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Conduct a public hearing required by the Tax and Equity Fiscal Responsibility Act of 1982 (TEFRA) and consider adopting a resolution approving the issuance of revenue bonds by the California Municipal Finance Authority (CMFA), in an amount not to exceed $61,000,000 for the purpose of financing the acquisition, construction, rehabilitation, renovation, installation, improvement and/or equipping of land, buildings, facilities and/or equipment, including but not limited to an expanded capacity for transfer and processing of municipal solid waste and rolling stock, for the collection, transfer and processing of municipal solid waste, including associated equipment and appurtenances thereto by Recology Incorporated for approximately $10,000,000 for facilities within Solano County
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Published Notice Required? Yes _X__ No _ _
Public Hearing Required? Yes _X__ No _ _
DEPARTMENTAL RECOMMENDATION:
It is recommended that the Board of Supervisors conduct a public hearing required by the Tax and Equity Fiscal Responsibility Act of 1982 (TEFRA) and consider adopting a resolution approving the issuance of revenue bonds by the California Municipal Finance Authority (CMFA), in an amount not to exceed $61,000,000 for the purpose of financing the acquisition, construction, rehabilitation, renovation, installation, improvement and/or equipping of land, buildings, facilities and/or equipment, including but not limited to an expanded capacity for transfer and processing of municipal solid waste and rolling stock, for the collection, transfer and processing of municipal solid waste, including associated equipment and appurtenances thereto by Recology Incorporated for approximately $10,000,000 for facilities within Solano County.
SUMMARY
Recology Incorporated, a corporation organized and existing under the laws of the State of California, and/or affiliates thereof (collectively, the “Borrower”) is a private waste management company that collects and processes municipal solid waste and reclaims reusable materials. The company operates transfer stations, materials recovery facilities (MRFs), landfills, renewable energy projects, and is the largest organics compost facility operator by volume in the United States. Borrower is seeking issuance of $61 million in tax exempt bonds from the CMFA, which requires that all jurisdictions with facilities benefiting from projects paid for with bonds hold a public hearing and approve a resolution in support of the bond issuance. The portion of the project within Solano County totals approximately $10,000,000 for facility improvements, please see additional details in the Discussion section herein.
FINANCIAL IMPACT:
The Bonds to be issued by the CMFA for the Project will be the sole responsibility of the Borrower, and the County 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 County or the State of California but are to be paid for solely from funds provided by the Borrower.
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 County of Solano, it is expected that that a portion of the issuance fee attributable to the County will be granted by the CMFA to the general fund of the County. Such grant may be used for any lawful purpose of the County.
The costs associated with preparing the agenda item are nominal and absorbed by the department’s FY2024/25 Working Budget.
DISCUSSION
Recology (Borrower) has requested that the CMFA participate in the issuance of one or more series of tax-exempt revenue bonds in an aggregate principal amount not to exceed $61,000,000 (the “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 pursuant to a plan of finance for multiple projects, which may occur over a period of multiple years, throughout the State of California. A portion of the proceeds of such 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 initially owned by the Borrower and located within the County of Solano (the “County”): the acquisition, construction, rehabilitation, renovation, installation, improvement and/or equipping of land, buildings, facilities and/or equipment, including but not limited to an expanded capacity for transfer and processing of municipal solid waste and rolling stock, for the collection, transfer and processing of municipal solid waste, including associated equipment and appurtenances thereto (collectively, the “Project”). The Project is located within the County at (i) Recology Vacaville Solano, 855 ½ Davis Street, Vacaville, California, 95687 (in an amount not to exceed $5,000,000) and (ii) Recology Vallejo, 2021 Broadway, Vallejo, California, 94589 (in an amount not to exceed $5,000,000).
The remaining $51,000,000 in tax-exempt bonds would be used to fund projects in San Mateo County and Sonoma County.
In order for all or a portion of the Bonds to qualify as tax-exempt bonds, the County of Solano 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 350 municipalities, including the County of Solano, 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.
ALTERNATIVES:
The Board of Supervisors could elect not to adopt the resolution in favor of the issuance of the Bonds by the CMFA. This is not recommended as it will hamper the provision of important sanitary services to the people of Solano County.
OTHER AGENCY INVOLVEMENT:
California Municipal Finance Authority and Republic Services Inc. have been involved in the drafting of this item.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION