Official Minutes of MARION COUNTY BOARD OF COUNTY COMMISSIONERS. December 11,2012

Transcription

1 Official Minutes of MARION COUNTY BOARD OF COUNTY COMMISSIONERS December 11,2012 The Marion County Board of County Commissioners met in a workshop session in Commission Chambers at 9:02 a.m. on Tuesday, December 11, 2012 in the Growth Management Training Room located at 2710 East Silver Springs Boulevard. The meeting opened with the Pledge of Allegiance to the Flag of our Country. Upon roll call the following members were present: Chairman Kathy Bryant, District 2; Vice-Chairman Carl Zalak, District 4; Commissioner David Moore, District 1; Commissioner Stan McClain, District 3; and Commissioner Earl Arnett, District 5. Also present were County Attorney Matthew G. Minter, Clerk David R. Ellspermann and County Administrator Lee A. Niblock. Also present were Charlie Sands, Kosan Associates; Larry Calloway, Klein & Klein, LLC, IDA counsel; Chairman Doug Cone, Ocala/Marion County Chamber & Economic Partnership (CEP); and IDA Secretary Pete Tesch. Bonds/Projects & Programs - Chairman Bryant advised that today's workshop was scheduled to discuss the Industrial Development Authority (IDA). The Deputy Clerk was in receipt of a single page Agenda and a 15 page PowerPoint presentation entitled, "Industrial Development Bonds (IDBs)". Mr. Tesch thanked the Board for organizing today's workshop regarding the IDA. He stated the purpose today was to provide a concise and effective overview of the IDA and its functions. Mr. Tesch recognized members of the IDA who were in the audience (Chairwoman Karen Grider, Dave Harden, Joe Dunn, Adam Woods, Butch Verrando) and noted Ken Colen was unable to appear this morning. Mr. Tesch stated the IDA provided tax-exempt and private activity bond financing for the community, which began in This morning Mr. Calloway would address the IDBs process, as well as how he worked with the IDA; and Mr. Sands would concentrate on IDBs financing. Mr. Tesch commented on some of the projects that had occurred over the years, which included Goodwill Industries, YMCA, Chambrel at Pinecastle,..IRS Metal Magic, LLC, ABB Water Meters, Inc., the Enterprise Center at the College of Central Florida (CF), Cone Distributing and Ocala Recycling. As a result of the partnership with IDA and the Board of County Commissioners (BCC) hundreds of millions of dollars of capital investment had occurred, along with many jobs. The IDA provided a very effective financing tool for specific companies, namely manufacturing facilities and certain 501 c3 corporations. Mr. Calloway advised that in the late 1960's the State of Florida concluded that it was in the public interest to facilitate the financing of certain projects that either benefited the public at large or promoted growth in industry within Florida. As a result, legislation was adopted authorizing the establishment of local industrial development authorities, as a means of providing taxes and conduit financing. The Marion County IDA was created by Resolution of the BCC in 1971 and partnered with the Committee of One Hundred, doing business as (d/b/a) the Industrial Development Council (IDC) in 1983 for support staff and general financing arrangements. The Economic Development Book R, Page 393

2 Corporation (EDC) succeeded the IDC and with the consolidation of the EOC and Chamber of Commerce as the CEP the question now before the BCC was whether it was time for a new agreement to be reached to provide a similar type arrangement. Mr. Calloway noted he had served as IDA counsel since 1999 and his primary obligations were to ensure that the IDA, in its deliberations, followed correct procedures and also coordinated with the County Attorney's Office regarding the County Commissioners portion of the IDA approval process. He advised that he was not Bond counsel, noting Bond counsel was retained for each issue and paid for from bond issue funding. Mr. Sands noted he had been involved with 15 or 20 bond issues within Marion County over the years. He addressed the PowerPoint presentation and briefly commented on his background (page 2). Page 3 addressed lobs, which were basically a loan from a governmental agency, similar to a bank loan, but the difference was that the agency that was technically loaning the money to a project/borrower was not guaranteeing the bonds for repayment or the project and had no liability in connection to the project, either individually or as a body. The project itself was responsible for repayment of the loan. The main attraction for institutions that purchased the tax-exempt lobs, and tax-exempt bonds in general, was that they did not pay Federal income tax on the interest collected. For this reason they were willing to accept a lower interest rate than other types of conventional financing. Mr. Sands advised that these were historically called Bonds because these were relatively large sized projects that went through this process, but was the same as a loan in many respects. Commissioner Zalak requested examples of agencies that were financing recent projects in Marion County. Mr. Sands stated the IDA was the agency that was most often associated with these types of projects. In response to Commissioner Zalak, Mr. Sands stated the money came from private sector lenders; however, the instrument/mechanism used to transfer funds went through the agency (from the lender to the agency then to the borrower) as a document similar to a loan type agreement. The IDA, in most instances, did not administer the loan, collect payments, or make sure the project was working. The IDA assigned those duties to either the lender, or for some larger projects, to a trustee. The main purpose for these types of bonds was typically for manufacturing expansion; and other types most often seen included not-for-profit or 501 c3 type organization (e.g., Goodwill, educational facility, low-income housing, Advanced Ufe Support (ALF) healthcare facility, etc.). Page 4 covered the types of tax-exempt bonds, which included private activity bonds and governmental bonds. Governmental bonds were used to finance infrastructure, public schools and mass transit, airports, etc. Mr. Sands noted the governmental agency was typically responsible for repayment of those bonds owned and operated by government. He stated bonds, for IDA purposes, were private activity bonds, meaning the ownership was a private entity (for profit and non-governmental). Various rules and guidelines determined what constituted private ownership, but for IDA purposes, it was a company, a manufacturing operation, a project or some type of industry that was privately owned. Guidelines and rules in the tax code and treasury rules allowed for certain types of publically owned projects to make use of tax-exempt bonds for financing. The most typical projects Marion County would be dealing with, through the IDA, were manufacturing and not-for-profits. Page 394, Book R

3 Page 5 addressed where the money came from for the bonds. Page 6 covered the lob bond issuance process (2 alternative tracks). Page 7 addressed lob bond public approval process through County Commission. County Attorney Matthew G. Minter commented on Commission approval and stated it would be helpful for the Board to understand what they were approving. He noted State Statute said when a project came before a County Commission that their review was to evaluate whether or not the County itself had the necessary infrastructure in place to service a project and questioned if there was anything else that the BCC was supposed to consider for its approval. Mr. Sands stated the BCC was representing the public and approving: that the bond process had been met; that they were approving staff recommendation; that all the processes, procedures and guidelines for the IDA had been met; and that the review by bond counsel was complete. He noted the approval by the BCC was not guaranteeing the project would work and that they would repay or assume any liability, but was simply saying that the project had met IDA's process and the public had a chance to review and appear at a public hearing to discuss the matter. Chairman Bryant commented on the amount of funds available and questioned if the IDA made sure those funds were available before going through the process. Mr. Sands stated that was correct, noting the manufacturing pool was the one IDA was concerned about. At the beginning of the year (January 1), "x" amount of dollars was set aside in the manufacturing pool, which had never been fully utilized through the allocation process. He noted 501 c3 did not require an allocation. Page 8 addressed the lob Bond closing process (3 simultaneous tracks). Page 9 covered the role of the County Commission and IDA. Page 10 addressed industrial development bonds. Page 11 covered the industrial development bond uses. Page 12 addressed the typical financing terms for tax-exempt lobs. Page 13 showed the taxexempt lob rate versus (vs.) bank lending rate chart. Page 14 covered the lob cost! benefit analysis. Page 15 addressed high-yield/unrated bonds. Mr. Calloway noted the IDA typically did not want to go before the BCC until everything was in place. He commented on the need for an applicant to obtain an allocation from the State, which could sometime alter that. Mr. Calloway referred to the Heartland Communities project, where the IDA performed a preliminary approval for the project so that Heartland could go to the State and obtain an allocation, which is available, but may not be available next year. The financing infrastructure was not in place at that time, so the Resolutions specifically provided that all the IDA was doing was saying that if the entity came back and confirmed that the guidelines were met then it would issue those bonds. He advised that there was no guarantee that the IDA would actually issue the bonds, as it only allowed Heartland to seek the allocation from the State. Mr. Calloway stated each IDA Resolution specifically provided that it in no way found the County Commission would approve any zoning, re-zoning or Special Use Permits. The applicant still had to comply with all BCC and governmental requirements for the project. He clarified that the applicants were not given any special treatment based on the bond financing. Mr. Minter commented on an received regarding a citizen's concern and requested Mr. Sands briefly comment on the types of collateral and securities that lenders looked for with these type of projects. Mr. Sands stated he could not comment on the high-yield project, noting the types of projects he was typically involved in had a history that would obtain financing from various sources, such as a profitable Book R, Page 395

4 manufacturing company that had been around for 10 years. The bank would look at existing financial statements and a plan of action (not a full feasibility or market study), banks also relied on the fact that a company's history showed it could manage this business and needed to expand. Mr. Cone commented on the IDA screening process. Mr. Calloway addressed Chapter 159, Florida Statutes (FS). which set forth the guidelines and procedures for issuance of IDA bonds. Section FS, set forth the criterion requirements that the IDA had to abide by in reviewing and approving any issuance. He read a portion of (2) into the record, as follows: No financing agreement for a project shall be entered into with a party that is not financially responsible and fully capable and willing to fulfill its obligations under the financing agreement. Mr. Calloway noted the IDA took that very seriously, as there had been applicants who came before the IDA with approved financing and the IDA required further security or guarantee. Commissioner McClain commented on the maximum $10,000,000 tax-exempt for manufacturing projects (page 10) and inquired if that was in the Federal Tax Code. Mr. Sands advised that was correct, noting there was a capital expenditures limitation for manufacturing, which he briefly explained. Chairman Bryant stated discussion of the transfer of the administration and operation of the Marion County IDA to the CEP would now begin. Mr. Tesch stated the reason for this was due to the dissolution of the EDC and direction was needed as how to proceed forward. Mr. Calloway mentioned the fact that IDA's were created in order to promote responsible growth and reiterated that the IDA Resolutions specified that no approvals allowed an applicant to avoid any other approval process. He noted the need for some kind of separation between the IDA approval process and any other governmental approval process to provide a counterbalance. Mr. Calloway stated the CEP would be the logical choice. Mr. Minter advised that he provided supplemental considerations to the Board, Mr. Tesch and Mr. Calloway, which were the product of reviewing the foundational documents between the BCC and the IDA. He stated he was encouraged and heartened based upon what he had heard, noting it sounded like the IDA had functioned on behalf of the citizens of Marion County with integrity and had done a good job of scrutinizing projects that came before them. Mr. Minter addressed his concern that the foundational documents were difficult to discern what the framework or criteria were and the guidelines were sparse. He stated, to his knowledge, the original Resolution (from 1970) had never been updated noting it appointed the Board members, provided for annual election of officers, record keeping, etc., but did not say much else about what the IDA members did or guidelines they followed. Mr. Minter commented on the Agreement that the IDA formerly had with the Council of One Hundred. Based on his review, it appeared that over the years the agreement, by some indefinite process, morphed into going from the Council of One Hundred, to the EDC. He noted the issue on today's agenda was the potential transfer of administration and operation to the CEP, which he opined was an issue that should be addressed by the BCC. Mr. Minter stated one question that should be clarified was the respective roles of the IDA versus the CEP. Mr. Minter noted the Statute dealing with IDA's (Chapter ) did contain certain guidelines for the review of applications, in general, but noted the Statute did not get into the level of detail and questioned whether the BCC wanted guidelines that Page 396, Book R

5 emphasized particular types of projects that it would or would not like to be funded by the IDA. He noted there was no clear statement of how the fees charged by the IDA were handled, accounted for, or what use could be made of those fees. Mr. Minter commented on the audit provided, noting the IDA revenues and expenses were included in those with the EDC. He inquired if the Board would like more specific accounting for IDA revenues and expenditures going forward. Mr. Minter clarified that he was not suggesting there had been any impropriety whatsoever in the past. He addressed the framework documents in place, noting the most recent was 20 years old and some were 40 or more years old. Mr. Minter stated it may be worthwhile to update those documents going forward. County Administrator Lee A. Niblock followed up on Mr. Minters' comments, noting he had succinctly outlined items for the BCC. He opined that the documents needed to be updated, which was a considerable legal undertaking, but worthy of the endeavor. Mr. Cone commented on the accountability aspect and noted that all fees generated by the IDA went back to the CEP to stimulate economic activity. Chairman Bryant stated she supported the transfer of administration and operation of the IDA to the CEP. She noted there was no need to take on more governance as the private sector should create jobs. Commissioner Moore questioned the qualifications of IDA members. Mr. Tesch advised that the general application was provided to applicants by the BCC and briefly commented on the backgrounds of current IDA members. Mr. Minter noted the Resolution provided no standards regarding qualifications for appointment to the IDA. Chairman Bryant stated vacancies were advertised and noted qualified applicants were received. Mr. Calloway noted the BCC controlled who was appointed to the IDA and cautioned about putting quotas in place, as they were often surprised by the type of projects that came before the IDA. Commissioner McClain concurred, noting he too supported the CEP continuing to operate the IDA. He questioned who would be responsible for working with the County Attorney on tweaking the language. Mr. Cone noted the CEP had a limited budget, but would want to ensure that it had competent counsel for the CEP to interact with the County Attorney. He stated President/Chief Executive Officer (CEO) Kevin Sheilley, Ocala/Marion County CEP, could lead that process. Commissioner McClain inquired if the current IDA members would.qe able to provide their input. Mr. Tesch stated members would provide input, noting Mr'; Calloway would be the point of contact in working with the BCC, IDA and' rv1r.minter,which would also lead to the selection of another IDA Secretary in the very near future. Commissioner Zalak agreed with the transfer of the administration and operation of the IDC to the CEP and noted clarification was needed. Mr. Cone advised that in the last 12 years the IDA had only issued 2 bonds. He stated he was not talking about a guaranteed source of revenue, but rather on a project by project basis. Mr. Cone noted the CEP expressed all along that its goal was to realistically to try to become a privately funded organization. Mr. Minter stated, going forward, it was best to have a clear statement of who was responsible for deciding what to do with the revenue. Mr. Cone stated any monies left over after all fees were paid and the issuance of the bond through the IDA process would be transferred to the CEP for the role it played and be unrestricted for CEP use. Commissioner McClain opined that it was incumbent upon the BCC to figure out Book R, Page 397

6 December 11,2012 how to pay for amending the documents. He suggested Messrs. Calloway, Minter and CEP counsel to sit down and come up with a Scope of Work and present some type of preliminary budget for the work to take place. Commissioner McClain stated the second point would be to determine a time table to complete the work in order to move forward as soon as possible. Mr. Minter stated the ultimate framework was Chapter 159, FS, which addressed the majority of the basic details. He opined that what was being discussed was details specific to Marion County and the Marion County IDA, along with the separate agreement between the IDA and CEP. Chairman Bryant inquired if this matter could be presented at the January 15, 2013 meeting. Mr. Minter concurred. Chairman Bryant suggested the BCC go over the guidelines and any input or concerns be provided to Mr. Minter. Clerk Ellspermann addressed the keeping of the records and advised that the Records Center was available to the IDA for the Clerk's Office to maintain those records. Mr. Tesch stated there were many records in boxes currently being maintained with their local records management office. Mr. Minter proposed that a one page bullet list of things that should be included in these documents be provided to the Board for its upcoming meeting on Tuesday, December 18, 2012 for direction. In response to Commissioner Moore, Mr. Minter stated the IDA was under the Sunshine Laws, with one exception being for confidential business information. Chairman Bryant advised that Mr. Minter had his direction. There being no further business to come before the Board, the meeting thereupon adjourned at 10:42 a.m. Attest: Page 398, Book R