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HomeMy WebLinkAboutItem 4.12 Transfer Activity Bond to Alameda County r CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: October 14, 1985 SUBJECT Transfer of Private Activity Bond Allocation Limit to Alameda County EXHIBITS ATTACHED Proposed Resolution; Letter from California Debt Limit Allocation Committee dated 1 /29/85; Letter from Bruce Kern, Director Alameda County Office of Community and Economic Affairs dated 9/11 /85 RECOMMENDATION � . Adopt Resolution Authorizing the Transfer of the City of Dublin Private Activity Bond Allocation to Alameda County FINANCIAL STATEMENT: None DESCRIPTION Public agencies within the State of California may iss-ue private activity bonds, which assist private companies undertaking major capital projects. A common method of providing this assistance is through the issuance of an Industrial Development Revenue Bond ( IDB) . An IDB is a security issued by a public agency to finance the construction or purchase of industrial plants and/or equipment, which is then leased to the private corporation. The security is backed by the credit of the private corporation rather than the credit of the issuer. Due to the ability of a public agency to issue tax exempt securities , a lower interest rate is obtained by the corporation. The Federal government became concerned with the number of tax free issues being utilized to finance private activities. Included in legislation addressing the Federal deficit were provisions to limit the issuance of private activity bonds. The legislation provides an allocation limit to each state and they are responsible for developing limits for each of their political subdivisions. As noted in the letter dated January 29, 1985, the City of Dublin has an allocation of $809, 000. If the City does not utilize this allocation, there are restrictions on the ability to transfer the limit to a future year. An allocation may only be carried forward for specific exempt projects. These projects are improvements undertaken by quasi- governmental agencies involved in enterprise activities. An example would be the construction of power plant facilities by a publicly owned utility. The City of Dublin has not been approached by any private corporations interested in this type of financing. Mr. Kern' s letter of September 11, 1985 outlines projects pending in other cities in Alameda County. The requests received all involve multi-million dollar projects. Given the City of Dublin' s relatively small allocation limit it would be difficult to utilize this allocation on a suitable project. The transfer of the allocation to Alameda County would provide a larger base for potential Dublin applicants to draw upon. This also assists in assuring the opportunity for the allocation to be utilized to promote the overall economic base of the region. The County Staff has made a commitment to take into consideration agency transfers from prior years when applications are submitted in the future. Staff recommends that the City Council adopt the Resolution authorizing the Transfer of the City of Dublin Private Activity Bond Allocation to the County of Alameda and direct Staff to process the transfer as appropriate. ---------------------------------------------------------------------------- / COPIES TO: Bruce Kern, Alameda County ITEM NO. �� RESOLUTION NO. - 85 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN -------------------------------------- APPROVING THE TRANSFER OF THE CITY'S PRIVATE ACTIVITY BOND ALLOCATION FOR CALENDAR YEAR 1985 TO THE COUNTY OF ALAMEDA WHEREAS, the Tax Reform Act of 1984 (the "Act" ) has imposed a volume cap on the amount of "Private Activity Bonds" which can be issued by any state; and WHEREAS, the Act permits any state to implement a procedure for the allocation of the aggregate principal amount of Private Activity Bonds which may be issued by state and local issuers; and WHEREAS, the Governor of the State of California, by Proclamation dated July 19, 1984 (the "Proclamation" ) has set in place a system for such allocation among state and local issuers in California (the "Private Activity Bond Limit" ) ; and WHEREAS, the 1985 calendar year Private Activity Bond Limit for the City of Dublin (the "City" ) is $809, 000 ; and WHEREAS, the City has determined that it does not expect to utilize $809,000 of its 1985 Private Activity Bond limit; and WHEREAS, the Act and the Proclamation authorize the transfer to another local agency or to the state of all or a portion of a local agency' s Private Activity Bond Limit, including the 1985 Private Activity Bond Limit of the City; and WHEREAS, the County of Alameda ( the "County" ) has requested that an amount equal to $809, 000 of the 1985 Private Activity Bond Limit of the City be transfered from the City to the County for use by the County in furtherance of certain projects; and WHEREAS, the City Council hereby deems it appropriate to take action on such request by the County and desires to transfer to the County, upon the terms and conditions hereinafter set forth, the above-stated amount of the City' s 1985 Private Activity Bond Limit which the City does not expect to utilize. NOW, THEREFORE, the City Council of the City of Dublin does resolve as follows: Section 1. The City Council hereby tranfers an amount equal to $809,000 of the calendar year 1985 Private Activity Bond Limit of the City to the County in furtherance of industrial development bond financings to be undertaken by the County referred to in said request or in furtherance of such other purposes as the County shall deem necessary or appropriate. Section 2. The City Council hereby determines that it does not reasonably expect to grant requests to use the portion of the 1985 Private Activity Bond Limit which it is transferring to the County for any issuance of Private Activity Bonds within the City. Section 3. The City Council hereby acknowledges that as provided in the Proclamation such portion of the 1985 Private Activity Bond Limit of the City transferred to the County pursuant to this Resolution shall be irrevocable upon the issuance of bonds pursuant to the procedures to be taken hereafter by the County, at least to the extent of the principal amount of such bonds to be issued by the County. The transfer as herein authorized shall be considered a general transfer to the County. Section 4. Although the City understands the County intends to apply the full amount of the City' s 1985 Private Activity Bond Limit transferred hereby to industrial development bond financings in calendar year 1985, in the event the County shall not so use all or a portion of the City' s 1985 Private Activity Bond Limit transferred, the City authorizes the County to carry forward (under the terms of the Act and the Procla- mation) or transfer to any State Agency or Local Agency ('as defined in the Proclamation) the City' s 1985 Private Activity Bond Limit, as the County shall deem necessary and appropriate. Section 5. The City Council hereby authorizes the City Clerk to forward a copy of this Resolution to the Clerk of the County Board of Supervisors and to the California Debt Limit Allocation Committee under cover of the letter of the City in the form attached to this Resolution. Section 6. This Resolution shall take effect immediately upon its passage. I hereby certify under penalty of perjury that the transfer of allocation made pursuant to the foregoing Resolution was .not made in consideration of any bribe, gift, gratuity, or direct or indirect contribution to any political campaign. PASSED, APPROVED AND ADOPTED this 14th day of October, 1985, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mayor of the City of Dublin ATTEST: City Clerk • REC VED FEB 51985 ' STATE OF CALIFORNIA DUBLIN My OF 01121 IN CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE MEMBERS: 915 CAPITOL MALL ROOM 417 J P.O. BOX 1919 State Chairman Cha SACRAMENTO,CALIFORNIA 95809 George Dauk malten TELEPHONE: (916)324-0310 cO1erner Kenneth Cory State Controller January 29, 1985 TO: City Managers and Administrators FROM: California Debt Limit Allocation Committee SUBJ: 1985 PRIVATE ACTIVITY BOND ALLOCATIONS THE FOLLOWING IS A QUICK UPDATE ON THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE AND THE STATE' S ALLOCATION SYSTEM FOR THE ISSUANCE OF PRIVATE ACTIVITY BONDS. PLEASE EXCUSE THIS MODIFIED "FORM LETTER, " BUT WE WANTED TO SEND THIS INFORMATION TO YOU AS QUICKLY AS POSSIBLE. The California Debt Limit Allocation Committee held its first meeting of 1985 on January 22, 1985, and at that meeting adopted the enclosed Resolution establishing the 1985 State ceiling and state and local allocations for private activity bond issuance . (As you know, the issuance of private activity bonds is limited by the enactment of the federal Tax Reform Act of 1984. ) The enclosed summary explains the allocation system, as established in Governor Deukmejian 's July 19, 1984 Proclamation, which also created the Debt Limit Allocation Committee to oversee the allocation system. Also enclosed is a table of local allocations . The following summarizes the actions of the Committee regarding 1985 allocations relevant to your city: 1. 1985 State Ceiling : The 1985 State ceiling for the issuance of private activity bonds was established at $3, 776, 100, 000. 2. 1985 State Bond Limit (" State Share" ) : The 1985 State share Tifter transfers to local governments for rounding ) is $1, 888, 031, 000. 3. Local Allocations : Individual allocations for cities and counties were announced by the Committee . Your city's allocation for the issuance of private activity bonds in 1985 is $ 809 , 000 Memo to City Managers and Administrators Page 2 January 29, 1985 The Department of Treasury IRS regulations of December 1984 extend the 1984 carryforward election time period until February 25, 1985 for unused 1984 private activity allocations . (For later years ' allocations, such election must be made by the end of the respective calendar year. ) The extended time period, of course, only applies to projects for which carryover is allowable under the Tax Reform Act of 1984 and federal regulations . Counsel has interpreted the IRS regulations on carryover as also allowing transfers of allocations for purpose of carryover of unused allocation by another jurisdiction. Accordingly, local jurisdictions have until February 25 to transfer unused 1984 allocations to other jurisdictions or to the State for carryover . If any jurisdiction makes such an election, please remember to notify the Debt Limit Allocation Committee within 15 days of the action, using the enclosed Report of Action Taken (yellow form) . For a jurisdiction which elects to transfer unused 1984 allocation to the State for carryover to state projects, an official certified copy of the transfer resolution, together with the Report of Action Taken, must be received by the Debt Limit Allocation Committee by noon, February 19' to accommodate CDLAC actions of carryover by February 25. We hope that this update has been helpful. Please call us if you have any questions . Sincerely, MARY A E GO�INS Executive Secretary MJJ:djc Enclosures �y OF 44q Jr' • F COUNTY ADM I NISTRATOR cgilFO'1R MEL HING STEPHEN A. HAMILL COUNTY ADMINISTRATOR ASSISTANT COUNTY ADMINISTRATOR September 11, 1985 Mr. Richard C. Ambrose City Manager City of Dublin, Suite D P. 0. Box 2340 Dublin, California 94568 Dear Mr. Ambrose: As previously agreed to, I have attached for your information the most recent status report on the County's Industrial Development Bond Program. Assuming all pending applications are approved by the County's Authority and the California Industrial Development Financing Authority, we have an unobligated balance of approximately $1.6 million for potential applications. It should be noted that despite our joint efforts to judiciously manage our industrial development bond allocations within each of our assigned caps, the state's lower cap limit of $250 million may be exceeded shortly. Unless emergency legislation, which appears to not look very promising, is adopted, many of the projects already approved or in the process of being approved may not be able to close and utilize a 1985 allocation. For your information, the state has approved over $300 million in industrial development projects and has closed approximately $72 million. Therefore, it is suggested that if you have pending applications, efforts should be made to encourage your clients to close as quickly as possible. Very truly yours, Bruce Kern Director, Office of Community and Economic Affairs BK/as Attachment cc: Mel Hing, County Administrator 5013c 1221 OAK STREET - SUITE 555 OAKLAND. CALIFORNIA 94612 14151 874.6252 1985 IDB Allocation Summary (As of September 1, 1985) I. ALLOCATION REQUEST COMPLETED OR PENDING ------------------------------------------------------------------------------- 1985 Issues Completed Letters of Inducement Application Approved Pending ------------------------------------------------------------------------------- $3.5 Million $3.8 Million $3.5 Million Oliver Rubber Co. Barkoff Container Esco Corp. --new plant and Supply Co. --Facility (Emeryville/Oakland) --new facility Purchase & Renovation (Berkeley) $2.5 Million $8.0 Million $3.5 Million Longview Fibre Co. Pacific Coast Segundo Tool --equipment Warehouse, NDA, & Mfg. Inc. (Oakland) & Development --new facility Research Corp. (Union City) --public warehouse (Union City) $3.175 Million $3.5 Million Snitzer Steel American Carriers and Products Co. --new truck --equipment distribution (Oakland) office and maintenance $1.36 Million facility TSM Production & Distribution $4.5 million Facility Printing, Mfg. (Hayward) New Facility (Livermore) ------------------------------------------------=------------------------------ $6.0 Million $14.975 Million $16.36 Million Total IDB Allocation Request: $37,335,000 Page Three III. STATUS OF REVIEWING JURISDICTION Allocation Utilized Hayward $ 5,133,000 Newark 1,851,000 Union City 1,750,000 Anticipate to Use Allocation Alameda $ 3,895,000 Berkeley 5,538,000 Fremont 7,447,000 Oakland 18,284,000 San Leandro 3.453,000 IV. SPECIAL DISTRICTS All districts have been contacted and no plans for allocation transfers are anticipated for this year. CITY OF DUBLIN P.O. Box 2340 Dublin, CA 94568 (415) 829-4600 October 18, 1985 State of California California Debt Limit Allocation Committee 915 Capitol Mall, Room 417 P. O. Box 1919 Sacramento, CA 95809 Subject: Transfer of the City of Dublin Private Activity Bond Allocation for Calendar Year 1985 to the County of Alameda Gentlemen: The City Council of the City of Dublin by its Resolution adopted October 14, 1985, has transferred $809,000 of the City' s 1985 calendar year private activity bond allocation limit to the County of Alameda. A certified copy of the Resolution has been enclosed. Section 7(B) of the Executive Proclamation dated July 19, 1984, by the Governor of California requires notification of transfers to be provided within 15 days to the California Debt Limit Allocation Committee. Pursuant to said provisions, the City of Dublin does hereby advise you of this transfer. Sincerely, Richard C. Ambrose City Clerk RCA:kk cc: Clerk of County Board of Supervisors Bruce Kern, Alameda County Economic Affairs