HomeMy WebLinkAbout55A - RESO RECOVERY ZONE BONDREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
AUGUST 17, 2009
TITLE:
RESOLUTION TO DESIGNATE THE CITY
OF SANTA ANA AS A RECOVERY ZONE
FOR THE PURPOSES OF UTILIZING
RECOVERY ZONE BOND FINANCING IN
2009 AND 2010
'` ~
CITY MANAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY;
APPROVED
^ As Recommended
^ As Amended
^ Ordinance on 15t Reading
^ Ordinance on 2"d Reading
^ Implementing Resolution
^ Set Public Hearing For_
CONTINUED TO
FILE NUMBER
Adopt a resolution designating the City of Santa Ana as a Recovery Zone
for the purposes of utilizing recovery zone bond financing in 2009 and
2010.
DISCUSSION
As part of the American Recovery and Reinvestment Act (ARRA) stimulus
package, the federal government has authorized the City of Santa Ana to
issue up to $5,872,000 in Recovery Zone Facility Bonds and $8,807,000 in
Recovery Zone Economic Development Bonds.
In order to take advantage of the recovery zone bond financing, the City
must adopt a resolution designating a Recovery Zone area.
A Recovery Zone is defined as an area having significant poverty,
unemployment, home foreclosures, or general distress; or an area that has
already been federally designated as an Empowerment Zone or Renewal
Community. Discretion to designate the boundaries of the Recovery Zone
has been left up to each individual jurisdiction.
Recovery Zone Facility Bonds
Recovery Zone Facility Bonds are a new type of financing mechanism that
enable the City to issue bonds to creditworthy applicants to assist with
the purchase, renovation and/or construction of a commercial or
industrial development project. These bonds are similar in nature to the
City's existing Industrial Development Bonds with the exception that
these bonds are not just limited to industrial development.
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Resolution to Designate Recovery Zone
August 17, 2009
Page 2
There is no financial obligation on the part of the City for issuing
these bonds. The intent of these bonds is to help stimulate investment
for development in today's tight commercial credit market.
The Community Development Agency will be working to identify potential
projects that could utilize the Recovery Zone Facility Bonds.
Recovery Zone Economic Development Bonds
Recovery Zone Economic Development Bonds are only available to state and
local governments. The bonds can be used to finance infrastructure
projects at a lower borrowing cost to the City. This is achieved by a
direct federal subsidy of 45 per cent of the interest on the bonds, for
projects such as street improvements, sewer and other Public Works
infrastructure projects.
In this current economic crisis, staff does not anticipate issuing bonds
for local infrastructure projects as the City would have to demonstrate
the capacity to service the debt on these bonds. However, this
resolution provides the City the flexibility to issue bonds in the future
as its fiscal stability strengthens.
All Recovery Zone Bonds must be issued by December 31, 2010.
FISCAL IMPACT
There is no fiscal impact associated with this item.
r
Cynt is J. elson
Deputy City Manager for Development Services
Community Development Agency
CJN/LAS/mm
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bk:7/27/09
RESOLUTION NO. 2009-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA DESIGNATING SANTA ANA AS A
RECOVERY ZONE PURSUANT TO THE FEDERAL
AMERICAN RECOVERY AND REINVESTMENT ACT
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS
FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines
and declares as follows:
A. The federal American Recovery and Reinvestment Tax Act of 2009
(hereon referred to as the "Recovery Act") provides federal income tax
incentives for obligations issued to finance expenditures for purposes of
promoting economic development or other activity in a "Recovery Zone"
(Recovery Zone Economic Development Bonds) and obligations issued to
finance the construction, renovation, or acquisition of Recovery Zone
property to be used in a qualified business in the Recovery Zone
(Recovery Zone Facility Bonds).
B. Under the Recovery Act, Santa Ana has been given an allocation of nearly
$5.9 million in Recovery Zone Facility Bonds, and over $8.8 million in
Recovery Zone Economic Development Bonds.
C. The Recovery Act provides that the City may issue Recovery Zone Facility
Bonds and Recovery Zone Economic Development Bonds only until the
end of 2010.
D. To be eligible to use this bonding authority under the Recovery Act, each
jurisdiction must first adopt a "Recovery Zone."
E. The Recovery Zone is defined in the Recovery Act as including any area
designated by this Council as having significant poverty, unemployment,
rate of home foreclosures, or general distress; and any area designated
as an empowerment zone as of February, 2009.
F. Internal Revenue Service Notice 2009-50 states that each city council of a
city designated to issue Recovery Zone Facility Bonds and Recovery Zone
Economic Development Bonds may make a designation of its Recovery
Zone by resolution in any reasonable manner as the City Council shall
determine in good faith in its discretion.
Resolution No. 2009-XXX
55A-3 Page 1 of 3
G. Issuance of any Recovery Zone Facility Bonds or Recovery Zone
Economic Development Bonds shall require further approval of this City
Council.
H. Being fully informed and after consideration of all relevant factors, the city
council further finds, declares and determines that the area within the
geographical limits of the City of Santa Ana reasonably meets the criteria
of the Recovery Act for designation as a Recovery Zone.
Section 2. The City Council hereby designates the area within the corporate
limits of the City of Santa Ana as a Recovery Zone for purposes of the Recovery Act.
Section 3. This Resolution shall take effect immediately upon its adoption by
the City Council, and the Clerk of the Council shall attest to and certify the vote adopting
this Resolution.
ADOPTED this day of , 2009.
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
Resolution No. 2009-XXX
Page 2 of 3
55A-4
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify the attached
Resolution No. 2009-XXX 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
Resolution No. 2009-XXX
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