AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: COLLEEN T. DOAN
COMMUNITY DEVELOPMENT DIRECTOR
SUBJECT:
title
PUBLIC HEARING - CONDUCT A TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARING, TO ADOPT A RESOLUTION APPROVING THE ISSUANCE OF A NOT TO EXCEED TOTAL OF $7,000,000.00 OF CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY REVENUE BONDS FOR THE BENEFIT OF EDCO WASTE & RECYCLING SERVICES, INCORPORATED, EDCO DISPOSAL CORPORATION, EDCO WASTE SERVICES LLC, EDCO TRANSPORT SERVICES, LLC, AND/OR A RELATED ENTITY FOR THE PURPOSE OF FINANCING, REFINANCING, AND/OR REIMBURSING THE COST OF SOLID WASTE DISPOSAL FACILITIES
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Summary:
Following the recent City Council approval of the EDCO Waste and Recycling Facility (EDCO) Conditional Use Permit to expand its waste operations, EDCO intends to invest in its facility by purchasing additional large capacity haul trucks at an average unit cost of $425,000. The State developed a tax-exempt program to finance such expenditures for waste transfer facilities, which involves the issuance of tax-exempt bonds by the California Enterprise Development Authority (the Authority). This program requires a public hearing to provide an opportunity for the public to be informed about the proposed use of the tax-exempt funds. While these public hearings have historically taken place in Sacramento, recently updated regulations require public hearings to take place in the region, or locality where the operations occur. Therefore, in accordance with the Tax Equity and Fiscal Responsibility Act (TEFRA), the City Council will consider adopting a resolution to enable the issuance of tax-exempt revenue bonds in a not-to-exceed amount of $7,000,000 to EDCO.
Form of Notice: The City published the notice in the Signal Tribune newspaper on August 30, 2024. The City published the notice in accordance with Signal Hill Municipal Code Section 1.08.010 at City Hall, the Signal Hill Public Library, Discovery Well Park, and Reservoir Park on or before August 30, 2024, and was published on the California Enterprise Development Authority web site.
Strategic Plan Goal(s):
Goal No. 3 Improve the local economy, support local businesses, and create a vibrant downtown core.
recommendation
Recommendation:
Adopt a Resolution approving the proposed issuance of the bonds by the Authority to finance, refinance, and/or reimburse the cost of solid waste disposal facilities, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, APPROVING THE ISSUANCE OF A NOT-TO-EXCEED TOTAL OF $7,000,000 OF CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY REVENUE BONDS FOR THE BENEFIT OF EDCO WASTE & RECYCLING SERVICES, INCORPORATED, EDCO DISPOSAL CORPORATION, EDCO WASTE SERVICES LLC, EDCO TRANSPORT SERVICES, LLC AND/OR A RELATED ENTITY FOR THE PURPOSE OF FINANCING, REFINANCING, AND/OR REIMBURSING THE COST OF SOLID WASTE DISPOSAL FACILITIES, PROVIDING THE TERMS AND CONDITIONS FOR SUCH BONDS AND OTHER MATTERS RELATING THERETO HEREIN SPECIFIED
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Fiscal Impact:
There is no fiscal impact to the City associated with the recommended action. The adoption of the Resolution approving the issuance of the bonds complies with the requirements of Section 147(f) of the Internal Revenue Code of 1986. The City does not bear any responsibility for the tax-exempt status of the interest on the bonds, the debt service on the bonds, or any other matter related to the bonds. Furthermore, the proposed debt service does not impact the City’s Gann Appropriation Limit. The approval of the bonds to finance, refinance, and/or reimburse the cost of the Facilities is not subject to compliance with the California Environmental Quality Act (California Public Resources Code, Section 21100, et seq.).
Background:
Federal and state laws provide cities and counties with the ability to enter into cooperative agreements to form joint powers authorities that 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. Cities and counties in California often utilize joint powers authorities primarily for economies of scale which provide access to specialized transaction knowledge and resources. The California Enterprise Development Authority (the Authority) is a joint exercise of 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. There are more than 200 cities and counties which are associate members of the Authority. The Authority’s activities are dedicated to providing economic development assistance to member jurisdictions. As an Associate Member of the Authority, the City is eligible to participate in the Authority’s programs. Staff has attached the 2006 Joint Powers Authority Agreement that enabled the formation of CEDA (Attachment A).
Analysis:
Following the recent City Council approval of the EDCO Conditional Use Permit to expand its waste operations, EDCO desires to reinvest in its local operations and intends to purchase additional large capacity haul trucks at an average unit cost of $425,000. Given the scope and scale of the purchase, EDCO is seeking to leverage a tax-exempt bond program to facilitate this investment. As noted, the Authority provides a conduit for businesses to fund these types of local economic development efforts. The City does not bear any responsibility for the tax-exempt status of the interest on the bonds, the debt service on the bonds, or any other matter related to the bonds.
EDCO and the Authority requested the City conduct a Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) hearing and 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 $7,000,000 (Attachment A). Pursuant to the Internal Revenue Code, before tax-exempt debt may be issued to a private for-profit corporation, or nonprofit corporation, the law requires a TEFRA hearing. The hearing provides the public an opportunity to comment on EDCO’s use of the tax-exempt funds.
The benefit of a tax-exempt bond program is that it reduces financing costs and debt service costs. As a business operating locally in Signal Hill, both the City and the region would be best served by EDCO’s continued investment in its operations. If approved by the City Council, the proceeds of the Bonds must be expended within three years and may be used to finance, refinance, and/or reimburse the cost of the acquisition, construction, installation, improvement and equipping of solid waste disposal facilities. EDCO proposes to utilize the majority of the funds for the purchase of additional large capacity haul trucks and other expenses associated with its anticipated increased waste hauling volumes.
A requirement for bond issuance is that an applicable elected representative, which is also a member of the Authority, is required to conduct the TEFRA hearing and approve the bond issuance. The City Council of the City of Signal Hill constitutes an applicable elected representative under Section 147(f) of the Internal Revenue Code. Staff recommends the City Council conduct the public hearing and adopt the proposed Resolution approving the issuance of the Bonds by the Authority to finance, refinance and/or reimburse the cost of solid waste disposal facilities (Attachment B).
Environmental Analysis
The approval of the Bonds to finance, refinance and/or reimburse the cost of the Facilities is not subject to compliance with the California Environmental Quality Act (California Public Resources Code, Section 21100, et seq.) because this action does not qualify as a “project” under CEQA and because this action will not result in a direct or reasonably foreseeable indirect physical change in the environment since the proposed action is to adopt a resolution to approve issuance of the Bonds for the benefit of the EDCO Recycling and Waste facility. (State CEQA Guidelines section 15060, subd. (c)(2), (3).) Even if the action is considered a “project” subject to CEQA, it is categorically exempt under CEQA Guidelines section 15061(b)(3), because there is no possibility that the proposed action might have a significant effect on the environment since it only pertains to the issuance of the Bonds.
Lastly, none of the exceptions to the use of categorical exemptions identified in State CEQA Guidelines section 15300.2 apply; there is no potential for cumulative impacts; there are no unusual circumstances that would have a significant impact on the environment due to the approval of the Bonds; approval of the Bonds would not negatively impact scenic resources within a duly designated scenic highway; there is no record of hazardous waste and the proposed approval has no potential to impact historic resources.
Reviewed for Fiscal Impact:
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Sharon del Rosario
Attachments:
A. Joint Powers Agreement
B. Resolution