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HomeMy WebLinkAbout8/20/07 REQUEST FOR COUNCIL/INDUSTRIAL DEVELOPMENT AUTHORITY ACTION IDA MEETING DATE: AUGUST 20, 2007 TITLE: SECRETARY USE ONLY: APPROVED PUBLIC HEARING - BOND ALLOCATION FOR INGARDIA BROS. PRODUCE, INC. D As recommended D As recommended D As Amended D Implementation Resolution o Set Public Hearing For c(,. Vila )jDiJ;" CITY MANAGER EXECUTIVE DIRECTOR CONTINUED TO FILE NUMBER RECOMMENDED ACTION CITY COUNCIL Adopt a resolution approving the Industrial Development Authority of the City of Santa Ana entering into a loan in a principal amount not to exceed $2.5 million of the Santa Ana Empowerment Zone allocation for Private Activity Bonds to Ingardia Bros. Produce, Inc. to finance the acquisition and installation of equipment for a new facility within the Federal Empowerment Zone. 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 $2.5 million of the Santa Ana Empowerment Zone allocation for Private Activity Bonds to Ingardia Bros. Produce, Inc. to finance the acquisition and installation of equipment for a new facility within the Federal Empowerment Zone. SANTA ANA EMPOWERMENT CORPORATION BOARD ACTION At its meeting of July 25, 2007, by a vote Cong, Fogarty, Garcia, E. Martinez, Metzler, the Santa Ana Empowerment Corporation recommendations: of 10: 0 (Absent: Bacigalupo, Ream, Reyna, Russo, Sidler), Board made the following 1. Recommended that the City Council adopt a resolution approving the Industrial Development Authority of the City of Santa Ana entering into a p,2 Public Hearing - Bond Allocation for Ingardia Bros. Produce, Inc. August 20, 2007 Page 2 loan and/or issue a bond in a principal amount not to exceed $2,500,000 in Private Activity Bonds and lend the proceeds of such loan or bond to Ingardia Bros. Produce, Inc. for the acquisition of equipment for installation and use in their new Santa Ana facility. 2. Recommended that the Industrial Development Authority adopt a resolution authorizing entering into a loan agreement pursuant to which the Authority will borrow pursuant to the loan agreement and lend to Ingardia Bros. Produce, Inc. an amount not to exceed $2,500,000 in Private Activity Bonds and lend the proceeds of such loan to Ingardia Bros Produce, Inc. for the acquisition of equipment for installation and use in their new Santa Ana facility. DISCUSSION One of the incentives available in the Santa Ana Empowerment Zone is an allocation of $130 million of private activity bond volume cap for the issuance of Industrial Development Bonds (lOBs) to qualified businesses. The Industrial Development Authority has received an application from Ingardia Bros. Produce, Inc. requesting issuance of an lOB to finance the acquisition and installation of equipment for their new distribution facility located at 700 South Hathaway which is located within the Santa Ana Federal Empowerment Zone. As a condition of financing, thirty-five percent of Ingardia Bros. Produce, Inc. workforce must be Empowerment Zone residents. Ingardia Bros. Produce, Inc. is a wholesale distributor of produce, seafood, dairy, and groceries offering daily deli very service to more than 1,400 restaurants, schools, hospitals, caterers, and other food service operations in the southern California region. Ingardia Bros. has purchased 1.16 acres at 700 South Hathaway to construct a new 62,423 square foot distribution facility to augment its current 23,000 square foot facility in Costa Mesa. They are looking to complete construction and relocation of their operations by November 2007. Ingardia Bros. will use the bond proceeds to finance the purchase of walk-in coolers, racking, fork lifts, dock leveling equipment, ice makers and other equipment necessary for their operations. The company recently celebrated their 34th anniversary and currently employs 150 employees. 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 Public Hearing - Bond Allocation for Ingardia Bros. Produce, Inc. August 20, 2007 Page 3 the Orange County Register on August 3, 2007. Bonds issued by the Industrial Development Authority are not an obligation of the Authority or the City. The law firm of Stradling, Yocca, Carlson and Rauth has been retained as bond counsel and CSG Advisors has been retained as financial advisor. FISCAL IMPACT The action would reduce the remaining $108,300,000 of Empowerment Zone bond allocation by $2.5 million. St~~~~~ding Executive DIrector Industrial Development Authority SGH/LS/DS/mlr H:\ACTION ITEMS\IDA\2007 IDA\JT PH CC-IDA BondAllocforlngardiaBros 8-20-07wLCPedits.doc RESOLUTION NO. IDA 2007-002 A RESOLUTION OF THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF SANTA ANA AUTHORIZING ENTERING INTO LOAN AGREEMENT PURSUANT TO WHICH THE AUTHORITY WILL BORROW AND LEND TO BORROWER NOT TO EXCEED $2,500,000 FOR THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN PROPERTY AND FACILITIES, AND AUTHORIZING VARIOUS ACTIONS IN CONNECTION THEREWITH BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF SANTA ANA AS FOLLOWS: Section I. The Board of Directors hereby finds, determines and declares as follows: A. The California Industrial Development Financing Act (California Government Code Sections 91500 et seq., as amended and supplemented) (the "Act"), permits an industrial development authority to issue revenue bonds for the purpose of financing the acquisition, construction and/or rehabilitation of facilities, including real and personal property suitable for industrial uses such as assembling, fabricating, manufacturing or processing activities with respect to any products of agriculture, forestry or manufacturing, and commercial uses in an empowerment zone and enterprise community designated pursuant to Section 1391 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Act deems such revenue bonds to include various types of obligations and evidences of indebtedness. B. The Industrial Development Authority of the City of Santa Ana (the "Authority") is authorized pursuant to the provisions of the Act to exercise powers of acquiring, constructing, improving, furnishing, equipping, repairing, reconstructing and/or rehabilitating facilities and to enter into agreements for the same. C. The Board of Directors of the Authority desires to enter into a Loan Agreement for the benefit of Ingardia Bros. Produce, Inc., or a related entity, as applicable (the "Borrower") for the purpose of financing the acquisition and equipping of certain property comprising equipment to be located at 700 Hathaway, Santa Ana, California, and certain costs of issuance, all of which together constitute a project under the Act (the "Project"). D. The Project is located within the City of Santa Ana Federal Empowerment Zone designated pursuant to Section 1391 of the Code and will be used for qualified purposes. E. The Authority has accepted the Borrower's application and has made certain findings by resolution adopted July 16, 2007, the Borrower has revised its application to make a technical correction to its legal name and to increase the principal amount of financing requested to a revised principal amount not to exceed $2,500,000, and, based on the information provided by the Borrower with respect to the Project, the Authority makes in Section 5 hereof certain determinations with respect to the public benefits that may be derived from the financing of the Project and the qualifications of the Project for financing under the Act. F. The Project constitutes "Facilities" within the meaning of the Act and the Borrower is a "Company" within the meaning ofthe Act. DOCSOC/123 3 212v2/20003 9-000 1 G. For purposes of financing on a tax-exempt basis a portion of the costs of the Project, the Authority now desires to (i) authorize the execution and delivery of a loan agreement (the "Loan Agreement") pursuant to which the Authority will issue a revenue bond (the "Bond") to GE Government Finance, Inc. (the "Lender") in an aggregate principal amount not to exceed $2,500,000", (ii) provide for the payment of the principal, premium, if any, and interest on the Bond with revenues derived from the loan of the proceeds to the Borrower to finance a portion of the costs of the Project pursuant to the terms and provisions of the Loan Agreement, and (iii) take and authorize certain other actions in connection with the foregoing. H. There have been presented to this meeting and there are now on file with the Secretary of the Authority, the following documents: (1) proposed form of Loan Agreement (including the form of bond to be issued by the Authority) to be entered into by and among the Authority, the Borrower and the Lender; (2) a proposed form of Tax Regulatory Agreement (the "Tax Regulatory Agreement") to be entered into by and among the Authority, the Borrower and the City of Santa Ana, California (the "City"); and (3) proposed form of the Escrow Agreement (the "Escrow Agreement") to be entered into by and among the Lender, the Authority, the Borrower and Marshall and Ilsley Trust Company (M&I), as escrow agent. I. The Board of Directors of the Santa Ana Empowerment Corporation, at its regular meeting of July 25, 2007, recommended approval of this action by the City of Santa Ana and the Industrial Development Authority of the City of Santa Ana. Section 2. Subject to approval as to form of the City Attorney of the City, serving as counsel to the Authority (the "Authority Attorney"), the Authority hereby approves the form of Loan Agreement presented at this meeting and authorizes the Executive Director of the Authority (hereafter the "Authorized Representative") to execute by manual or facsimile signature and deliver the Loan Agreement and the Bond provided for therein, and the Secretary of the Authority or designee is authorized to attest to the Loan Agreement, in the form presented to this Board with such changes and insertions therein as may be necessary to cause the same to carry out the intent of this Resolution and as are approved by counsel to the Authority, such approval to be conclusively evidenced by the execution and delivery of the Loan Agreement. Payment of the principal, premium, if any, and the interest on the Bond shall be made solely from the revenues received by the Authority from the Borrower pursuant to the Loan Agreement, and the Bond shall not be deemed to constitute a debt or liability of the Authority, the City, the State of California or any political subdivision thereof. The Authority further authorizes and approves lending the proceeds of the Bond to the Borrower to finance a poition of the costs of the Project pursuant to the terms and provisions of the Loan Agreement. Section 3. Subject to approval as to form of the Authority Attorney, the form of the Tax Regulatory Agreement presented at this meeting is hereby approved, and the Authorized Representative is hereby authorized to execute by manual or facsimile signature and deliver the Tax Regulatory Agreement with such changes and insertions therein as may be necessary to cause the same to carry out the intent of this Resolution and as are approved by counsel to Authority, such 2 DOCSOC11233212v2/200039-000 1 approval to be conclusively evidenced by execution and delivery of the Tax Regulatory Agreement by an Authorized Representative. Section 4. Subject to approval as to form of the Authority Attorney, the form of the Escrow Agreement presented at this meeting is hereby approved and the Authorized Representative is hereby authorized to execute by manual or facsimile signature and deliver the Escrow Agreement with such changes and insertions therein as may be necessary to cause the same to carry out the intent of this Resolution and as are approved by counsel to Authority, such approval to be conclusively evidenced by execution and delivery of the Escrow Agreement by an Authorized Representative. Section 5. The Board of Directors of the Authority hereby finds and determines that: A. the Act; the use of the Project in an Empowerment Zone is in accord with Section 91503 of B. the use of the Project is likely to result in public benefits and employment benefits 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; C. the Bond issued by the Authority in the amount sufficient to finance all or a portion of the costs of the Project is likely to be a substantial factor in the accrual of each of such public benefits from the use of the Project; and D. the proposed financing of the Project is otherwise in accord with the purposes and requirements of the Act. Section 6. In no event shall the Bond constitute a pledge of faith and credit of the Authority, the City, the State of California (the "State") or any political corporation, subdivision or agency of the State, and none of the City, the State or any political corporation, subdivision or agency of the State shall be liable to make any appropriation for the repayment of the Bond. The Bond shall constitute a special obligation of the Authority payable solely from the revenues or other sources provided for in the Loan Agreement and proceedings relating to the Bond. Section 7. The Authorized Representative or his or her designee is hereby requested and authorized to (i) file a copy of this Resolution and the Application with the Clerk of the City, and (ii) file such information with the California Industrial Development Financing Advisory Commission as may be required for the review and approval of the Project pursuant to Section 91531 of the Act. Publication ofthe notice of the filing of the Application by the Applicant in accordance with Section 91530(e) of the Act in a newspaper of general circulation within the City on August 3, 2007 is hereby approved, confirmed and ratified. Section 8. The Authorized Representative or duly appointed designee is hereby requested to conduct a public hearing with respect to the financing of the Project for the purpose of satisfYing the public approval requirements of Section 147(f) of the Internal Revenue Code of 1986. Publication of the notice of such public hearing in a newspaper of general circulation within the City on August 3, 2007 is hereby approved, confirmed and ratified. 3 DOCSOC/1233212v2/200039-000 I Section 9. The Authorized Representative or duly appointed designee, on behalf of the Authority, are authorized to execute all documents, certificates, and instruments necessary or appropriate to this transaction and undertaking the issuance of the Bond and entering into the Loan Agreement; provided, however that the issuance of the Bond will not be undertaken and the Loan Agreement shall not be entered into and delivered on behalf of the Authority until the California Industrial Development Financing Advisory Commission has made all necessary findings and determinations and given all necessary approvals as required by the Act. Section 10. Prior to execution of the Loan Agreement or Tax Regulatory Agreement, the Authorized Representative or duly appointed designee, on behalf of the Authority, shall approve in writing the final compensation being made to the financing team. Section 11. All actions heretofore taken by the officers and agents of the Authority with respect to the approval of the Bond and the loan of the proceeds to the Borrower are hereby approved, confirmed and ratified, and the officers of the Authority and their authorized designees, deputies and agents are each hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all certificates and documents which they, bond counsel, special tax counsel and the Authority Attorney may deem necessary or advisable, including but not limited to nonsubstantial changes as may be approved in form by the Authority Attorney and approved in content by the Executive Director, in order to consummate the issuance of the Bond and loan of the proceeds to the Borrower and otherwise to effectuate the purpose of this Resolution. Section 12. This Resolution shall take effect from and after its inception. ADOPTED this 20th day of August 2007. Miguel A. Pulido Chair APPROVED AS TO FORM: Joseph W. Fletcher, General Counsel By: Lorena C. Penaloza Assistant General Counsel AYES: Boardmembers NOES: Boardmembers ABSTAIN: Boardmembers NOT PRESENT: Boardmembers 4 DOCSOC/l233212v2/20003 9-000 1 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Secretary to Authority, do hereby attest to and certify the attached Resolution No. IDA 2007-002 to be the original resolution adopted by The Industrial Development Authority of the City of Santa Ana on August 20.2007. Date: Secretary Industrial Development Authority ofthe City of Santa Ana 5 DOCSOCI1233212v2120003 9-000 1