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HomeMy WebLinkAboutMinutes 1984-05-09Chairman Mark N. Addiego Board Members: Richard A. Haffey Emanuele N. Damonte Gus Nicolopulos Roberta Cerri Teglia MINUTES Industrial Development Authority Municipal Services Building May 9, 1984 NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, that the Industrial Development Authority of the City of South San Francisco will hold a Special Meeting on Wednesday, May 9, 1984, at 7:55 p.m., in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Purpose of the meeting: 1. Adoption of a Resolution directing execution of an agreement for bond counsel services with Jones, Hall, Hill & White. A RESOLUTION OF CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO ACTING AS THE BOARD OF DIRECTORS OF THE SOUTH SAN FRANCISCO INDUSTRIAL DEVELOPMENT AUTHORITY APPROVING, AUTHORIZING AND DIRECTING EXECUTION OF AGREEMENT FOR BOND COUNSEL SERVICES WITH JONES, HALL, HILL & WHITE, A PROFESSIONAL LAW CORPORATION. 2. Adoption of a Resolution accepting the application of Mercedez Benz of North America for industrial revenue bond financing. A RESOLUTION OF CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO ACTING AS THE BOARD OF DIRECTORS OF THE SOUTH SAN FRANCISCO INDUSTRIAL DEVELOPMENT AUTHORITY ACCEPTING APPLICATION OF MERCEDEZ BENZ OF NORTH AMERICA FOR INDUSTRIAL REVENUE BOND FINANCING MAKING FINDINGS WITH RESPECT THERETO, AUTHORIZING OFFICIAL ACTION AND SETTING PUBLIC HEARING die~o, Chairman or, the Industrial Development Authority City of South San Francisco Board Dated: May 3, 1984 AGENDA SPECIAL MEETING CALL TO ORDER ROLL CALL ACTION TAKEN SPECIAL MEETING 8:14 p.m. Mayor Addiego presiding. Council present: Nicolopulos, Teglia, Haffey, Damonte and Addiego. Council absent: .None. 5/9/84 Page I A G E N D A A C T I 0 N T A K E N 00~00~ AGENDA REVIEW Adoption of a Resolution direct- ing execution of an agreement for bond counsel services with Jones, Hall, Hill & White. A RESOLUTION OF CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO ACTING AS THE BOARD OF DIRECTORS OF THE SOUTH SAN FRANCISCO INDUSTRIAL DEVELOPMENT AUTHORITY APPROVING, AUTHORIZING AND DIRECT- ING EXECUTION OF AGREEMENT FOR BOND COUNSEL SERVICES WITH JONES, HALL, HILL & WHITE, A PROFESSIONAL LAW CORP. AGENDA REVIEW City Manager Birkelo stated that the Bond Counsel costs in connection with this project would be paid by the Developer - all costs. He stated that it had been asked whether the City had any preferen- ces, we indicated we deal with several firms and they had indicated they would be happy to deal with this firm as the Bond Counsel. He stated that Mr. Bill Madison, Jones, Hall, Hill & White, was here tonight to respond to questioning. He stated that the agreement clearly sta- tes that their fee is contingent upon the delivery of the proceeds of the bonds and that if that took place their fees would be paid by a fund provided by the Developer. Councilwoman Teglia stated that the Authority would be issuing the bonds and Jones, Hall, Hill & White goes out and sells the bonds; the City receives the funds and turns them over to Mercedez Benz. Mr. Madison stated that was correct, the bonds are issued and properly placed and Mercedez Benz had stated they would work with the bank to place the bonds. He continued, the proceeds would be received upon closing as with other bond issues and immediately loaned to the company pursuant to a loan grant. He stated that the repayment of the loan under the loan agreement would be the source of security for the bonds and the only security for the bonds. Councilwoman Teglia questioned if they would be repaying this Authority. Mr. Madison replied that under the loan agreement, technically they were. Councilwoman Teglia questioned what would happen if something went wrong with the project or the company goes bankrupt or whatever. Mr. Madison stated that it was very clear under the law and the contracts that the 5/9/84 Page 2 AGENDA ACTION TAKEN 1. Adoption of a Resolution - Cont. sole repayment source is under the loan agreement or under whatever source. He stated that normally there would be a deed of trust on the property but Mercedez Benz was so strong that there was only a promise to repay; that there was no ability to get to City Funds. He stated that Industrial Development Bonds were very new to California and that there were a few pitfalls but they were fairly rare, however throughout the Country they were quite common with a rubber stamp operation. Councilwoman Teglia stated that this application was for $7,000,000 and questioned how many other applications the City could entertain. Mr. Madison stated that within the Act itself was a $10,000,000 limit per pro- ject that was mirrored in Small Issue Exemption Federal Law. He continued, there is legislation pending in Congress today which sets a different kind of a limit, it's two versions of a Bill adopted by the House and the Senate which is going to Conference Committee at the end of this month. He continued, the House version of the Bill contains a limit of the total number of bonds, total dollar amount of bonds, that may be issued in any State in a particular year - that is arrived at by multiplying $150 times the population, half of that is State and half of that is Local. He stated that until the Governor or our Legislators take some action to modify, as they are permitted to do under these bills to modify the allocations, the allocation will simply be to multiply the population of South San Francisco by $75.00 that produces something less than required to do this individual project. He stated that indications were that the Allocations Committee that was set up to handle single family mortgage revenue bonds will be chosen to administer a pro- ject on a first come, first serve pro- cess. He stated that if a County had not chosen to set up an Industrial Development Authority i t would be possible to take some of their allocation and give it to this City to do a project such as this if it was approved by the Commission in Sacramento. 5/9/84 Page 3 AGENDA 1. Adoption of a Resolution - Cont. ACTION TAKEN Councilwoman Teglia stated that if it was only $10,000,000 perhaps this was not the best application and the City should look very judiciously, carefully at this application and certain guidelines. Vice Mayor Haffey stated if there was a limit and there was a cap, then there needed to be some type of criteria set up to prioritize these projects to come in - otherwise the limit could be reached before we get started and there might be some favorable projects down the line that the City misses out on because of having used up our limit. Mayor Addiego stated that this City was fortunate in starting this at an oppor- tune time because later the Federal and State Governments could tighten up on these programs as was the case in forming the Redevelopment Agency. City Manager Birkelo stated that since this process had started he had learned that Mercedez Benz may have difficulty with a current limitation of not more than $40,000,000 to any one corporation and if that was the case they may never proceed even though the Authority appro- ves their application. He continued, in that event all the Authority has done is indicate publicly that the Authority was willing to consider this on some basis. He stated that Mercedez Benz had indi- cated that every one of the vehicle cen- ters had been done with this method of financing. Bill Madison, Esq., stated that the firm had indicated they had approximately $50,000,000 of IDBs outstanding across the country and the limitation Mr. Birkelo had mentioned was contained in both versions of the Bill. He stated that the Senate version does not carry a cap and mentions that a cap is very bad and that when the Bill is a law the Authority would be in a better position to make a decision. Councilman Nicolopulos stated that he thought Industrial Development Bonds were 5/9/84 Page 4 AGENDA 1. Adoption of a Resolution - Cont. ACTION TAKEN to assist someone who might have a necessity for the money rather than for a firm like Mercedez Benz who was so very affluent. He questioned what the City had to gain or lose. Bill Madison, Esq., stated that the com- pany was on a long term lease and the purpose of the project was to buy the land and expand the business. He stated that the benefits would be job creation and job retention - if their application is turned down they would explore other agencies around the Bay Area for financing of this type simply to save money. He stated that he understood that the Authority did not want a project that could not repay which would put the City's name on a defaulted bond issue which would be the only risk. Councilwoman Teglia stated that with Mercedez Benz the only revenue the City would receive would be property tax, however maybe another firm could bring in sales tax as well as employ more people. M/S Teglia/Haffey - To adopt the Resol uti on. Mayor Addiego stated that there were several empty buildings and available land in the City and did not feel that this project should be held up to seek sales tax revenue. RESOLUTION IDA 1-84 Carried by unanimous voice vote. Vice Mayor Haffey stated that this item was accepting the application of Mercedez Benz, not approving it and he thought the cap should be in place with a law before any application was accepted. City Manager Birkelo stated that the Council had been aware that in setting up this Authority that this type of assistance would be useful in the City's economical development program. He stated that this was not a sterling program but it did have a number of advantages, such as an image of the type 5/9/84 Page 5 A G E N D A A C T I 0 N T A K E N O000OG 2. Adoption of a Resolution - Cont. ADJOURNMENT: of business that goes on in the area which some people are using as a marketing tool. Discussion followed: that commercial properties do not turn over; that Mercedez Benz had a long term lease; if anyone had defaulted on this type of funding - yes, that a default would not hurt the City. M/S Haffey/Damonte - To adopt the Resolution. RESOLUTION NO. IDA 2-84 Carried by unanimous voice vote. M/S Haffey/Teglia - To adjourn the meeting. Carried by unanimous voice vote. The meeting was adjourned at 8:40 p.m. RESPECTFULLY SUBMITTED, Industrial Development Authority City of South San Francisco APPROVED: Ma rk~N.~Addi e~o ~ C~ Board Industrial Development Authority City of South San Francisco The entries of this Council meeting show the action taken by the Authority to dispose of an item. Oral communications, arguments, and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the Secretary and available for inspection, review and copying. 5/9/84 Page 6