Agenda

Back to Calendar Return

Agenda Item 21.

City Council Meeting

Meeting Date:	02/18/2020
FROM:	Bill Gallardo

Subject:

Synrgo Project and Associated California Municipal Finance Authority Bond Financing

RECOMMENDATION

Determine whether to support a proposed project of Synrgo Inc. (Synrgo) to acquire two M2 General Industrial properties, make interior improvements to existing buildings on the properties and add new equipment, and obtain California Municipal Finance Authority (CMFA) bond financing for the project;
Determine whether to make the following public benefit findings for the project: (i) economic development and business expansion; (ii) job development; (iii) building rehabilitation and new equipment; (iv) business retention; and (iv) increased local revenue; and
Determine whether to authorize the City Manager to deliver a letter to CMFA regarding the City's support and public benefit findings.

BACKGROUND/DISCUSSION

Last month Wayne Wedin contacted the City on behalf of Synrgo to request support for CMFA’s issuance of $35 million in taxable bonds for economic development in Brea. Synrgo is a local company that provides document management, recordation and delivery for the mortgage industry. Synrgo is proposing to undertake a project that includes, among other things, the purchase and rehabilitation of two properties in Brea - at 590 W. Lambert Road and 595 Vanguard Way - to expand existing business. As represented, the proposed project is not expected to require discretionary entitlements or public hearings under the zonining ordinance, but would require building permits. Synrgo has been in discussion with CMFA, a multi-jurisdictional joint powers authority, for CMFA to issue bonds to finance the project.

Synrgo Chairman, CEO, and Owner Karl Klessig submitted a January 29, 2020 letter (copy attached) describing the public benefits that he believes are associated with the proposed project and the CMFA bond financing. Additionally, Mr. Wedin submitted a January 30, 2020 e-mail (copy attached) providing further detail on the project and the perceived public benefits associated with the CMFA bond financing.

Under CMFA’s joint powers agreement (its governing document), CMFA may issue bonds for a project located in one of its member’s jurisdiction only if such member has approved the project and the related bond issuance. The City is a member of CMFA. Hence, CMFA will proceed with issuing bonds for the Synrgo project only after it has received evidence of the City’s support.

Should the City Council decide to support the Synrgo project and the CMFA bond financing, the City Attorney’s office has drafted a letter (copy attached) that will memorialize that decision. The letter makes clear that the City will have no responsibility with respect to the CMFA bonds, and the City has not undertaken any independent review of the feasibility of the Synrgo project. By this action, the City will be approving the project and the issuance of the bonds solely for the purpose of satisfying the requirement of CMFA’s joint powers agreement. CMFA counsel has reviewed the draft letter and confirmed that it is sufficient for CMFA’s purposes.

FISCAL IMPACT/SUMMARY

The proposed bonds will be issued by CMFA (and not the City). The City will have no responsibility or liability for such financing.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Melissa Davis, Management Analyst I
Concurrence: Terence R. Boga, City Attorney

Attachments
January 29, 2020 Karl Klessig Letter
January 30, 2020 Wayne Wedin E-mail
Draft letter to CMFA