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HomeMy WebLinkAbout01 TEFRA HEARING 01-03-06AGENDA REPORT JANUARY 3, 2006 TO: WILLIAM A. HUSTON, CITY MANAGER FROM: REDEVELOPMENT AGENCY SUBJECT: TEFRA HEARING AND RESOLUTION APPROVING THE ISSUANCE OF INDUSTRIAL DEVELOPMENT BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY FOR INTERPlEX NASCAl, INC. SUMMARY Public hearing for the issuance of State of California tax-exempt Industrial Development Bonds for business expansion of Interplex NASCAL, INC. RECOMMENDATION It is recommended the City Council take the following actions: 1. Open the public hearing, receive any comments or written communication, and then close public hearing; 2. Approve Resolution No. 06-02 FISCAL IMPACT There is no direct or indirect financial impact to the City of Tustin as a result of this proposed financing. The Authority will issue tax-exempt revenue bonds on behalf of the Project. The tax-exempt revenue bonds are payable solely out of the revenues derived by the Borrower. No financial obligations are placed on the City for project financing costs or debt repayment. BACKGROUND/DISCUSSION The City has received a request from the California Statewide Communities Development Authority (the "Authority") to conduct a public hearing as required by the Internal Revenue Code in order to issue tax-exempt revenue bonds (the "Bonds") in an aggregate amount not to exceed $6 million on behalf of Interplex NASCAL, Inc. (the "Borrower"). The Borrower will use the proceeds of the Bonds for acquisition and construction of a 37,000 square foot metal stamping facility located at 15777 Gateway Circle in the City of Tustin (the "Project"). Interplex NASCAL, Inc., has been a leader in the manufacturing of precision stamped product for the connector, electronic and telecommunications industries since 1969. The company currently operates a facility in Tustin located at 2961 Dow Avenue and is City Council Report January 3, 2006 Interplex NASCAL, Inc. Page 2 consolidating its Southern California operations, relocating a facility in Temecula and expanding its Tustin operations by over 100%. The new 37,000 square feet facility will increase the company's Tustin operations to 70,000 square feet and allow for the expansion of its workforce to 100 employees. ANALYSIS The Bonds would be tax-exempt private activity bonds for the purposes of the Internal Revenue code and, as such, require the approval of the elected body of the governmental entity having jurisdiction over the area where the project to be financed is located. The City will not be under any obligation to repay the Bond indebtedness. In order for the Authority to issue such Bonds, the City must (1) conduct a public hearing allowing members of the public to comment on the proposed Project, and (2) approve of the Authority's issuance of Bonds on behalf of the proposed financing. Although the Authority (not the City) will be the issuer of the tax-exempt revenue bonds for the Project, the financing cannot proceed without the governmental entity having jurisdiction over the site approving of the Authority's issuance of indebtedness. The Authority is a California joint exercise of powers authority, organized and existing under the laws of the State of California (specifically, California Government Code Section 6500 and following), and is sponsored by the League of California Cities and the California State Association of Counties. Under the California Government Code, cities and counties are authorized to form by agreement a governmental entity that combines the powers of such entities to perform certain governmental functions specifically outlined in the Agreement. With respect to the Authority, over 460 California cities, counties and special districts have entered into and executed the Agreement to become a member of the Authority. The Authority is authorized to assist in the financing of industrial development projects. Agency staff will be available to respond to any questions at the City Council's meeting of January 3, 2006. Christine A. Shingleton Assistant City Manager Jim Draughon Redevelopment Program Manager Attachment: Resolution 06-02 S:IRDAICC reportlJan 3, 2006 Interplex NASCAL Report.doc RESOLUTION NO. 06-02 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, APPROVING THE ISSUANCE OF NOTES, BONDS OR OTHER EVIDENCE OF INDEBTEDNESS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY FOR INTERPLEX NASCAL, INC. The Tustin City Council DOES HEREBY RESOLVE as follows: I. The Tustin City Council finds and determines as follows: A. Statewide Communities Development Authority ("Issuer") in its inducement resolution (the "Inducement Resolution") attached hereto as Exhibit A has proposed to issue its notes, bonds or other evidence of indebtedness (the "Obligations") in an aggregate principal amount not expected to exceed Six Million Dollars ($6,000,000), the Maximum Principal Amount pursuant to the California Industrial Development Financing Act, Section 91500 et seq. of the Government Code of the State of California, as amended and supplemented (the "Act"); and B. The project to be financed by the Obligations consists of the acquisition, construction, rehabilitation and improvement of property, including real and personal property, to be used as, or as a part of, a manufacturing facility (the "Project") as described in the Inducement Resolution; and C. The Issuer has requested that the governing body of the City of Tustin approve the issuance of the Obligations in order to satisfy the public approval requirement of Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), the requirements of Section 9 of the Amended and Restated Joint Exercise of Powers Agreement (the "Agreement"), dated as of June 1, 1988, among certain local agencies, including the City of Tustin, and the public agency approval requirement of Section 91530(f) of the Government Code of the State of California, as amended; and D. The governing body of the Local Government Participant hereby finds and detenmines that the Project is not substantively inconsistent with the City of Tustin's General Plan as prepared and adopted in accordance with Article 5 (commencing with Section 65300 of the Government Code of the State of California) of Chapter 3 of Title 7; and Resolution No. 06-02 January 3, 2006 Page 2 E. The City of Tustin held a public hearing on the Public Hearing Date providing a reasonable opportunity for persons to comment on the issuance of the Obligations and the Project; and F. It is intended that this resolution shall constitute the approval of the issuance of the Obligations required by Section 147(f) of the Code, Section 9 of the Agreement and Section 91530(f) of the Government Code of the State of California; NOW, THEREFORE, the City Council of the City of Tustin resolves that the issuance of the Obligations by Statewide Communities Development Authority to Interplex, NASCAL, Inc. is hereby approved for the purposes of Section 147(f) of the Code, Section 9 of the Agreement and Section 91530(f) of the Government Code of the State of California. PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on the 3rd day of January 2006. DOUG DAVERT, Mayor PAMELA STOKER City Clerk Resolution No. 06-02 January 3, 2006 Page 3 STATE OF CALIFORNIA) COUNTY OF ORANGE) CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 06-02 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 3rd day of January 2006, by the following vote: COUNCILMEMBER AYES: COUNCILMEMER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER CITY CLERK S:IRDAICC re808106-02, Interplex.doc Attachment: Exhibit A EXHIBIT A ISSUER'S INDUCEMENT RESOLUTION RESOLUTION NO. 2005IDB-4 RESOLUTION OF THE CALIFORNIA STATEWIDE COMMUNlTIES DEVELOPMENT AUTHORITY MAKING DETERMINATIONS WITH RESPEÇT TO TIlE FINANCING OF FACILlTIES AND DECLARING ITS OFFICIAL INTENT TO UNDERTAKE THE FINANCING AND TO REIMBURSE CERTAIN CAPITAL EXPE:NÐ:rroRES FROM PROCEEDS OF INDEBTEDNESS Øorrower: Obligation: M'uiia... PriDcipei Amo1lllt: ActIvIties au tl- of the Project: Anticipated Public Beaeftá: InterpleK NASCAL, Inc. Notes, Bonds or any other evidence of indebtedness $10,000,000 Manufacturing facility engaged in the metal stamping of precision components for the electronic and automotive industries (a) EmploymeRt benofits (within the moaninS of SeQtjon 91502.1(b)(1) of the Act) by securing or increasing the number of employees of the Borrower and any other direct Uscl's of the Project or the compensation for such employment. (b) Consumer benefits (within the moaninS of SeQtjon 91502.1(b)(3) of the Act) by improving the quantity or quality or reducing the price of prodw:ts" eneTl!Y or RIaùKI servk:es or t'acilitios, and bypioduclng new or improved products or related services or facilities. WHEREAS, the California Statewide Communities Development Authority (the "Issuer") is authorized and empowered by the provisions ofTitIe 1, Division 7, Chapter 5 of the Government Code of the State of California to issue its Obliptiæis pursuant to the California Industrial Development Financing Act, as amended and supplemented (the "Act"), for the purpose of fmancing certain costs of a project, as that term is defined in the Act; and WHEREAS;. the Borrower desires to &ctluÏFe. 00IISInlct. nmabilitate and improve property, including real and personal property, to be used as, or as a part of, a manufacturing facility (the "Project"); and WHEREAS. the BorrowOJ' is. willing to acquire, constru<:t. rehabilitate and improve the Project upon the issuance by tbe Issuer of the Obliption to finance the Project pursuant to the Act; and WHEREAS. the Borrower has heretofore submitted, and this Commission has accepted,. an application requesting financing for the Project; and WHEREAS;. the Issuer 111&)' not issue the Obliption to finance the Project wtil this Commission makes certain determinations with respect to public benefits and qualification of the Project as required by the Act; and WHEREAs, this CommiBsion has carefully considered and discussed the information contained in the Borrower's application and other information necessary to make such determinations; and CSCDA.EOID8-INDUCERES (819'/) WHEREAS, this Commission desires to induce the Borrower to commence acquisition, construction, rehabilitation and improvement of the Project at the earliest possible time so as to produce the public benefits set forth herein; and WHEREAS, the Issuer, in the course of assisting the Borrower in the fmancing of the Project, expects that the Borrower has paid or may pay certain expenditures (the "Reimbursement Expenditures") in connection willi tbe Project within 60 days prior to the adoption of Ibis Resolution and prior to tbe issuance of the Obligation for the purpose of financing costs associated with the Project on a long-tenn basis; and WHEREAS, the Issuer reasonably expects that the Obligation in an amount not expected to exceed the Maximum Principal Amount will be issued and that certain of the proceeds of the Obligation may be used to reimburse the Reimbursement Expenditures; and WHEREAs. Section 1.103-S(a)(5) and Section 1.150-2 of the Treasury Regulations require the Issuer to declare its reasonable official intent to reimburse prior expenditures for the Project with proceeds of a subsequent borrowing; NOW, THEREFORE, the Commission of the California Statewide Communities Development Issuer does hereby resolve as follows: Section 1. This Commission hereby finds and detennines that the foregoing recitals are true and correct. Section 2. This Commission hereby finds and detennines tbat: (a) the Activities and Uses of the Project are in accord with Section 91503 of the Act; (b) the IISe of the Project is likely to produce the Anticipated Public Benefits; (c) the issuance of the Obligation by tbe Issuer in an amount sufficient to fmance certain costs of the Project, which is now estimated not to exceed tbe Maximum Principal Amount, as described in the Borrower's application attached hereto as Exhibit A, is likely to be a substantial factor in the accrual of one or more of the Anticipated Public Benefits ftom the use of the Project as proposed in the Borrower's application; and (d) the acquisition of the Project by the issuance of the Obligation is otherwise in aooord with the purposes and requirements of the Act. Section 3. It is the present intent of tbe Issuer to issue, at one time or from time to time, the Obligation (the interest ofwbich is intended to be exempt ftom federal income taxation) when permitted to do so under the Act in the amount not to exceed the Maximum Principal Amount to finance certain costs of the Project. Section 4. This Resolution is being adopted by the Issuer for purposes of establishing compliance with the requirements of Section 1.103-8(a)(5) and Section 1.150-2 of the Treasury Regulations. In that regard, the Issuer hereby declares its official intent to use proceeds of indebtedness CSCD~(I/97) -2- to reimburse the Reimbursement Expenditures. Notwithstanding the foregoing, this resolution does not bind the Issuer to make any expenditure, incur any indebtedness, or proceed with the financing of the Project. Seetion 5, This resolution sball take effect immediately upon its passage. PASSED AND ADOPTED by the CaUfomla Statewide CommoDities Development Authority this 25th day of April, 2005. . . . . . The undersigned, a duly appointed and qualified Member of the Commission of the California Statewide Communities Development Authority, DOES HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of the Issuer at a duly called meeting of the Commission of the Issuer held in accordance with law on April 25, 2005. Member of the'tommission California Statewide Communities Development Authority CSCDA-EOIDB-DD-INDUCEIU!S (1197) -3- EXHIBIT A BORROWER'S APPLICATION [On file with Issuer]