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HomeMy WebLinkAboutCity Council Committees - Economic Development Corporation - 05/02/1985 (3) CITY OF KENT ECONOMIC DEVELOPMENT CORPORATION May 2, 1985 A regular meeting of the City of Kent Economic Development Corporation was called to order at 7:50 a.m. by Chairman of the Board, Tim Leahy. Present: BOARD MEMBERS: Councilman Tim Leahy, Chairman Councilman Tom Bailey Councilman Berne Biteman Leo Powers OFFICERS: City Attorney P. Stephen DiJulio, General Counsel William Tonkin, Bond Counsel City Clerk Marie Jensen, Secretary CITY OFFICIALS: Dick Cushing, City Administrator MINUTES Biteman moved to approve the following Minutes: Regular meeting of April 8, 1985 (Adjourned from April 4, 1985) Special meeting of April 15, 1985 Special meeting of April 22, 1985 . Powers seconded and the motion carried. BOARD MEMBERSHIP Referring to the vacancy on the Board created by the resignation of Michael Miller, DiJulio noted that Ordinance 2419 provided for two and four-year terms as follows: Two-year terms: Positions No. 2 and No. 4, held by Bailey and Miller w ich will expire at the end of the fiscal year (12/31/85). Four-year terms: Positions No. 1 , 3, and 5, held by Leahy, Biteman and owers which will expire 12/31/87. DiJulio noted that appointments to replace Board members would be for the unexpired terms connected with each position number. Powers noted that due to his out-of-town business commitments, he would be unable to attend meetings and that he too, would resign his position on the Board. He noted that he would continue to serve until a replacement had been appointed for Mike Miller's position. Upon Leahy's question, DiJulio reported on information he had gathered in Washington, D. C. He noted that the 1984 TEFRA laws precluded the Federal Government from securing or otherwise guaranteeing Industrial Revenue Bonds. The types of issues Kent has been dealing with have been supported by Letters of Credit from institutions which have been insured by FDIC. The position of r J the FDIC is that such Letters of Credit constitute deposits and are therefore guaranteed, and as a result, a bond secured by a letter of credit is also secured by FDIC. Consequently the bond is being supported by the Federal Government in violation of the TEFRA laws of 1984. This determination was to take effect today, May 2, but on Friday afternoon, April 26, 1985, the IRS issued a ruling that the regulation would not become effective until December 31 , 1985. He noted that the May 2 deadline was the reason that applicants wanted to have their issues close by May 1 , so as to not be impacted by the Philadelphia Gear Decision. He noted that Northwest Aluminum had postponed their closing for a week as a result of the IRS ruling. DiJulio pointed out that if the rule that Letters of Credit could not be provided by an FDIC bank or other financial institution, that would have meant those Letters of Credit would have to be provided by "off-shore" banks, such as Canadian, Japanese or Hong Kong. This issue has now been delayed to at least December 31. DiJulio noted that the National Institute of Municipal Law Officers had passed a resolution asking Congress to deal with the problem. He noted that it had been suggested that applications for Industrial Revenue Bonds were not really the "public purpose" issues for which IRBs were established. He noted that we are not so much �crre�eatti�in�g new jobs as supporting existing jobs and expansion of same and that we- had actually enticed any new businesses to Kent. In answer to Biteman's question, DiJulio explained that from the Federal Government's standpoint, the concern is that the interest on the bonds is tax-free and therefore private development is benefiting. He pointed out that . this type of financing is new to this State, but that other areas have been doing this for years. Powers noted that he thought that the Kent ADC applicants would not have gone forward with their projects if the Industrial Revenue Bonds had not been available. Bailey opined that some businesses might have relocated outside of Kent if Industrial Revenue Bonds had not been available through the Economic Development Corporation. BROTHERTON-PLEAS Bill Tonkin introduced Resolution 1985-23, approving the documents for the issuance of $1 million -5—dustrial Revenue Bonds for the Brotherton-Pleas Project. He explained that this was for a ten-year term with a floating interest rate tied to tax-exempt mutual funds. He noted that the bond would be sold to an individual , Max Gurvich, and has a put option with 60 days notice. Bailey moved to adopt Resolution 1985-23, Biteman seconded and the motion carried. Bailey noted that the corporation should be actively pursuing business and therefore should have some guidelines and should establish parameters. DiJulio stated that the joint meeting with the County had been delayed from the April workshop but that such a meeting would be rescheduled. He noted that the EDC issue would then be addressed and that Penny Peabody, Executive Director of the County EDC, would be in attendance. Cushing distributed a packet of information to all present which contained an executive summary of the King County Economic Development Plan Work Program, King County Economic Development Council Business Expansion Questionnaire, - 2 - r King County Economic Development Council Business Survey and a copy of a presentation made at the Seattle Chamber Leadership Conference, entitled: "Economic Development in King County." The next regular meeting was set for Thursday, June 6, 1985 at 7:30 a.m. The meeting was adjourned at 8:10 a.m. 1�fFIE-J� i ty �1 er - Secretary of the Board 0024C-IC - 3 -