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HomeMy WebLinkAbout75C - BOND-MEMORY EXPERTS INTL REQUEST FOR COUNCIU INDUSTRIAL DEVELOPMENT AUTHORITY ACTION IDA MEETING DATE: DECEMBER 20, 2004 TITLE: SECRETARY USE ONLY: APPROVED PUBLIC HEARING - BOND ALLOCATION FOR MEMORY EXPERTS INTERNATIONAL As recommended As Amended Implementation Resolution Set Public Hearing For a~~ * t.dti CONTINUED TO FILE NUMBER CITY MANAGER EXECUTIVE DIRECTOR RECOMMENDED ACTION CITY COUNCIL ACTION Adopt a resolution approving the Industrial Development Authority of the City of Santa Ana entering into a loan or loans in a principal amount not to exceed $4.7 million and lending the proceeds of such loan or loans to NSHE Harlan, LLC and/or Memory Experts International (USA), Inc., as applicable. INDUSTRIAL DEVELOPMENT AUTHORITY ACTION Adopt a resolution authorizing entering into a loan agreement pursuant to which the Authority will borrow and lend to borrower not to exceed $4.7 for the acquisition, construction and installation of certain property and facilities, and authorizing various actions in connection therewith. SANTA ANA EMPOWERMENT CORPORATION BOARD RECOMMENDATION 1. Recommended that the City Council adopt a resolution approving the Industrial Development Authority of the City of Santa Ana entering into a loan or loans in a principal amount not to exceed $4.7 million and lending the proceeds of such loan or loans to NSHE Harlan, LLC and/or Memory Experts International (USA), Inc., as applicable. 75C-1 Public Hearing - Bond Allocation for Memory Experts International December 20, 2004 Page 2 2. Recommended that the Industrial Development Authority adopt a resolution authorizing entering into a loan agreement pursuant to which the Authority will borrow and lend to borrower not to exceed $4.7 for the acquisition, construction and installation of certain property and facilities, and authorizing various actions in connection therewith. By a vote of 11:0 (Absent: Anton, Bracho, Brewster, Burrier-Lund, Forgarty, Haro, Medrano, and Mejares) at its Regular Meeting of September 22, 2004. DISCOSSION One of the incentives available to businesses within the Santa Ana Empowerment Zone is an allocation of $130 million for the issuance of Private Activity Bonds to qualified businesses. Currently, the Empowerment Zone has issued two prior bonds to Gold Coast Baking Company and Laguna Cookie Company, thus reducing the original allocation by 17 million. The City has received an application from Memory Experts International requesting assistance in acquiring the property located in the Santa Ana Empowerment Zone (1651 St. Andrew Place). The financing also includes the acquisition and installation of manufacturing equipment to produce and distribute various computer products. As a condition of financing, 35 percent of Memory Experts International's Santa Ana workforce must be Empowerment Zone residents. Currently, Memory Experts International employs 57 employees and the company is prepared to work with the Santa Ana Empowerment Zone to comply with the 35 percent employee residence rule. Founded in 1994, Memory Experts International is a leading multi-national provider of enhanced storage and networking technologies that is outgrowing its 17,000 square foot location in Irvine. The company is looking to relocate its headquarters into a new 39,848 square foot facility. The new manufacturing facility is located in the city's State Enterprise Zone and Federal Empowerment Zone. Memory Experts International is requesting $4.4 million to acquire and improve the new facility and $300,000 for the purchase and installation of new manufacturing equipment In addition to receiving approval by the Industrial Development Authority, the Tax Equity and Fiscal Responsibility Act (TEFRA) imposes public hearing requirements for tax-exempt bonds. Before bonds can be sold, the legislative body within the jurisdiction where the project is located must hold a public hearing at which time the public may discuss the project and the issuance of the bonds. Notice of the public hearing was published in the D.C. Reporter on November 1, 2004. Bonds issued by the Industrial 75C-2 Public Hearing - Bond Allocation for Memory Experts International December 20, 2004 Page 3 Authority are not an obligation of the Authority or the City. The law firm of Hawkins, Delafield & Wood LLP has been retained to serve as bond counsel and CSG Advisors has been retained as financial advisor. FISCAL IMPACT TherC!tca1 impact associated with this action. patricia C. Whitaker Executive Director Community Development Agency PCW/MA/mlr H:Actions\2004CC-IDA\JT PH CC-IDA-BondAllocforMemory Experts Intl 12-20-04 75C-3 RESOLUTION NO. 2004-100 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF SANTA ANA ENTERING INTO A LOAN OR LOANS IN A PRINCIPAL AMOUNT NOT TO EXCEED $4,700,000 AND LENDING THE PROCEEDS OF SUCH LOAN OR LOANS TO NSHE HARLAN, LLC AND/OR MEMORY EXPERTS INTERNATIONAL (USA), INC., AS APPLICABLE AND ALLOCATING AN AMOUNT NOT TO EXCEED $4,700,000 OF THE SANTA ANA EMPOWERMENT ZONE CEILING FOR PRIVATE ACTIVITY BONDS FOR THE BENEFIT OF THE PROJECT TO BE FINANCED PURSUANT TO SUCH LOANS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council hereby finds, determines and declares as follows: A. Pursuant to the Taxpayer's Relief Act of 1997 (the "Taxpayer's Relief Act"), the federal government has designated a portion of the City of Santa Ana (the "City") as an empowerment zone (the "Santa Ana Empowerment Zone"). B. Pursuant to the Taxpayer's Relief Act, among the tax incentives conferred on the City is the ability to issue up to $130 million in tax-exempt enterprise zone facility bonds (the "Empowerment Zone Ceiling") to make loans to qualifying business borrowers to finance the cost of certain commercial, retail, industrial or other facilities qualifying as "enterprise zone facilities" as that term is defined in Section 1394 of the Internal Revenue Code of 1986, as amended (the "Code"). C. As of the date of this Resolution, the City has utilized only Seventeen Million Dollars ($17,000,000) of the City's Empowerment Zone Ceiling, not counting other actions taking place this same date. D. The Industrial Development Authority of the City of Santa Ana (the "Authority") has accepted an application (the "Application") from NSHE Harlan, LLC, an Arizona limited liability company, or a related entity, and Memory Experts International (USA), Inc., or a related entity, as applicable (the "Applicant"), requesting the Authority to enter to a loan agreement or loan agreements pursuant to the California Industrial Development Financing Act, being Title 10 of the California Government Code, as supplemented and amended (the "Act"), to finance the construction, rehabilitation, installation and equipping of certain facilities (the "Project") to be owned and operated by the Applicant, or a related entity; and 75C E. The Applicant has represented in the Application certain facts and information concerning the Project and the Applicant, including but not limited to the requirement that, after a two year start up period, 35% of the Applicant's employees shall be residents of the Santa Ana Empowerment Zone. F. The City Council in evaluating the Project has relied upon the written facts and information represented in the Application by the Applicant as well as any comments made before the City Council in conjunction with the hearing on this matter. G. The Board of Directors of the Authority in its resolution adopted on December 20, 2004, expressed its intent to enter into a loan or loans, in aggregate principal amount not to exceed $4,700,000 (the "Loans") for the benefit of the Applicant. H. The Authority has made the determinations required to be made pursuant to Section 91530 of the Act preliminary to the entering into the Loans. I. The Authority approved and authorized the Loans, subject to certain conditions, on December 20, 2004. J. The Authority proposes to lend the proceeds of the Loans to the Applicant. K. This City Council of the City of Santa Ana (the "City Council") has considered the information contained in the Applicant's application and has considered the determinations of the Authority. L. The Loans must be approved by the City Council to satisfy the public approval requirements of Section 147(f) of the Code and Section 91530(f) of the Act. M. It is intended that this Resolution shall constitute the approval of the Project and the Loans as required by Section 147(f) of the Code and Section 91530(f) of the Act. N. The City Council is the elected legislative body of the City and is one of the applicable elected representatives required to approve the execution and delivery of the Loans under Section 147(f) of the Code. O. The Authority has requested that the City Council approve the execution and delivery of the Loans by the Authority to satisfy the public approval requirement of Section 147(f) of the Code. P. Pursuant to Section 147(f) of the Code, prior to their execution and delivery, private activity bonds are required to be approved by the "applicable elected representative" of the governmental units on whose behalf such obligations are expected to be issued and by a governmental unit having jurisdiction over the entire area in which any facility financed by such obligations is to be located, after a public hearing held following reasonable public notice. a. There has been published, at least 14 days prior to the date thereof, in a newspaper of general circulation within the City, a notice that a public hearing regarding the Loans would be held on December 20, 2004. R. Such public hearing was conducted on said date by the City, at which time an opportunity was provided to interested parties to present arguments both for and against the execution and delivery of the Loans. S. The Board of Directors of the Santa Ana Empowerment Corporation, at its regular meeting of September 22, 2004, unanimously recommended approval of this action by the City of Santa Ana and the Industrial Development Authority of the City of Santa Ana. Section 2. The City Council hereby finds and determines that the Project will provide significant public benefits to residents of the Santa Ana Empowerment Zone. Section 3. The City Council hereby approves the Project and approves the Authority entering into the Loans in an amount not to exceed $4,700,000 pursuant to a loan agreement or loan agreements (the "Loan Agreements") by and among the Authority, the Applicant and GE Capital Public Finance, Inc. to finance on a tax-exempt basis the costs of the Project, which Loans and interest thereon shall be paid from revenues received by the Authority from the Applicant pursuant to the Loan Agreements. This resolution shall constitute both "host" and "issuer" approval of the Loans within the meaning of Section 147(f) of the Code and approval of the Loans for purposes of Section 91530(f) of the Act. Section 4. The Authority is hereby designated as an issuer in an amount of the Empowerment Zone Ceiling equal to $4,700,000 for the benefit of the Applicant (the "Allocation"). Such Allocation may only be used by the Authority for the Project, as specifically described herein and represented in the Application. The Authority is not authorized to transfer the Allocation set forth herein to any other governmental unit in the State except the City. Section 5. All actions heretofore taken by the officers, employees and agents of the City with respect to the approval of the Loans are hereby approved and ratified, and the officers and employees of the City and their authorized deputies and agents are hereby authorized and directed, jointly and severally, to do any and all things to execute and deliver any and all certificates and documents which they, bond counsel and the Authority Attorney and the City may deem necessary or advisable to consummate the Loans and otherwise effectuate the purposes of this Resolution. Section 6. Neither the faith and credit nor the taxing power of the State, the City, the Authority or any political subdivision of the State, is pledged to the payment of the principal of, premium, if any, or interest on the Loans, nor is the State or any political subdivision of the State, in any manner obligated to make any appropriation for such payment. The Authority has no taxing power. Section 7. This Resolution shall take effect from and after its adoption. ADOPTED this day of ,200_. Miguel A. Pulido Mayor APPROVED AS TO FORM: Joseph W. Fletcher, City Attorney By: Benjamin Kaufman Chief Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2004-100 to be the original resolution adopted by the City Council of the City of Santa Ana on Date: Clerk of the Council City of Santa Ana