Loading...
HomeMy WebLinkAbout2010-06-22 - AGENDA REPORTS - AEROSPACE DYNAMICS RECOVERY (4)PUBLIC HEARING DATE: SUBJECT: DEPARTMENT: Agenda Item: 6-R y CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval Item to be presented by: June 22, 2010 -!l Jason Crawford ISSUANCE OF STATE ALLOCATED RECOVERY ZONE FACILITY BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO AEROSPACE DYNAMICS INTERNATIONAL FOR A PROPOSED EXPANSION PROJECT WITHIN THE SANTA CLARITA RECOVERY ZONE City Manager's Office RECOMMENDED ACTION City Council conduct public hearing and adopt resolution approving the issuance of State allocated Recovery Zone Facility Bonds by the California Statewide Communities Development Authority. BACKGROUND On February 17, 2009, President Barack Obama signed into law the American Recovery and Reinvestment Act (Recovery Act) of 2009 which, among other actions, amended the Internal Revenue Code to create a new method of federally subsidized financing available to private borrowers for economic development called Recovery Zone Facility Bonds (RZFBs). States, counties, and large municipalities (population over 100,000) were given a direct allocation of bonds to be used by January 1, 2011, to finance certain qualified economic development purposes for use within a designated "Recovery Zone." As a result of the direct allocation, the United States Department of Treasury awarded the City of Santa Clarita an allocation of $13,270,000 in Recovery Zone Facility Bonds (RZFBs). In addition to the allocation received directly by the City, businesses have the option to apply to Adopted: a �� the State of California to receive funds for projects in designated Recovery Zones. The funds available from the State include allocations from cities and counties that chose not to participate in this program, and voluntarily waived those funds back to the State or those cities and counties that had their allocations deemed waived. These tax-exempt, private activity bonds are economic development bonds to assist local agencies in stimulating economic growth by supporting selected private development projects. The City or other local or state agency serves as the conduit issuer of the bonds for projects that meet the requirements of the Recovery Act and such conduit issuer is not liable or obligated to pay any debt incurred as a result. On April 28, 2009, the City Council unanimously approved the 21 -Point Business Plan for Progress, a broad -reaching economic development stimulus program to strengthen our local economy for both the short- and long-term. The 21 -Point Business Plan for Progress will enhance local business partnerships, encourage quality job creation in the area through business retention, expansion and attraction, bolster retail spending, and attract external dollars to the community. A component of the plan included maximizing the funds available to the City as a result of President Obama's stimulus package and aggressively pursuing opportunities that would maximize job creation. In October 2009, the City Council approved a "Recovery Zone" for the purposes of accessing these funds. The Santa Clarita Recovery Zone was approved to include the same boundaries as the Santa Clarita Enterprise Zone, whereby the goals to reduce poverty and increase employment are similar. The City 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 $7 million on behalf of Aerospace Dynamics International (the "Borrower"). The Borrower will use the proceeds of the bonds to finance designing, acquiring, and constructing a 100,000 square foot building to be used in the design and production of aircraft parts, components and assemblies, located at 25575 Rye Canyon Road in the City of Santa Clarita, California, and acquiring and installing certain related equipment and capital items to be installed and located at 25540 Rye Canyon Road (collectively "The Project"). The $7 million being requested by the Borrower represents additional funds, above the City's allocation, that the Borrower will be requesting from the State of California. Aerospace Dynamics International is an aerospace manufacturing company headquartered in Santa Clarita. They occupy over 245,000 square feet of space in the City in order to provide engineering, manufacturing, and inspection technology to their two largest clients: Boeing and Lockheed. ADI is also one of the largest employers in Santa Clarita Valley, currently providing over 400 job opportunities. The expansion project proposed to be funded through these bonds is expected to create an additional 200 jobs. In order for the Authority to issue such Bonds, the City must: 0 1. Conduct a public hearing allowing members of the public to, comment on the proposed Project; and 2. Approve 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 City being a member of the Authority and, as the governmental entity having jurisdiction over the site, approving of the Authority's issuance of indebtedness. The City has been a member of the Authority since July 22, 1993. 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. ALTERNATIVE ACTIONS Other action as determined by City Council. FISCAL IMPACT The Borrower, Aerospace Dynamics International, shall be responsible for the payment of all present and future costs in connection with the issuance of the obligations. The payment of the principal and interest on the obligations shall be solely the responsibility of the Borrower. The obligations shall not constitute a debt or obligation of the Authority or the City. ATTACHMENTS Resolution S NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that on June 22, 2010, a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 will be held with respect to the proposed issuance by the California Statewide Communities Development Authority (the "Authority") .of its revenue bonds in one or more series in an amount not to exceed $7,000,000 (the "Bonds"). The proceeds of the Bonds will be used to: (1) finance a portion of the cost of (a) designing, acquiring and constructing an approximately 100,000 square foot facility to be used in the design and production of aircraft parts, components and assemblies, located at 25575 Rye Canyon Road in the City of Santa Clarita, California, and (b) acquiring and installing certain related equipment and capital items to be installed and located at 25540 Rye Canyon Road in the City of Santa Clarita, California (collectively, the "Project"); and (2) pay certain expenses incurred in connection with the issuance of the Bonds. The Project is to be owned and operated by Aerospace Dynamics .International, Inc., a corporation organized and existing under the laws of the State of California, or an affiliate thereof (the "Borrower"). The Borrower has submitted an application to the Authority for the financing of the Project through the issuance of the Bonds, and reference is made to such application for further particulars. The Bonds are in addition to a separate series of bonds proposed to be issued by the Authority for the benefit of the Borrower in the aggregate principal amount not to exceed $13,270,000 to finance additional costs of the same Project, which separate bonds are the subject of a separate public hearing. The Bonds and the obligation to pay principal of, and interest thereon and any redemption premium with respect thereto do not constitute indebtedness or an obligation of the Authority, the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation, or a charge against the general credit or taxing powers of any of them. The Bonds shall be a limited obligation of the Authority, payable solely from certain revenues duly pledged therefor and generally representing amounts paid by the Borrower. The hearing will commence at 6:00 p.m. or as soon thereafter as the matter can be heard, and will be held in the City Council Chambers, City Hall, First Floor, 23920 Valencia Blvd., Santa Clarita, California. Interested persons wishing to express their views, on the issuance of the Bonds or on the nature and location of the facilities proposed to be financed may attend the public hearing or, prior to the time of the hearing, submit written comments. Additional information concerning the above matter may be obtained from,. and written comments should be addressed to, Denise Lellan, Administrative Analyst, City of Santa Clarita, 23920 Valencia Blvd., Santa Clarita, CA 91355. Dated: June 8, 2010 0 RESOLUTION 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $7,000,000 FOR THE PURPOSE OF FINANCING THE ACQUISITION, DESIGN, CONSTRUCTION AND INSTALLATION OF CERTAIN RECOVERY ZONE PROPERTY FOR THE BENEFIT OF AEROSPACE DYNAMICS INTERNATIONAL, INC. WHEREAS, the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) authorizes a new category of federally tax-exempt private activity bonds entitled "recovery zone facility bonds" that have been codified in Sections 140OU-1 and 140OU-3 (collectively, the "Recovery Zone Facility Act") of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, the Recovery Zone Facility Act permits the issuance of recovery zone facility bonds to finance certain improvements in an area designated as a "recovery zone" by the issuer of such bonds or the locality in which such -improvements are located; and WHEREAS, by resolution adopted on October 27, 2009, the City Council (the "City Council") of the City of Santa Clarita (the "City") designated certain portions of the geographic territory of the City as a "recovery zone" for purposes of the Recovery Zone Facility Act (the "Recovery Zone Designation"); and WHEREAS, pursuant Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "JPA Act"), certain public agencies (the "Members") have entered into a Joint Exercise of Powers Agreement (as amended and restated as of June 1, 1988, the "Agreement") in order to form the California Statewide Communities Development Authority (the "Authority"), for the purpose of promoting economic, cultural and community development, and in order to exercise any powers common to the Members, including the issuance of bonds, notes or other evidences of indebtedness; and WHEREAS, the City is a Member of the Authority; and WHEREAS, the Authority is authorized pursuant to the JPA Act and the Agreement to issue and sell revenue bonds, including recovery zone facility bonds, for the purpose, among others, of financing recovery zone property for private companies, and is an eligible issuer of recovery zone facility bonds pursuant to the Recovery Zone Facility Act; and WHEREAS, Aerospace Dynamics International, Inc., a California corporation (the `Borrower"), has requested that the Authority issue and sell recovery zone facility bonds in the maximum principal amount of $7,000,000 (the "Bonds") for the purpose of making a loan to the Borrower to (1) finance a portion of the cost of (a) designing, acquiring and constructing a new facility to be used in the design and production of aircraft parts, components and assemblies, located in the City at 25575 Rye Canyon Road, and (b) acquiring and installing certain related equipment and capital items to be installed and located in the City at 25540 Rye Canyon Road (collectively, the "Project"); and (2) pay certain expenses incurred in connection with the issuance of the Bonds; and WHEREAS, in order for the interest on the Bonds to be tax-exempt, Section 147(f) of the Code requires that an "applicable elected representative" of the governmental unit, the geographic jurisdiction of which contains the site of facilities to be financed with the proceeds of the Bonds, hold a public hearing on the issuance of the Bonds and approve the issuance of the Bonds following such hearing; and WHEREAS, the Authority has determined that the City Council is an "applicable elected representative" for purposes of holding such hearing and approving such issuance; and WHEREAS, as a condition to issuing bonds to assist in the financing of capital projects, Section 9 of the Agreement requires the approval of the Member within the jurisdiction of which the project is situated; and WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 9 of the Agreement; and WHEREAS, notice of such public hearing has been duly given as required by the Code, and this City Council has heretofore held such public hearing at which all interested persons were given an opportunity to be heard on all matters relative to the financing of the Project and the Authority's issuance of the Bonds therefor; and WHEREAS, it is in the public interest and for the public benefit that the City Council approve the issuance of the Bonds by the Authority for the aforesaid purposes; and WHEREAS, the Borrower has also requested the Authority to issue an additional $13,720,000 principal amount of recovery zone facility bonds (the "Additional Bonds") to finance additional recovery zone property at one or more of the aforesaid locations, and to apply to the City for additional recovery zone facility bond volume cap to support such bond issuance, and such Additional Bonds (if issued) will be separate and distinct from, and in addition to, the Bonds approved hereunder; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL AS. FOLLOWS; SECTION 1. The City Council hereby finds and determines that the foregoing recitals are true and correct. SECTION 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds (a) by the "applicable elected representative" of the governmental 2 f unit having jurisdiction over the area in which the Project is or is to be located in accordance with Section 147(f) of the Code and (b) by the City Council in accordance with Section 9 of the Agreement. SECTION 3 The issuance of the Bonds shall be subject to the approval of the Authority of all financing documents relating thereto to which the Authority is a parry. The City shall have no responsibility or liability whatsoever with respect to the Bonds. SECTION 4_ The adoption of this Resolution shall not obligate the City to (i) provide any financing to acquire or construct the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, design, construction, installation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. SECTION 5. The executing officers, the City Clerk and all other proper officers and officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein authorized. SECTION 6. This resolution shall take effect immediately upon its passage. SECTION 7. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED this day of 2010. ATTEST: CITY CLERK MAYOR STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Sarah P. Gorman, City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the day of 2010, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK 4 7 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) CERTIFICATION OF CITY COUNCIL RESOLUTION I, , City Clerk of the City of Santa Clarita, do hereby certify that this is a true and correct copy of the original Resolution 10 adopted by the City Council of the City of Santa Clarita, California on , 2010, which is now on file in my office. Witness my hand and seal of the City of Santa Clarita, California, this _ day of 2010. City Clerk By Deputy City Clerk 5