Merced Municipal Code Ch. 13.64 General Provisions

This Division IX shall be known as the "City of Merced Industrial Development Revenue Bond Law" (sometimes hereafter referred to as "this division"), and is enacted by the city council of the city under and pursuant to the powers granted and reserved to the city under Sections 3, 5 and 7 of Article XI of the Constitution of the state and Section 200 of the Charter of the city, and is enacted for the purpose of establishing a procedure for the issuance and sale of revenue bonds of the city for certain purposes. This division shall constitute a special procedure for the carrying out and enforcement of the rights and powers belonging to the city and such procedure shall control and be followed in the issuance and sale of revenue bonds as in this division so provided. This division fixes and establishes the entire procedure for the issuance and sale of said revenue bonds and no other law shall be applicable thereto.

(Ord. 1417 § 1 (part), 1981: prior code § 14A.300(part)).

Unless the particular provision or the context otherwise requires, the definitions and provisions contained in this section shall govern the construction, meaning and application of words and phrases used in this division.

A. "Acquire" and its variations mean acquire, construct, improve, furnish, equip, remodel, repair, reconstruct or rehabilitate.

B. "Administrative expenses" means the reasonable and necessary expenses incurred by the city in the administration of the provisions of this division, including, without limitation, fees and costs of paying agents, indenture trustees, attorneys, consultants and others.

C. "Application" means an application submitted by a company pursuant to this division to obtain financing for a project under a project agreement.

D. "Bondholder" or "holder of bonds," or any other similar term, means:

1. Any person who has been the holder of any outstanding bond payable to bearer; or

2. The registered owner or his duly authorized attorney, trustee, representative or assigns of any outstanding bond which shall at the time be registered so as to be payable other than to bearer.

For the purpose of bondholders' voting rights or consents, bonds owned by the city shall not be counted.

E. "Bond proceeds" means all amounts received by the city upon sale or other disposition of any bonds.

F. "Bonds" means the bonds, including principal (premium, if any) and interest, authorized to be issued by the city tinder this division, including a single bond, a promissory note or notes, or other instruments evidencing an indebtedness or obligation. Without limiting the generality of the foregoing, bonds include any security issued hereunder, including any guarantee of such security by any person given in relation to an issue of bonds, which satisfy the following criteria:

1. Are issued as part of an issue all or a major portion of the proceeds of which are to be used directly or indirectly in any trade or business carried on by any person who is not an exempt person within the meaning of the Internal Revenue Code of 1954, as amended; and

2. The payment of the principal or interest on which (under the terms of such obligation or any underlying arrangement) is, in whole or in major part:

a. Secured by any interest in property used, or to be used, in a trade or business or in payments in respect of such property, or

b. To be derived from payments in respect of property, or borrowed money, used or to be used in a trade or business; and

3. Are issued as part of an issue substantially all of the proceeds of which are to be used, with respect to any one or more of such facilities (none of which shall be deemed to be restricted in scope because of the provisions of any other state law), to provide:

a. For the acquisition or development of land as the site for an industrial park,

b. For any facilities meeting the criteria set forth in subdivisions 1 and 2 of this subsection which the city can finance hereunder under the exemptions in the Internal Revenue Code of 1954, as amended, commonly known as the "small issue exemptions",

c. Projects for residential rental property if each obligation issued pursuant to the issue is issued in registered form and if

i. Fifteen percent or more in the case of targeted area projects, or

ii. Twenty percent or more in the case of any other project, of the units in each project are to be occupied by individuals of low or moderate income (within the meaning of section 167(k) (3)(B) of the Internal Revenue Code of 1954,

d. Sports facilities,

e. Convention or trade show facilities,

f. Airports, docks, wharves, mass commuting facilities, parking facilities, or storage or training facilities directly related to any of the foregoing,

g. Sewage or solid waste disposal facilities or facilities for the local furnishing of electric energy or gas,

h. Air or water pollution control facilities,

i. Facilities for the furnishing of water for any purpose if:

i. The water is or will be made available to members of the general public (including electric utility, industrial, agricultural, or commercial users), and

ii. Either the facilities are operated by a governmental unit or the rates for the furnishing, or sale of the water have been established or approved by the state or political subdivision thereof, by an agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of the state or political subdivision thereof, or

j. For any other facilities which the city can finance hereunder without violating the applicable federal laws and regulations promulgated thereunder pertaining to industrial development bonds.

The above definitions of the words "bonds" and "bond" shall be construed to include all of the types of industrial development bond facilities that can be financed on a tax-exempt basis under the applicable federal laws and the regulations promulgated thereunder, the details thereof, although also incorporated in such laws and regulations, being, omitted herein for the sake of brevity; and, it is intended that the definition in this division will be amended to correspond with any changes in said federal laws (but not in the regulations or in the details of such laws). It is not intended, by including any of the above definitions, to contravene any provisions of the city Charter and such definitions shall be so construed. Furthermore, some of the above items are furnished by privately owned public utilities or private concerns, and it is not intended to, nor shall any proceedings be conducted under those provisions, without the consent of the privately owned public utility or other private concern involved, as the case may be; or

4. Are issued as part of an issue substantially all the proceeds of which are to be used with respect to any one or more of such facilities (none of which shall be deemed to be restricted in scope because of the provisions of any other state law) to provide facilities (for example, hospitals) which are to be used directly or indirectly in any trade or business carried on by any person who is an exempt person within the meaning of the Internal Revenue Code of 1954, as amended; and any company, who so qualifies as an exempt person, may submit an application for financing hereunder; and any company, who does not so qualify as an exempt person, may submit an application for financing of facilities for operations by such an exempt person, it being the intent of this division to encourage all enterprises, either within or without the city, which broaden the employment opportunities for residents of the city and which serve the residents of the city and so make it a more attractive place for industrial and commercial ventures. While bonds issued to provide facilities described in this subdivision do not fall within the definition of "industrial development bonds" as set forth in the Internal Revenue Code of 1954, as amended, and the regulations promulgated thereunder, such bonds shall be treated as industrial development bonds for purposes of this division and may be issued substantially in the manner set forth herein pursuant to appropriate proceedings being taken therefor.

G. "City" means the city of Merced, California, a charter city in the State existing under and exercising powers pursuant to the city Charter.

H. "City Charter" means the "Charter of the city," as amended from time to time.

I. "Company" means a person, partnership, corporation, whether for profit or not, trust, or other private enterprise of whatever legal form, for which a project is undertaken or proposed to be undertaken pursuant to this division, and may include more than a single enterprise.

J. "Cost" as applied to any project, may include, without limitation, any or all of the following:

1. The cost of construction, improvement, remodeling, rehabilitation, repair and reconstruction:

2. The cost of acquisition, including rights in land and other property, both real and personal and improved and unimproved, and franchises, and disposal rights;

3. The cost of demolishing, removing, or relocating any building or structures on lands so acquired, including the cost of acquiring any lands to which such buildings or structures may be moved or relocated;

4. The cost of machinery, equipment and furnishings, and of engineering and architectural surveys, plans, and specifications;

5. The cost of consultant services, including, without limitation, legal, financial, engineering, accounting, and auditing, necessary or incident to a project and of the determination as to the feasibility or practicability of undertaking such project;

6. The cost of financing, including, without limitation, interest to be paid on the bonds prior to, during, and for, a reasonable period after completion of a project, underwriter's discount, loan fees. and reserves for securing principal and interest payments and for extensions, enlargements, additions, repairs, replacements, renovations, and improvements;

7. The cost of acquiring or refinancing existing obligations incurred in connection with a project, and the reimbursement to any governmental entity or agency, or any company, of expenditures made by or on behalf of such entity, agency, or company that are costs of such project hereunder, without regard to whether or not such expenditures may have been made before or after the undertaking of a project by the city or delivery of bonds, all to the extent that such costs may be legally paid from bond proceeds;

8. The cost of making relocation assistance payments by the company and/or the city, as the case may be, all as provided by state law;

9. Any other items necessary or convenient for the project, whether or not included within the above categories.

Except in the case of a company qualifying as an exempt person Linder Section 501 of the Internal Revenue Code of 1954, as amended, "cost" shall not otherwise include working capital for a company.

K. "Facilities" or "facility" means property suitable for any one or more of the activities or uses described in this division for which bonds can be issued, and includes incidental facilities and appurtenances and appurtenant work.

L. "Governmental department" means any commission, department, or agency of the state or the United States of America with which, under any other act, the offer, issuance, or sale of the bonds is subject to authorization, qualification or registration.

M. "Health facilities," means a structure or building suitable for use as a hospital, clinic, nursing home, home for the aged or infirm, place providing health care, laboratory, laundry, nurses', doctors', or interns' residence, ambulatory care center, place for administrative offices, place in which to conduct research, place in which to house maintenance equipment and supplies, storage place, place in which to 'locate utilities, auditorium, dining hall, place for food service and preparation, place in which to house firefighting equipment, place in which to provide mental and physical health care and dental care, nursing school, medical teaching school, and place in which to house offices; parking lots, garages, and buildings or structures in which to house supporting services; and all necessary, useful, and related furnishings, equipment, machinery, and appurtenances, including without limitation, the acquisition, preparation, and development of all lands necessary or convenient as a site or sites for any of the foregoing.

N. "Proceedings" means the actions taken by the city in undertaking, carrying out, and completing a project, including, without limitation, the project agreements, indentures, bonds, and resolutions.

O. "Project" means the acquisition, financing or refinancing of facilities as authorized by this division.

P. "Protect agreements" means the agreements between the city and a company respecting a project, and may include, without limitation, leases, subleases, options to, and installment or other contracts of purchase, loan, and guarantee agreements, notes, mortgages, deeds of trust, and security agreements.

Q. "Property" means any land, easements, rights-of-way, air rights, water rights, disposal rights, and any other rights, hereditaments, or profits of whatever kind and nature, improvements, buildings or other structures, and any personal property, and includes, but is not limited to, machinery and equipment, whether or not in existence or under construction, and interests in any of the foregoing necessary, incidental or convenient in connection with a project.

R. "Resolution of issuance" means a resolution authorizing the issuance of bonds by the city as further provided in Section 13.66.100.

S. "Revenues" means all rents, purchase payments, and other income derived by the city from, or with respect to, the sale, lease, or other voluntary or involuntary disposition of, or repayment of, loans with respect to, property, bond proceeds, and any receipts derived from the investment of any such income or proceeds in any fund or account of the city, but does not include receipts designated to cover administrative expenses.

T. "State" means the state of California.

(Ord. 1417 § 1 (part), 1981: prior code § 14A.300 (part)).

A. The city council finds and declares that it is necessary and essential to the well-being of the city that it provide financial assistance to promote the economic development of the city. Such economic development will serve the following public purposes and municipal affairs of the city:

1. The full and gainful employment of residents of the city;

2. The full and efficient utilization and modernization of existing industrial, commercial, and business facilities;

3. The development of new industrial, commercial and business facilities;

4. The growth of the city's tax base through increased property values and purchasing power;

5. The reduction of the need for and costs of welfare and other remedial programs;

6. The reduction of urban ills, such as crime, attributable in part to inadequate economic opportunities;

7. The stability and diversification of the city's economy;

8. The lowering of the cost to Merced consumers of necessary goods and services;

9. The environmentally optimum disposition of waste materials of the city; and

10. The enhancement of the general economic prosperity, health, safety and welfare of the residents of the city.

B. The availability of financial assistance pursuant to this division will serve those purposes and the general plan of the city by providing private enterprises with new methods of financing capital outlays in the city and by ensuring that economic development within the city will reflect the local community's needs and objectives and will be environmentally optimal with respect to both the physical and social environment of the city. The city can promote such public interests pursuant to this division without adversely affecting areas outside the city and without conflicting with efforts by the state to solve problems of statewide concern.

C. The city is authorized and directed to engage in the issuance of bonds for the accomplishment of one or more of the public purposes which it is the declared policy of the city to achieve, all as provided in this division. Such purpose or purposes shall be deemed to constitute a public purpose or purposes of the city in which the city has a peculiar and unique interest, and the exercise of the powers recognized in this division shall be deemed to be in the performance of an essential governmental function and also a municipal affair as those terms are defined by California law. Findings as to the reasons for the adoption of this division, the public purposes to be achieved thereby and other matters pertinent to this division were set forth in Ordinance No. 1374 of the city council, which the ordinance codified in this division is amending in its entirety.

(Ord. 1417 § 1 (part), 1981: prior code § 14A.301).

A. No attorney or firm of attorneys employed as counsel by a company may serve as legal counsel, including bond counsel, to the city in connection with any project or proposed project for such company. No attorney or firm of attorneys employed as counsel by an underwriter may serve as legal counsel, including bond counsel, to the city in connection with any project or proposed project for the company involved.

B. No person or firm employed as financial consultant, advisor or underwriter by a company may serve as financial advisor to the city, and no financial advisor to the city for a particular issue of bonds may purchase or agree to purchase bonds from the city unless such bonds are offered by the city at a public sale upon publication of a notice inviting bids.

(Ord. 1417 § 1 (part), 1981: prior code § 14A.302).