HomeMy WebLinkAboutAgenda Report - February 7, 2001 F-03 PHa# CITY OF LODI COUNCIL COMMUNICATION
AGENDA TITLE: Adopt Resolution authorizing the issuance of tax-exempt Industrial Revenue
Bonds (IRB's) for Lustre -Cal Nameplate Corporation or an affiliate (Not to
exceed $5 million)
MEETING DATE: February 7, 2001
SUBMITTED BY: Economic Development Coordinator
RECOMMENDED ACTION: That the City Council approve the attached Resolution authorizing
issuance of tax-exempt Industrial Revenue Bond (IRB's) not to
exceed five million ($5,000,000) for Lustre -Cal Nameplate
Corporation or an affiliate.
BACKGROUND INFORMATION: As stated in the council communication dated January 17, 2001, part
of the City's economic development business attraction and expansion efforts oftentimes includes
assisting business in securing project financing. We have, in fact, played this role on three other separate
occasions by assisting Arkay Industries, Scientific Specialties Inc. and Fairmont Sign Company in securing
Industrial Development Bond financing from the State of California. Manufacturing firms seek to use this
financing due to the significant interest cost savings over traditional financing mechanisms. Potential
savings are typically over 2% less than conventional rates. Eligible firms include businesses engaged in
manufacturing.
Lustre -Cal Nameplate Corporation, a local manufacturer of custom identification products since 1964, has
purchased a 4.25 acre parcel in the Beckman Industrial Park for the purpose of constructing a new 63,000
+/- square foot manufacturing facility. The recent purchase will facilitate the expansion and relocation of
their present facility, consisting of approximately 36,000 square feet that is now located at 110 E. Turner
Road in Lodi, Lustre-Cal's home since 1970. Lustre -Cal currently employs 110 people in Lodi with an
annual payroll of approximately $2.7 million.
Lustre -Cal is seeking an aggregate principal amount not to exceed $5 million dollars in tax-exempt bonds
to finance the project and is requesting the City of Lodi's assistance in securing the bonds by acting as a
conduit for their issuance. The bonds will be issued by California Statewide Communities Development
Authority (California Communities), of which the City is a member; and bond counsel, Gilmore & Bell will
confirm there is no obligation or any other liability to the City of Lodi. This public hearing is required
pursuant to the Federal Tax Equity Fiscal Responsibility Act ("TEFRA"), which governs issuance of such
bonds, and is the initial step in the application process.
California Communities is a public agency created under California's joint powers statute. California
Communities was established in 1987 and, to date, has issued over $11 billion in bond financing.
California Communities is the most active issuer of California IRB's, having funded 100 projects totaling
over $330 million. There have been no bond defaults.
APPROVED: `% //\.ice
H. Dixon Flynn -- City Manager
CITY OF LODI COUNCIL COMMUNICATION
_J t.
As a matter of emphasis, staff would like to reiterate the following -- the City is not the bond issuer nor is it
financially or legally responsible for bond repayment. Thus, there is no impact on the City's debt capacity
or bond rating. The bonds are payable solely from company generated revenues and bond repayment
security is provided by the bond applicant, Lustre -Cal Nameplate Corporation or an affiliate.
Project Advantages
➢ Up to $5 million of new company capital investment
➢ New projected jobs — 77 within two years
➢ Increased annual payroll
➢ Consistent with adopted Economic Development Mission Statement and Strategy to retain and help
expand existing business firms in the community
➢ Consistent with prior City Council approval of IRB bond issuances
➢ Manufacturing companies provide significant additional, indirect employment and revenue benefits to
the City
No City legal or financial risks
Project Disadvantages
➢ None
FUNDING: None required (There is no City budget impact)
Respectfully submitted,
Tony C. Goehring
Economic Development Coordinator
APPROVED:
H. Dixon Flynn -- City Manager
RESOLUTION NO. 2001-25
A RESOLUTION OF THE LODI CITY COUNCIL
APPROVING THE ISSUANCE OF NOTES, BONDS
OR OTHER EVIDENCE OF INDEBTEDNESS BY THE
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
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Local Government Participant:
Issuer:
Borrower:
Obligations:
Maximum Principal Amount:
Public Hearing Date:
City of Lodi, California
California Statewide Communities Development
Lustre -Cal Nameplate, Joseph C. and Clydene G.
Hohenrieder or an affiliate
Notes, Bonds or any other evidence of
indebtedness of the Issuer
$5,000,000
February 7, 2001
WHEREAS, the 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 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
WHEREAS, 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
WHEREAS, the Issuer has requested that the governing body of the Local
Government Participant 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 Restarted
Joint Exercise of Powers Agreement (the "Agreement"), dated as of June 1, 1988,
among certain local agencies, including the Local Government Participant, and the
public agency approval requirement of Section 91530(f) of the Government Code of the
State of California, as amended; and
WHEREAS, the governing body of the Local Government Participant hereby
finds and determines that the Project is not substantively inconsistent with the Local
Government Participant'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
WHEREAS, the Local Government Participant 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
WHEREAS, 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, BE IT RESOLVED, by the governing body of the Local
Government Participant, that the issuance of the Obligations 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.
Dated: February 7, 2001
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I hereby certify that Resolution No. 2001-25 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held February 7, 2001, by the following
vote:
AYES: COUNCIL MEMBERS — Hitchcock, Howard, Land and Pennino
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Mayor Nakanishi
ABSTAIN: COUNCIL MEMBERS — None
SUSAN J. BLAC TON
City Clerk
2001-25
EXHIBIT A
ISSUER'S INDUCEMENT RESOLUTION
CSCUA-MOS•PABTICIPASTDOCS (L911
EXH1BI-f
RESOLUTION NO.2000IDB-13
RESOLUTION OF THE CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY MAKING DETER`IINATIONS WIT_ri
RESPECT TO THE FINANCING OF FACILITIES AIND DECLARING ITS
OFFICIAL INTENT TO UNDERTAKE THE FINANCING AND TO
REIMBURSE CERTAIN CAPITAL EXPENDITURES FROM PROCEEDS OF
INDEBTEDNESS
Borrower: Lustre -Cal Nameplate Corporation or an affiliate
Obligation: Notes, Bonds or any other evidence of indebtedness
Maximum
Principal Amount: S5,000,000
Activities and Uses
of the Project: In a manufacturing facility or facilities that manufactures labels,
nameplates and related supplies
Anticipated
Public Benefits: (a) Employment benefits (within the meaning of Section 91502.1(b)(1)
of the Act) by securing or increasing the number of employees of the
Borrower and any other direct users of the Project or the
compensation for such employment.
(b) Consumer benefits (within the meaning of Section 91502.1(b)(3) of
the Act) by improving the quantity or quality or reducing the price of
products, energy or related services or facilities, and by producing
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 of Title 1, Division 7, Chapter 5 of the Government Code of
the State of California to issue its Obligations pursuant to the California Industrial Development
Financing Act, as amended and supplemented (the "Act"), for the purpose of financing certain costs of a
project, as that term is defined in the Act; and
WHEREAS, the Borrower desires to acquire, construct, rehabilitate 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 Borrower is willing to acquire, construct, rehabilitate and improve the Project
upon the issuance by the Issuer of the Obligation 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 may not issue the Obligation to finance the Project until this Commission
makes certain determinations with respect to public benefits and qualification of the Project as required
by the Act; and
WHEREAS, this Commission has carefully considered and discussed the information contained
N_ in the Borrower's application and other information necessary to make such determinations; and
CSCOA.EOIDOJNDUCERES (V97)
WHEREAS, this Commission desires to induce the Borrower to commence adquisition,
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 financing of the Project,
expects that the Borrower has paid or may pay certain expenditures (the "Reimbursement Expenditures")
in connection with the Project within 60 days prior to the adoption of this Resolution and prior to the
issuance of the Obligation for the purpose of financing costs associated with the Project on a long-term
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 1.103-3(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:
correct.
Section 1. This Commission hereby finds and determines that the foregoing recitals are true and
Section 2. This Commission hereby finds and determines that:
Act;
(a) the Activities and Uses of the Project are in accord with Section 91503 of the
(b) the use of the Project is likely to produce the Anticipated Public Benefits;
(c) the issuance of the Obligation by the Issuer in an amount sufficient to finance
certain costs of the Project, which is now estimated not to exceed the 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 from 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
accord with the purposes and requirements of the Act.
Section 3. It is the present intent of the Issuer to issue, at one time or from time to time, the
Obligation (the interest of which is intended to be exempt from 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+ Loino oo.noccezes (wr)
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.
Section 5. This resolution shall take effect immediately upon its passage.
PASSED AND ADOPTED by the California Statewide Communities Development
Authority this 19th day of December, 2000.
The undersigned, a duly appointed and qualified Member of the Commission of the Califomia
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 December 19, 2000.
1'vlenfbr of the Commission
California Statewide Communities
Development Authority
CSCDA E0103-DD-INDCCERES (S;97)
CITY OF LODI NOTICE OF PUBLIC HEARING
Date: Wednesday, February 7, 2001
Carnegie Forum
305 West Pine Street, Lodi Time: 7:00 p.m.
For information regarding this notice please contact:
Susan J. Blackston
City Clerk
Telephone: (209) 333-6702
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that on Wednesday, February 7, 2001 at the hour of 7:00 p.m., or as soon
thereafter as the matter may be heard, at the Carnegie Forum, 305 West Pine Street, Lodi, the City Council
of the City of Lodi, California (the "City"), will conduct a public hearing concerning the issuance and sale by
the California Statewide Communities Development Authority (the "issuer") of notes, bonds, or any other
evidence of indebtedness (the "Obligations) in an aggregate principal amount not expected to exceed
$5,000,000. Proceeds of the Obligations are to be loaned to Lustre -Cal Nameplate Corporation, Joseph C.
and Clydene G. Hohenrieder or an affiliate (the 'Borrower's pursuant to a Loan Agreement (the 'Loan
Agreement") to provide for 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") to be used in
the manufacturing of labels, nameplates and related supplies. The Project will be located at the northwest
corner of Industrial Way and South Guild Avenue, Lodi, California 95240 and/or 1101 East Turner Road,
Lodi, California 95240. The Obligations will be paid entirely from repayments by the Borrower under the
Loan Agreement. Neither the faith and credit nor any taxing power of the City, the Issuer, the State of
California (the 'State") or any other political corporation, subdivision or agency of the State is pledged to the
payment of the principal of or premium, if any, or interest on the Obligations, nor shall the City, the State or
any other political corporation, subdivision or agency of the State be liable or obligated to pay the principal of
or premium, if any, or interest on the Obligations.
The public hearing is intended to comply with the public approval requirements of Section 147(f) of the
Internal Revenue Code of 1986.
Those wishing to comment on the proposed nature and location of the Project and the financing of the
Project with the proceeds of the Obligations may either appear in person at the time and place indicated
above or submit written comments, which must be received prior to the public hearing, to the City in care of
Susan J. Blackston, City Clerk, at 221 West Pine Street, Lodi, California 95240 or P.O. Box 3006, Lodi,
California 95241-1910.
By Order of the Lodi City Council:
Susan J. Blackston
City Clerk
Dated: January 17, 2001
Approved as to form:
Randall A. Hays
City Attorney
JX1TYCLRK\F0RMSWo1speda1.doc 1/18101
NOTICE OF FILING AN APPLICATION WITI4
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
NOTICE IS HEREBY GIVEN that Lustre -Cal Nameplate Corporation (the "Corporation")
has filed an application with the California Statewide Communities Development Authority (the
"Issuer") and that the Issuer has accepted the application. The application requests that the Issuer issue
its notes, bonds or any other evidence of indebtedness (the "Obligations"), in an aggregate principal
amount not expected to exceed $5,000,000, to finance 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 for the Corporation, Joseph C. and Clydene G. Hohenrieder (the Corporation's
owners) or an affiliate (the "Project"), to be used in the manufacturing of labels, nameplates and
related supplies, which Project will be located at the northwest corner of Industrial Way and South
Guild Avenue, Lodi, California 95240 and/or 1101 East Turner Road, Lodi, California 95240. Neither
the faith and credit nor any taxing power of the City of Lodi, California (the "City"), the Issuer, the
State of California (the "State") or any other political corporation, subdivision or agency of the State is
pledged to the payment of the principal of or premium, if any, or interest on the Obligations, nor shall
the City, the State or any other political corporation, subdivision or agency of the State be liable or
obligated to pay the principal of or premium, if any, or interest on the Obligations.
Further particulars may be obtained by reviewing the application at the Issuer's office, located
at 1100 K Street, Suite 101, Sacramento, California, during regular business hours.
Dated: January 18, 2001
/s/ Dan Harrison
Secretary
California Statewide Communities
Development Authority