(1)AR 011607 Bonds - Biosolids - Laserfiche WebLink

Browse Search

For the past year, staff has been negotiating a lease agreement with Biosoils of Southern California ("Biosoils") that would permit Biosoils to construct and operate a Biosolids Drying Facility for the processing and treatment of municipal sewage and its byproducts at the City's wastewater treatment plant located at 1201 S. Rancho Avenue. The disposal of biosolids derived from sewage sludge is looming as a critical issue for those municipalities that operate publicly owned treatment works (wastewater treatment plants) in the Southern California region. The disposal of such biosolids in an environmentally acceptable manner represents an essential public service in that it constitutes the last step in the treatment and disposal of sewage. TEFRA Hearing and Approval to Join the CMFA Biosoils proposes to use bond monies obtained via the California Municipal Finance Authority ("CMFA") to finance the construction of the Biosolids Facility. In order for the interest on the bonds to be excluded from the gross income of the owner of the bonds (i.e. tax-exempt), an "applicable elected representative" of the government unit must approve the issuance of the bond after a public hearing ("TEFRA hearing") following reasonable public notice. The proposed bond issuance by the CMFA is classified as a private activity for purposes of the Internal Revenue Code (the "Code"). Because the CMFA's Board of Directors is not an elected body, the Code provides that a governmental unit with elected representatives and jurisdiction over the area in which the project to be financed is located, in this case, the City Council of Colton, may be considered an "applicable elected representative" with respect to the bond issue. As a result, the Code requires that the City Council hold a TEFRA public hearing regarding the issuance of the bonds and adopt a resolution approving the issuance of the bonds by the CMFA. In addition, in order for the CMFA to have jurisdiction to issue the bonds, the City must become a member of the CMFA. Lease Agreement The lease agreement currently under negotiation with Biosoils would include the following terms: 1. City would lease a portion of the City's wastewater treatment plan property to Biosoils for a 54 year —10 month term. 2. Biosoils would construct, at their cost, a Biosolids Drying Facility for the processing and treatment of municipal sewage.