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HomeMy WebLinkAboutD-2 Staff Report - Waste Management TEFRA Public HearingPublic Hearing Waste Management TEFRA July 15, 2019 Page 1 of 3 PUBLIC HEARING/SCHEDULED ITEM D-2 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: TALIKA JOHNSON, DIRECTOR OF FINANCE VIA: SERGIO GONZALEZ, CITY MANAGER DATE: JULY 15, 2019 SUBJECT: PUBLIC HEARING TO ADOPT A RESOLUTION APPROVING THE ISSUANCE OF BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY FOR THE PURPOSE OF FINANCING THE ACQUISITION, CONSTRUCTION, INSTALLATION, REHABILITATION, IMPROVEMENT AND/OR EQUIPPING OF SOLID WASTE DISPOSAL FACILITIES AND CERTAIN OTHER MATTERS RELATING THERETO BACKGROUND: Waste Management, located in the City of Azusa, desires to issue bonds for the purpose of making improvements to existing permitted solid waste landfill facilities, and have the California Municipal Finance Authority (“CMFA”) serve as the municipal issuer of tax-exempt exempt facility bonds in an aggregate principal amount not to exceed $300,000,000. To proceed with the bond issuance, the City must conduct the public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended. Approval of the recommended actions does not result in any financial obligation to the City. RECOMMENDATIONS: Staff recommends the City Council take the following actions: 1)Conduct the public hearing under the requirements of the Tax and Equity Fiscal Responsibility Act (“TEFRA”) and the Internal Revenue Code of 1986, as amended (the “Code”). 2) Adopt Resolution No. 2019-C25 approving the issuance of the Bonds by the California Municipal Finance Authority (“CMFA”), a joint exercise of powers authority and public entity of the State of California, for the benefit of Waste Management, Inc. (the “Borrower”), to provide for the refinancing and refunding of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, the Code and the California Government Code Section 6500 (and following). APPROVED CITY COUNCIL 7/15/2019 Public Hearing Waste Management TEFRA July 15, 2019 Page 2 of 3 ANALYSIS: The Borrower requested that the CMFA serve as the municipal issuer of tax-exempt exempt facility bonds (the “Bonds”) in an aggregate principal amount not to exceed $300,000,000 of tax- exempt revenue bonds. The proceeds of the Bonds will be used for the purpose of, among other things, financing, in an amount not expected to exceed $10,000,000, the following projects (collectively, the “Project”) initially owned by the Borrower and located within the City of Azusa (the “City”): (a) improvements to existing, permitted solid waste landfill facilities, including but not limited to (i) construction of new disposal cells and liners within currently permitted acreage, (ii) additions and improvements to the leachate collection and treatment system, including leachate trenching, (iii) additions and improvements to the methane gas systems, (iv) installation of new liners for intermittent and final closure of completed sections of the landfill facilities, (v) site and/or land improvements, including construction of building facilities, (vi) acquisition of real property, (vii) acquisition of equipment to be used at the landfill facilities, and (viii) acquisition of other equipment and assets necessary to support the foregoing additions and improvements and to place them into service; and (b) improvements to collection (hauling), transfer station and/or material recycling facilities, including but not limited to (i) acquisition of solid waste disposal and recycling trucks and support vehicles, (ii) acquisition of solid waste disposal and recycling containers and related equipment, (iii) acquisition of solid waste sorting and processing and recycling equipment, (iv) site and/or land improvements, and (v) acquisition of other equipment and assets necessary to support the foregoing improvements and place them into service. In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the City of Azusa must conduct a public hearing (the “TEFRA Hearing”) providing for the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the Project. Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an “applicable elected representative” of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project. The CMFA was created on January 1, 2004 pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. To date, over 300 municipalities, including the City of Azusa, have become members of CMFA. The CMFA was formed to assist local governments, non-profit organizations and businesses with the issuance of taxable and tax-exempt bonds aimed at improving the standard of living in California. The CMFA’s representatives and its Board of Directors have considerable experience in bond financings. The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing such agreement. Public Hearing Waste Management TEFRA July 15, 2019 Page 3 of 3 The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the Bonds are not obligations of the City or the State of California, but are to be paid for solely from funds provided by the Borrower. Participation by the City in the CMFA will not impact the City’s appropriations limits and will not constitute any type of indebtedness of the City. Outside of holding the TEFRA hearing and adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the Bonds will be required. The Board of Directors of the California Foundation for Stronger Communities, a California non-profit public benefit corporation (the “Foundation”), acts as the Board of Directors for the CMFA. Through its conduit issuance activities, the CMFA shares a portion of the issuance fees it receives with its member communities and donates a portion of these issuance fees to the Foundation for the support of local charities. With respect to the City of Azusa, it is expected that 25% of the issuance fee attributable to the City will be granted by the CMFA to the general fund of the City. Such grant may be used for any lawful purpose of the City. A similar amount will be donated by the CMFA to one or more non-profit organizations in the City. FISCAL IMPACT: There is no fiscal impact to the City. The public hearing is a requirement of the financing package and is the City’s only involvement. Prepared by: Reviewed and Approved: Talika M. Johnson Sergio Gonzalez Director of Finance City Manager Attachment: 1) Resolution No. 2019-C25 4133-1362-5373.2 CITY COUNCIL CITY OF AZUSA, CALIFORNIA RESOLUTION NO. 2019-C25 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA APPROVING A PLAN OF FINANCE FOR THE ISSUANCE OF THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY SOLID WASTE DISPOSAL REVENUE BONDS (WASTE MANAGEMENT, INC. PROJECT) IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $300,000,000 FOR THE PURPOSE OF FINANCING THE ACQUISITION, CONSTRUCTION, INSTALLATION, REHABILITATION, IMPROVEMENT AND/OR EQUIPPING OF SOLID WASTE DISPOSAL FACILITIES AND CERTAIN OTHER MATTERS RELATING THERETO WHEREAS, Waste Management, Inc., a corporation duly organized and existing under the laws of the State of Delaware, and/or affiliates thereof (collectively, the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority”) participate in the issuance of one or more series of exempt facility bonds for qualified solid waste disposal facility projects pursuant to section 142(a)(6) of the Internal Revenue Code of 1986 (the “Code”) from time to time in an aggregate principal amount not to exceed $300,000,000 (the “Bonds”) for the purpose of, among other things, financing, in an amount not expected to exceed $10,000,000, the following projects (collectively, the “Project”) initially owned by the Borrower and located within the City of Azusa (the “City”): (a) improvements to existing, permitted solid waste landfill facilities, including but not limited to (i) construction of new disposal cells and liners within currently permitted acreage, (ii) additions and improvements to the leachate collection and treatment system, including leachate trenching, (iii) additions and improvements to the methane gas systems, (iv) installation of new liners for intermittent and final closure of completed sections of the landfill facilities, (v) site and/or land improvements, including construction of building facilities, (vi) acquisition of real property, (vii) acquisition of equipment to be used at the landfill facilities, and (viii) acquisition of other equipment and assets necessary to support the foregoing additions and improvements and to place them into service; and (b) improvements to collection (hauling), transfer station and/or material recycling facilities, including but not limited to (i) acquisition of solid waste disposal and recycling trucks and support vehicles, (ii) acquisition of solid waste disposal and recycling containers and related equipment, (iii) acquisition of solid waste sorting and processing and recycling equipment, (iv) site and/or land improvements, and (v) acquisition of other equipment and assets necessary to support the foregoing improvements and place them into service; and WHEREAS, the Project is located at Azusa Landfill, 1211 West Gladstone, Azusa, California, 91702-5142; and WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the Bonds by the Authority must be approved by the City because the Project is located within the territorial limits of the City; and Attachment 1 2 4133-1362-5373.2 WHEREAS, the City Council of the City (the “City Council”) is the elected legislative body of the City and is one of the “applicable elected representatives” required to approve the issuance of the Bonds under Section 147(f) of the Code; and WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City; and WHEREAS, the Authority has advised that the Bonds may be issued pursuant to a “plan of finance” and that, for purposes of this resolution, the “plan of finance” consists of a general plan of the Authority and the Borrower to monitor capital markets and the capital needs of the Borrower within the City and, if market conditions warrant, issue one or more additional series of Bonds in an aggregate principal amount not to exceed $300,000,000 to finance the Project within the three-year period commencing on the date of the issuance of the first series of Bonds pursuant to this resolution; and WHEREAS, pursuant to Section 147(f) of the Code and Section 6586.5 of the Government Code of the State of California, the City Council has, following notice duly given, held a public hearing regarding the Project and the plan of finance for the issuance of the Bonds, and now desires to approve the Project and the plan of finance for the issuance of the Bonds by the Authority; NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Azusa as follows: Section 1. The foregoing resolutions are true and correct. Section 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds by the Authority, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement. Section 3. The City finds that the actions authorized hereby regarding the financing of the Project will result in demonstrable savings in effective interest rate, bond preparation, bond underwriting, or bond issuance costs to produce significant public benefits. Section 4. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing transaction approved hereby. 3 4133-1362-5373.2 Section 5. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED by the City Council of the City of Azusa this ___ day of _________, 2019. AYES: NOES: ABSTAIN: ABSENT: [SEAL] Attest: By:__________________________ City Clerk