HomeMy WebLinkAbout2021-11-16; City Council; ; Tax and Equity Fiscal Responsibility Act Public Hearing for the Issuance of Tax-Exempt Bonds by the California Municipal Finance Authority for the Benefit of Camston Wrather LLCMeeting Date: Nov. 16, 2021
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Matt Sanford, Economic Development Manager
matt.sanford@carlsbadca.gov, 760-607-2923
David Graham, Chief Innovation Officer
david.graham@carlsbadca.gov, 760-473-2259
Subject: Tax and Equity Fiscal Responsibility Act Public Hearing for the Issuance of
Tax-Exempt Bonds by the California Municipal Finance Authority for the
Benefit of Camston Wrather LLC
District: 2
Recommended Action
Hold a public hearing, under the requirements of the Tax and Equity Fiscal Responsibility Act
and the Internal Revenue Code of 1986 and adopt a resolution approving the issuance of
California Municipal Finance Authority revenue bonds by the California Municipal Finance
Authority for the benefit of Camston Carlsbad Asset 1 LLC or a subsidiary or affiliate. The bonds
are to finance and refinance the construction, expansion, improvement and/or equipping of an
approximately 116,000 square-foot, solid waste disposal facility in the City of Carlsbad that will
process printed circuit boards and related materials derived from used computers, flat panel
televisions and smartphones.
Executive Summary
The borrower, Camston Wrather LLC, on behalf of the Camston Carlsbad Asset 1 LLC, a
Delaware limited liability company, has requested that the California Municipal Finance
Authority issue one or more series of revenue bonds in an aggregate principal amount not to
exceed $80 million. The project, a solid e-waste disposal facility to be built at 2856 Whiptail
Loop East in Carlsbad, is to be owned and operated by the borrower. The borrower is also
asking the Municipal Finance Authority to pay certain expenses in connection with the issuance
of the bonds.
For the bonds to qualify as tax-exempt bonds, the City of Carlsbad is required to conduct a
public hearing, known as a TEFRA hearing, to provide members of the community an
opportunity to speak in favor of, or against the use of tax-exempt bonds for the financing of the
project. Although the City of Carlsbad is not issuing the bonds, or in any way obligated to repay
the bonds, the Internal Revenue Code requires the financing by Municipal Finance Authority be
approved by the City Council because the proposed project is located within Carlsbad’s
jurisdictional boundaries.
Nov. 16, 2021 Item #10 Page 1 of 9
Discussion
The Municipal Finance Authority was formed as a joint powers authority to assist local
governments, non-profit organizations and businesses with the issuance of taxable and tax-
exempt bonds aimed at improving the standard of living in California. The City of Carlsbad is a
member of the authority, whose representatives and board of directors have considerable
experience in bond financing.
Once the City Council holds the required TEFRA hearing and adopts the required resolution, no
other participation of the City of Carlsbad in the bond financing will be required.
All parties should clearly understand:
• The debt issued that is financed by the bonds is not debt of the City of Carlsbad in any
way. There is no obligation of any kind on the part of the City of Carlsbad, the City
Council or any entity controlled by the City of Carlsbad to repay the debt issued by the
California Municipal Finance Authority. All repayment of debt is the strict obligation of
the borrower.
• All monitoring and administrative actions related to this issuance are the responsibility
of the California Municipal Finance Authority.
• The City of Carlsbad’s participation in the issuance of these state bonds will not impact
the city's appropriation limits and will not constitute any type of indebtedness by the
city.
The solid e-waste disposal facility Camston Carlsbad Asset 1 LLC plans to build with the borrowed
funds will reduce the amount of e-waste going to landfills, and thus support clean, safe solid-
waste disposal within the City of Carlsbad.
Options
Staff recommend the City Council:
• Conduct a hearing required by the Tax and Equity Fiscal Responsibility Act on Nov. 16,
2021, on the subject of the proposed issuance of revenue bonds by the California
Municipal Finance Authority in an amount not to exceed $80,000,000 for the
construction, expansion, improvement and/or equipping of the project
• Adopt the attached City Council resolution in favor of the issuance of the bonds
The council could choose to not approve the recommended resolution, but there would be no
benefit to the city for doing. Failing to approve the resolution this could result in the facility
locating elsewhere.
Fiscal Analysis
As noted above, the City of Carlsbad will have no financial, legal, moral obligation, liability or
responsibility for the project or the repayment of the bonds financing of the project. There is no
fiscal impact to the City of Carlsbad for the Municipal Finance Authority to issue the bonds for
the noted development.
The Municipal Finance Authority shares a portion of the issuance fees it receives with its
member communities when it issues bonds. The minor administrative and staff costs to prepare
the reports and related documents required by the borrower and the Municipal Finance
Nov. 16, 2021 Item #10 Page 2 of 9
Authority are reimbursed to the City of Carlsbad through a small portion of the bond issuance
fee paid to the city’s General Fund.
Next Steps
Should the City Council approve the proposed resolution, City staff will forward it to the
California Municipal Finance Authority, allowing its staff and the borrower to proceed with
bond issuance and project financing.
Environmental Evaluation
This action does not constitute a project as defined under the California Environmental Quality
Act in accordance with Public Resources Code Section 21065 in that this action may not cause a
direct physical change in the environment or a reasonably foreseeable indirect physical change
in the environment.
Public Notification and Outreach
This item was noticed in keeping with the state's Ralph M. Brown Act. It was available for public
viewing and review at least 72 hours before the scheduled meeting date.
A seven-calendar day public Tax and Equity Fiscal Responsibility Act hearing notice was posted
in a newspaper of general circulation on Oct. 26, 2021, and on the city website. Copies of the
notice are available in the Office of the City Clerk.
Exhibits
1. City Council resolution
2. Description of the proposed project
Nov. 16, 2021 Item #10 Page 3 of 9
RESOLUTION NO. 2021-256
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE ISSUANCE OF THE CALIFORNIA MUNICIPAL
FINANCE AUTHORITY REVENUE BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $80,000,000 FOR THE PURPOSE OF FINANCING
OR REFINANCING THE ACQUISITION, CONSTRUCTION, REHABILITATION,
IMPROVEMENT AND EQUIPPING SOLID WASTE DISPOSAL FACILITIES FOR
THE BENEFIT OF CAMSTON CARLSBAD ASSET 1, LLC AND CERTAIN OTHER
MATTERS RELATING THERETO
Exhibit 1
WHEREAS, Camston Wrather LLC (the "Sponsor"), on behalf of the Camston Carlsbad Asset 1,
LLC, a Delaware limited liability company (the "Borrower"), has requested that the California Municipal
Finance Authority (the "Authority") issue one or more series of revenue bonds in an aggregate principal
amount not to exceed $80,000,000 (the "Bonds"), including but not limited to revenue bonds issued as
part of a plan to (1) finance or refinance the construction, expansion, improvement and/or equipping
of an approximately 116,000 square foot solid waste disposal facility, described in Section 142(a)(G) of
the Internal Revenue Code (Code), that will process printed circuit boards and related materials derived
from used computers, flat panel televisions, and smartphones (the "Project") to be owned and
operated by the Borrower and located at 2856 Whiptail Loop E within the City of Carlsbad (the "City"),
and (2) pay certain expenses in connection with the issuance of the Bonds; and
WHEREAS, pursuant to Section 147(f) of the Code, the issuance of the Bonds by the Authority
must be approved by the City of City of Carlsbad (the "City") because the Project is located within the
territorial limits of the City; and
WHEREAS, the City Council of the City (the "City Council") is the elected legislative body of the
City and is one of the "applicable elected representatives" required to approve the issuance of the
Bonds under Section 147(f) of the Code; and
WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds
by the Authority in order to satisfy the public appro'(al requirement of Section 147(f) of the Code and
the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California
Municipal Finance Authority, dated as of January 1, 2004 (the "Agreement"), among certain local
agencies, including the City; and
Nov. 16, 2021 Item #10 Page 4 of 9
Exhibit 1
WHEREAS, pursuant to Section 147(f} of the Code, the City Council has, following notice duly
given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the
issuance of the Bonds by the Authority;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Carlsbad, California as
follows:
1. The foregoing recitals are true and correct.
2. The City Council approves the issuance of the Bonds by the Authority, including but not limited
to Bonds issued as part of a plan to finance or refinance the Project facilities. It is the purpose
and intent of the City Council that this resolution constitute approval of the issuance of the
Bonds by the Authority for the Project, for the purposes of (a} Section 147(f} of the Code by the
applicable elected representative of a governmental unit having jurisdiction over the area in
which the Project is to be located, in accordance with Section 147(f} and (b} Section 4 of the
Agreement.
3. The issuance of the Bonds shall be subject to the approval of the Authority of all financing
documents relating thereto to which the Authority is a party. The City shall have no
responsibility or liability whatsoever with respect to the Bonds.
4. The adoption of this Resolution shall not obligate the city or any department thereof to (i}
provide any financing to acquire or construct the Project or any refinancing of the Project; (ii}
approve any application or request for or take any other action in connection with any planning
approval, permit or other action necessary for the acquisition, construction, rehabilitation,
installation or operation of the Project; (iii} make any contribution or advance any funds
whatsoever to the Authority; or (iv} take any further action with respect to the Authority or its
membership therein.
5. The City Manager or designee is authorized and directed to do any and all things and to execute
and deliver any and all documents deemed necessary or advisable in order to carry out, give
effect to and comply with the terms and intent of this resolution and the financing transaction
approved hereby.
6. This resolution shall take effect immediately upon its adoption.
Nov. 16, 2021 Item #10 Page 5 of 9
ATTACHMENT E
DESCRIPTION OF THE PROPOSED PROJECT
1) The type of operation or process that will be conducted at the proposed facility.
The company is building a Plant that will process printed circuit boards (E-scrap) and related materials
(PCBs) derived from old computers, flat panel televisions, and smartphones (“E-waste”). Such material is
generally acquired from recyclers of whole E-waste or from the original equipment manufacturers (OEM)
that need to dispose E-Waste.
2) The end product or consumer services to be provided.
At the end of the Camston process you will have materials in the following buckets: ferrous metals, non-
ferrous metals and polymers. Each product has its own market that it can be sold into with the non-ferrous
bucket being the economic driver of the plant.
COMPONENT % by volume
1 Breakage (button batteries, fines, wires, and screws) 2.9%
2 Steel throw 3.5%
3 Gray Metal (aluminum, etc.) 5.8%
4 Plastic throw 2.6%
5 Ferrous metals 0.7%
6 Au/Ag/Pd/Cu/Other concentrate 29.7%
7 Plastic/Polymer Throw 51.%
8 Bag House 0.7%
Nov. 16, 2021 Item #10 Page 7 of 9
3) The number of acres to be acquired.
N/A
4) The amount of square footage to be constructed/renovated.
116,097 Square feet
5) Description of any new equipment or vehicles to be installed or purchased.
• Primary Shredding and Secondary Sorting Line.
In this step, the PCBs are first shredded to approximately 1¼ inch pieces. These 1¼-inch pieces are sorted
(“Secondary Sorting”) to remove larger ferrous materials (the “Steel Throw”), plastic material (the “Plastic
Throw”) and non-ferrous metals (the “Grey Metal Throw” and together with the Steel Throw and the
Plastic Throw, the “Initial Throw Items”). Together, the Initial Throw Items comprise approximately 69.7%
by weight of the PCB feedstock. Each of the Initial Throw Item categories is separately weighed and stored
so that their mass balances will be calculated along with the other processing products in order to comply
with extended producer requirements. Each of the Initial Throw Items will be sold without any further
processing. The Initial Sorting and the Initial Shredding and Secondary Sorting will be referred to herein
as the “Initial Processing.” The material that remains after the Initial Processing (the “Initial Processing
Residual”) is not a marketable material.
• Secondary Shredding Line.
The Initial Processing Residual is next processed through the Secondary Shredder Line and the Milling Line
described below in a closed system that reduces the Initial Residue to a powder form. Material leaving
the Secondary Shredder Line is expected to be no larger than 5/8 inch and is conveyed in a closed system
directly to the Milling Line described below for further processing. The material that has been processed
in the Secondary Shredding Line and is to be conveyed to the Milling Line is not a saleable product.
• Milling Line
The 5/8-inch material generated by the Secondary Shredder Line is next processed through the Milling
Line to produce a powder (“Milled Powder”) having an optimal particle size range as needed for processing
in the Hydro Separation Line described below to produce the saleable products. The Milled Powder
produced in the Milling Line is not a saleable product.
• Hydro-Separation Line
The Milled Powder produced in the Milling Line is discharged pneumatically into the “wetting bowl” where
water will be applied to facilitate the subsequent separation of the Milled Powder into different products.
The wetted material first enters an elutriation step, in which the particles are separated by weight and
density in a hydro-cyclone, producing two separate streams: plastics and metals. The plastics are
discharged from the hydro-cyclone to a filter press where the water is removed, and the plastics are auto-
bagged for sale as a commodity. The metals stream exiting the elutriator is routed by enclosed piping to a
ferrous removal step, using a hydro-electromagnetic process that separates ferrous metals (primarily iron,
cobalt and nickel) from non-ferrous metals (primarily copper and precious metals). The ferrous metals
Nov. 16, 2021 Item #10 Page 8 of 9
stream and the non-ferrous metal streams are each sent to separate filter presses for removal of water,
and the dewatered ferrous (e.g., iron, cobalt, and nickel) and non-ferrous (e.g., copper and precious
metals) streams are separately assayed, auto-bagged and weighed for sale as commodities. The metals
stream produced by the hydro-cyclone process (i.e., where it is separated from the plastics stream) is not
a saleable product until it has been processed in the hydro-electromagnetic process to produce the
separate ferrous and non-ferrous streams.
6) The communities to be served by the proposed facility.
The Camston process serves the global community by creating a viable alternative to recover the elements
contained in e-scrap. The current end of life standard is to size reduce e-scrap in order to be able to fit more
into a gaylord box, then redirect it overseas, to the poor countries of the world. Once e-waste reaches its final
destination it is usually burned in open fields in an attempt to recover what little value can be collected or is
smelted by a smelter which releases numerous environmental harming biproducts. This process is not only
dangerous and harmful to individuals in its immediate surrounding but create harmful gases that have much
further reaching negative repercussions.
7) Any other special feature of the proposed project (i.e. new technology)
Camston Wrather’s precious metals recovery process is a new technology in that it combines instruments
from multiple industries to create an e-scrap recovery solution. The facility has been tested at scale for
extended periods; therefore, diminishing scale up risk. But the technology is novel in its nature and will be a
first of its kind facility.
Nov. 16, 2021 Item #10 Page 9 of 9
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that on Nov. 16, 2021, a public hearing as required by Section 147(f) of
the Internal Revenue Code of 1986 (the "Code") will be held with respect to the proposed
issuance by the California Municipal Finance Authority (the "Authority") of its revenue bonds in
one or more series in an amount not to exceed $80,000,000 (the "Bonds"), including but not
limited to revenue bonds issued as part of a plan to: (1) finance and refinance the construction,
expansion, improvement and/or equipping of an approximately 116,000 square foot solid waste
disposal facility, described in Section 142(a) (6) of the Code, that will process printed circuit
boards and related materials derived from used computers, flat panel televisions, and
smartphones to be located at 2856 Whiptail Loop E., Carlsbad, California (the "Project"); and (2)
pay certain expenses incurred in connection with the issuance of the Bonds. The facilities are to
be owned and operated by Camston Carlsbad Asset 1, LLC, a Delaware limited liability company.
The Bonds and the obligation to pay principal thereof and interest thereon and any redemption
premium with respect thereto do not constitute indebtedness or an obligation of the City of
Carlsbad, California, the Authority, the State of California or any political subdivision thereof, within
the meaning of any constitutional or statutory debt limitation, or a charge against the general credit
or taxing powers of any of them. The Bonds shall be a limited obligation of the Authority, payable
solely from certain revenues duly pledged therefor and generally representing amounts paid by the
Borrower.
Copies of the staff report will be available on and after Nov. 12, 2021. If you have any questions,
please contact Matt Sanford at (760} 607-2923 or Matt.Sanford@carlsbadca.gov.
Per California Executive Order N-29-20, and in the interest of public health and safety, we are
temporarily taking actions to prevent and mitigate the effects of the COVID-19 pandemic by
holding City Council and other public meetings online only. All public meetings will comply with
public noticing requirements in the Brown Act and will be made accessible electronically to all
members of the public seeking to observe and address the City Council. You may participate by
phone or in writing. The hearing will commence at 3 p.m. or as soon thereafter as the matter can
be heard, and will be held via teleconference only. Interested persons wishing to express their views
on the issuance of the Bonds or on the nature and location of the facilities proposed to be financed
or refinanced may call (888) 475-4499 and enter meeting ID: 918 1501 1322. Participation in
writing: email comments to clerk@carlsbadca.gov. Comments received by 2 p.m. the day of the
meeting will be shared with the City Council prior to the meeting. When e-mailing comments,
please identify in the subject line the agenda item to which your comments relate. All comments
received will be included as part of the official record. Written comments will not be read out
loud. Please visit: https:ljwww.carlsbadca.gov/city-hall/meetings-agendas for additional details.
PUBLISH: Month day, 2021
City of Carlsbad
City Council
Tax and Equity Fiscal Responsibility Act Public
Hearing for Issuance of Tax-Exempt Bonds by
the California Municipal Finance Authority for
the Benefit of Camston Wrather LLC
David Graham, Chief Innovation Officer
Matt Sanford, Economic Development Manager
Innovation & Economic Development
November 16, 2021
{city of
Carlsbad
RECOMMENDED ACTION
•Conduct the public hearing
•Adopt a resolution approving the issuance of tax-
exempt bonds in an amount not to exceed
$80,000,000 for the purpose of financing the
Camston Wrather E-Waste Recycling Facility
CAMSTON WRATHER E-WASTE RECYCLING
{city of
Carlsbad
BACKGROUND
CAMSTON WRATHER E-WASTE RECYCLING
•Project Operator, Camston Wrather, is working with the California
Municipal Finance Authority (CMFA) to issue tax-exempt bonds.
•Camston Wrather has asked CMFA to be the issuer of up to $80
million of tax-exempt bonds to finance the project.
•Federal Tax and Equity Fiscal Responsibility Act requires a public
hearing on the use of tax-exempt bonds for the project.
•Today’s action is to provide the public hearing and adopt a
resolution approving the issuance of tax-exempt bonds not to
exceed $80,000,000 for the construction of the Camston Wrather
eWaste Recycling Facility
{city of
Carlsbad
PROJECT
•Located at 2856 Whiptail Loop East
•Will process printed circuit boards and related materials
derived from used computers, flat panel televisions, and
smartphones
•Generally aligns with City’s sustainability goals
CAMSTON WRATHER E-WASTE RECYCLING
{city of
Carlsbad
FISCAL ANALYSIS
•Not debt of the City of Carlsbad
•No obligation of the City of Carlsbad to repay the debt
•All monitoring and administrative actions are the
responsibility of CMFA
•Will not impact the city's appropriation limits and will
not constitute any type of indebtedness by the city.
CAMSTON WRATHER E-WASTE RECYCLING
{city of
Carlsbad
RECOMMENDED ACTION
•Conduct the public hearing
•Adopt a resolution approving the issuance of tax-
exempt bonds in an amount not to exceed
$80,000,000 for the purpose of financing the
Camston Wrather E-Waste Recycling Facility
CAMSTON WRATHER E-WASTE RECYCLING
{city of
Carlsbad