the Daughters of Charity Health <br />System due to mounting labor costs, low reimbursement rates and the ever-changing <br />healthcare landscape. In July 2015, the Daughters of Charity Health System Board of <br />Directors selected BlueMountain Capital Management LLC, a private investment firm, to <br />recapitalize its operations and transition leadership of the Daughters of Charity Health <br />System to Verity Health. <br />Verity Health is a California nonprofit public benefit corporation headquartered in <br />Redwood City, California and is the sole corporate member of five California nonprofit <br />public benefit corporations, each of which operates an acute care hospital and other <br />facilities (collectively, the "Hospitals," see list below) in the state of California. Verity <br />Health and the following affiliated entities (collectively, "Verity") operate as a nonprofit <br />