Explanation
BACKGROUND: Issuance of Recovery Zone Bonds was authorized by the American Recovery and Reinvestment Act of 2009 (ARRA). The City received an allocation of $24,500,000.00 in Recovery Zone Facility Bonds that must be issued by December 31, 2010. Recovery Zone Facility Bonds are a new category of tax-exempt private activity bonds. Facility Bonds allows projects to be financed tax-exempt which prior to the ARRA were not eligible for tax-exempt financing. Tax-exempt financing provides a lower cost of money for the borrower. Almost any type of capital investment project in a designated Recovery Zone is eligible. Examples include commercial projects, office complexes, hotels and warehouses. Ineligible projects include residential rental properties, golf courses, massage parlors, and stores that sell alcoholic beverages to be consumed off-site as its primary product. The entire City has been designated a Recovery Zone by Resolution 0159x-2009.
The City is currently working in partnership with the Columbus-Franklin County Finance Authority to identify eligible private commercial development which is eligible to issue Recovery Zone Facility Bonds. Both entities are confident that the entire bond allocation will be expended within the given timeframe.
This legislation will designate the Columbus-Franklin County Finance Authority as the issuer of the Recovery Zone Bonds for the City of Columbus. The Finance Authority is also acting as the bond issuer for the Franklin County Recovery Zone Bond allocation.
This ordinance will repeal ordinance number 0262-2010, passed February 24, 2010 because the Columbus-Franklin County Finance Authority was referred to not only as the issuer but also as the "ultimate beneficiary" of the bonds and it was recently determined that the City needs instead to designate the Columbus-Franklin County Finance Authority as the City's "agent" for purposes of issuance
Emergency action is requested to allow the transfer of the Recovery Zone Bond allocation to the Columbus-Franklin County Finance Authority in a timely manner to allow projects to be financed within the given timeframe.
FISCAL IMPACT: None. The Columbus-Franklin County Finance Authority will provide conduit financing and issue the Recovery Zone Facility Bonds in order for the project to be eligible and benefit from the interest rate reduction. The private entity that will receive the proceeds from the bond sale will be responsible for the repayment. In case of default neither the City nor the Finance Authority will be impacted. The Recovery Zone Facility Bond allocation is not actual dollars; it is a mechanism for the private entity to get a lower interest rate.
Title
To designate the Columbus-Franklin County Finance Authority, Franklin County, Ohio as agent of the City of Columbus, Ohio for the purpose of allocating the City's Federal Recovery Zone Facility Bond volume cap limitation and issuing Federal Recovery Zone Facility Bonds in the City's recovery zone; to repeal ordinance number 0262-2010, passed February 24, 2010; and to declare an emergency.
Body
WHEREAS, the issuance of Recovery Zone Facility Bonds can potentially promote job creation and economic recovery in areas particularly affected by employment decline, significant poverty, increased home foreclosures, or general economic distress; and
WHEREAS, the City desires to designate the Columbus-Franklin County Finance Authority, Franklin County, Ohio a port authority duly organized and validly existing under Chapter 4582, Ohio Revised Code (the "Finance Authority") as agent of the City for the purpose of allocating the City's Volume Cap and issuing Recovery Zone Facility Bonds to finance certain recovery zone property located in the Recovery Zone; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development in that it is immediately necessary to designate Columbus-Franklin County Finance Authority as agent for the City of Columbus manner to allow projects to be financed within the given timeframe, all for the immediate preservation of the public health, peace, property, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. Under Section 1400U-1(a)(3)(A) of the Code, $24,500,000 of the State of Ohio's Recovery Zone Facility Bond volume cap limitation has been allocated to the City for the issuance of Recovery Zone Facility Bonds to finance certain projects within the Recovery Zone.
Section 2. This Council reasonably finds and determines, in good faith, that the Finance Authority is an eligible issuer of Recovery Zone Facility Bonds for recovery zone property located within the Recovery Zone.
Section 3. This Council hereby designates the Finance Authority as agent of the City for the purpose of allocating the City's Volume Cap to ultimate beneficiaries.
Section 4. The Finance Authority is directed to issue Recovery Zone Facility Bonds in accordance with applicable federal and state laws and regulations to finance certain recovery zone property in the Recovery Zone.
Section 5. The Finance Authority is directed to notify the City Auditor on October 1, 2010, if the agency is not terminated on an earlier date, of the amount of the unused Volume Cap on such date to permit automatic reversion of such portion of the Volume Cap to the City for such use as the City Auditor should determine.
Section 6. All prior legislation of this Council inconsistent with the provisions hereof are hereby repealed and of no further effect, including, but not limited to Ordinance No. 0262-2010, dated February 24, 2010.
Section 7. It is hereby found and determined that all formal actions of this Council concerning and relating to the adoption of this Ordinance were adopted in an open meeting of this Council, and that all deliberations of this Board and of any of its committees that resulted in such formal action, were in meetings open to the public, in compliance with all legal requirements including Section 121.22 of the Ohio Revised Code.
Section 8. In accordance with Section 55(b) of the Charter of the City of Columbus, Ohio, and for the reasons stated in the preamble hereto, which is hereby made a part hereof, this Ordinance is declared to be an emergency measure necessary for the immediate preservation of the public peace, health, and safety and therefore, except as otherwise provided herein, shall take effect and be in force from and immediately after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.