|
DATE: |
February 25, 2025 |
07 |
SUBJECT
Title
NOTICED PUBLIC HEARING (TEFRA): ISSUANCE OF REVENUE OBLIGATIONS BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY FOR THE BENEFIT OF EDCO REFUSE SERVICES, INC., BURRTEC WASTE & RECYCLING SERVICES, LLC, BURRTEC ENVIRONMENTAL, LLC, BURRTEC RECOVERY & TRANSFER, LLC, JEMCO EQUIPMENT CORP., SANCO SERVICES, L.P., AND/OR A RELATED OR SUCCESSOR ENTITY IN AN AGGREGATE MAXIMUM STATED PRINCIPAL AMOUNT NOT TO EXCEED $73,500,000 (DISTRICTS: 2 AND 5)
Body
OVERVIEW
The County has received a request from the California Enterprise Development Authority (“Authority”) to conduct a public hearing as required by the Internal Revenue Code and to approve the Authority’s issuance of one or more series of tax-exempt and/or taxable revenue obligations in an aggregate principal amount not to exceed $73,500,000 (the “Revenue Obligations”), for the benefit of EDCO Refuse Services, Inc., Burrtec Waste & Recycling Services, LLC, Burrtec Environmental, LLC, Burrtec Recovery & Transfer, LLC, Jemco Equipment Corp., and/or a related or successor Entity Sanco Services, L.P. (collectively, the “Borrower”).
The Borrower has applied for the financial assistance of the Authority. The proceeds of the Revenue Obligations will be loaned to the Borrower to: (1) finance, refinance and/or reimburse the cost of: (a) the acquisition, construction, installation, improvement and equipping of solid waste disposal facilities including, but not limited to, improvements to existing buildings, conversion of the existing diesel fleet to renewable natural gas, transfer stations, waste and recycling terminals, organics facilities, anaerobic digester facilities, container yards, hauling yards, material recovery facilities, maintenance yards and administrative facilities; and (b) the acquisition of collection trucks, transfer trailers and loaders, carts, bins and other solid waste disposal machinery and equipment, all of which will be located at and1035 and 1044 West Washington Avenue, Escondido, California 92025 in the approximate amount of $72,000,000 and 324 Maple Street, Ramona, California 92065 in the approximate amount of $1,500,000 (collectively, the “Facilities”); and (2) pay interest on the Revenue Obligations and the costs of issuance and other related costs in connection with the financing (collectively the “Project”).
The Authority is authorized to assist in financing projects of nonprofit public benefit organizations or for-profit corporations with a public benefit wishing to issue or reissue bonds, notes or other evidences of indebtedness, including the Borrower. In order to initiate such a financing, the Borrower is asking the County of San Diego, a member jurisdiction in which the Project is located to: (1) conduct a public hearing to satisfy the public approval requirement of Section 147(f) of the Internal Revenue Code; and (2) approve the Authority’s issuance of the Revenue Obligations. Although the Authority will be the issuer of the Revenue Obligations for the Borrower, the financing cannot proceed without the approval of one of the applicable legislative bodies.
Today’s recommendations will provide the Authority with the required authorization to pursue its determination to issue the Revenue Obligations on behalf of the Borrower.
RECOMMENDATION(S)
CHIEF ADMINISTRATIVE OFFICER
1. Pursuant to Section 147(f) of the Internal Revenue Code, hold a public hearing regarding the financing of the Project.
2. Adopt a Resolution entitled:
RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO APPROVING THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF ITS REVENUE OBLIGATIONS FOR THE BENEFIT OF EDCO REFUSE SERVICES, INC., AND/OR RELATED OR SUCCESSOR ENTITIES, IN AN AGGREGATE MAXIMUM STATED PRINCIPAL AMOUNT OF $73,500,000 FOR THE PURPOSE OF FINANCING, REFINANCING AND/OR REIMBURSING THE COST OF ACQUISITION, CONSTRUCTION, INSTALLATION, IMPROVEMENT AND EQUIPPING OF SOLID WASTE DISPOSAL FACILITIES AND EQUIPMENT, PROVIDING THE TERMS AND CONDITIONS FOR SUCH REVENUE OBLIGATIONS AND OTHER MATTERS RELATING THERETO
EQUITY IMPACT STATEMENT
The Authority was established to assist in financing projects of nonprofit public benefit organizations or for-profit corporations with a public benefit wishing to issue or reissue revenue obligations. The Revenue Obligations issued will be used to: (1) finance, refinance and/or reimburse the cost of: (a) the acquisition, construction, installation, improvement and equipping of solid waste disposal facilities, including, but not limited to, improvements to existing buildings, conversion of the existing diesel fleet to renewable natural gas, transfer stations, waste and recycling terminals, organics facilities, anaerobic digester facilities, container yards, hauling yards, material recovery facilities, maintenance yards and administrative facilities; and (b) the acquisition of collection trucks, transfer trailers and loaders, carts, bins and other solid waste disposal machinery and equipment, all of which will be located at one or more of the addresses and in the approximate dollar amounts set forth below; and (2) pay interest on the Revenue Obligations and the costs of issuance and other related costs in connection with the financing. The Borrower is focused on enhancing community recycling efforts through an extensive network of Material Recovery Facilities, Construction and Demolition Processing Facilities, Commingled Recycling Processing Centers, Recycling Buyback Centers, Household Hazardous Waste Collection Centers, and an Anaerobic Digestion Facility. The Facilities will allow the Borrower to continue its investment in diversion facilities to achieve the mandates of AB 939 and SB 1383.
SUSTAINABILITY IMPACT STATEMENT
The proposed action would result in economic, social, health and wellbeing benefits for the community by allowing the Borrower to meet the waste collection, disposal and recycling needs of a broad segment of the San Diego population, while ensuring a safe and rewarding career for its employees. The proposed action will contribute to County of San Diego Sustainability Goal No. 3 by minimizing waste and promoting responsible consumption and reuse to create more restorative and regenerative operations. The proposed action will also result in the investment of more energy efficient operations and in a reduction of emissions through the conversion of the Borrower’s diesel fleet to renewable natural gas.
FISCAL IMPACT
If approved, the proposal will result in approximately $991 of unanticipated revenue to be used to reimburse the County for staff time associated with this non-County financing. There will be no change in net General Fund cost and no additional staff years.
The Borrower will be responsible for the payment of all present and future costs in connection with the financing. The County will incur no obligation of indebtedness as a result of these actions.
BUSINESS IMPACT STATEMENT
N/A
Details
ADVISORY BOARD STATEMENT
The Debt Advisory Committee, composed of the Chief Financial Officer, the Auditor and Controller, and the Treasurer-Tax Collector, concurs with this recommendation in order to permit the Authority to issue Revenue Obligations on behalf of the Borrower.
BACKGROUND
California Enterprise Development Authority (“Authority”)
The California Enterprise Development Authority provides tax-exempt loans and leases for qualified projects located throughout the State of California. The Authority’s mission is to support economic development, job creation and social programs throughout the State of California. By assisting nonprofit and for-profit corporations with various tax-exempt financing programs, the Authority is able to support programs that improve the health and welfare of California residents. The Authority finances a broad range of facilities, including nonprofit projects such as education, health care and cultural facilities, affordable multi-family and senior housing, manufacturing facilities and equipment, solid waste, water, wastewater treatment facilities and infrastructure projects and government sponsored financing.
EDCO Refuse Services and Related Entities (“Borrower”)
The Borrower consists of EDCO Refuse Services, Inc., Burrtec Waste & Recycling Services, LLC, Burrtec Environmental, LLC, Burrtec Recovery & Transfer, LLC, Jemco Equipment Corp., Sanco Services, L.P. The entities, along with EDCO Disposal Corporation, are the largest privately held solid waste company in California. The entities are focused on serving the integrated waste and recycling needs of many California communities, including many communities in San Diego County. The entities provide residential and commercial solid waste collection and recycling services throughout the greater Southern California area. The entities also offer special electronic and hazardous waste collection, recycling and disposal services and operate material recovery facilities, transfer stations and landfills. The material recovery facilities sort and process recyclables from general waste. The various transfer stations serve as a local collection point to the final disposal site and operate as an important and fundamental part of effective waste management. The entities also operate an anaerobic digester in the city of Escondido, which will be expanded with a portion of the proceeds of the obligations.
PROJECT
Public Benefit
The Borrower is focused on enhancing community recycling efforts through an extensive network of Material Recovery Facilities, Construction and Demolition Processing Facilities, Commingled Recycling Processing Centers, Recycling Buyback Centers, Household Hazardous Waste Collection Centers and an Anaerobic Digestion Facility. The proceeds of the Revenue Obligations will be used by the Borrower to (1) finance, refinance and/or reimburse the cost of (a) the acquisition, construction, installation, improvement and equipping of solid waste disposal facilities including, but not limited to, improvements to existing buildings, conversion of the existing diesel fleet to renewable natural gas, transfer stations, waste and recycling terminals, organics facilities, anaerobic digester facilities, container yards, hauling yards, material recovery facilities, maintenance yards and administrative facilities; and (b) the acquisition of collection trucks, transfer trailers and loaders, carts, bins and other solid waste disposal machinery and equipment, all of which will be located at 1035 and 1044 West Washington Avenue, Escondido, California 92025 in the approximate amount of $72,000,000 and 324 Maple Street, Ramona, California 92065 in the approximate amount of $1,500,000 (the “Facilities”) and (2) pay interest on the Revenue Obligations and the costs of issuance and other related costs in connection with the financing. The Facilities will allow the Borrower to continue its efforts to divert the disposal of solid waste from landfills to achieve the mandates of AB 939 (The California Integrated Waste Management Act) and SB 1383, a California state mandate aimed at reducing organic waste in landfills by 75% by 2025.
County Involvement
Section 147(f) of the Internal Revenue Code requires that an applicable elected body, with respect to the Project, hold a public hearing and approve the issuance and delivery of the Revenue Obligations. The Board of Supervisors of the County of San Diego, as an applicable elected body, is requested to: (1) hold a public hearing at which all those interested in speaking with respect to the financing of the Project can be heard; and (2) approve the issuance of Revenue Obligations. The Borrower shall be responsible for the payment of all present and future costs in connection with the issuance of the Revenue Obligations.
The Authority will be issuing Revenue Obligations in an aggregate principal amount not to exceed $92,000,000 and is seeking approval pursuant to Section 147(f) of the Internal Revenue Code for the projects located in San Diego County totaling $73,500,000. The Authority and Borrower will be seeking a separate TEFRA approval from the County of Riverside for $2,500,000 of Revenue Obligations to be issued for the benefit of the Borrower for solid waste facilities located in the County of Riverside. The remaining Revenue Obligations in the amount of $16,000,000 will be issued for the benefit of the Borrower to refund obligations issued for solid waste facilities located in other jurisdictions that do not require a new TEFRA approval.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
Today’s proposed action supports the Community Strategic Initiative in the County of San Diego’s 2025-2030 Strategic Plan by supporting and allowing the issuance of Revenue Obligations by the Authority for the Borrower to finance the cost of improving and expanding waste collection, disposal and recycling facilities to serve a broad segment of the San Diego population.
Respectfully submitted,
ebony n. shelton
Chief Administrative Officer
ATTACHMENT(S)
1. RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN DIEGO APPROVING THE ISSUANCE BY THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF ITS REVENUE OBLIGATIONS FOR THE BENEFIT OF EDCO REFUSE SERVICES, INC., BURRTEC WASTE & RECYCLING SERVICES, LLC, BURRTEC ENVIRONMENTAL, LLC, BURRTEC RECOVERY & TRANSFER, LLC, JEMCO EQUIPMENT CORP., SANCO SERVICES, L.P., AND/OR a RELATED OR SUCCESSOR ENTITY, IN AN AGGREGATE MAXIMUM STATED PRINCIPAL AMOUNT OF $73,500,000 FOR THE PURPOSE OF FINANCING, REFINANCING AND/OR REIMBURSING THE COST OF ACQUISITION, CONSTRUCTION, INSTALLATION, IMPROVEMENT AND EQUIPPING OF SOLID WASTE DISPOSAL FACILITIES AND EQUIPMENT, PROVIDING THE TERMS AND CONDITIONS FOR SUCH REVENUE OBLIGATIONS AND OTHER MATTERS RELATING THERETO
2. NOTICE OF PUBLIC HEARING
3. CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY PROJECT PRE-APPLICATION FOR BOND FINANCING