Memorandum

City of Lawrence

City Manager’s Office

TO:              David L. Corliss, City Manager

CC:               Diane Stoddard, Assistant City Manager

FROM:          Roger Zalneraitis, Economic Development Coordinator/Planner

DATE:           December 30, 2009

RE:               Letter to County for Berry Plastics Facility Bonds

Berry Plastics has begun the process of locating a site to construct a new distribution center in Lawrence, Kansas.  Berry Plastics has not finalized a site.  However, they are interested in Industrial Revenue Bond (“IRB”) financing and realize that issuing these bonds takes several weeks.  In order to ensure that the bond issuance occurs concurrently with their new project, they have begun seeking financing.  Berry Plastics is particularly interested in the Recovery Zone Facility Bonds as these are tax exempt and thus carry a lower interest rate.  Recovery Zone Bonds are essentially IRBs- the City is a conduit for issuing the bonds and the firm for whom the bonds are issued is responsible for all principle and interest payments.

On December 15^th Berry Plastics requested that the City Commission submit an application for Facility Bonds from the state of Kansas.  The City approved the request and forwarded the application, along with one from Bowersock Dam, to the State Department of Commerce.  Berry Plastics is now asking that the County allocate substantially all of their Facility Bonds to the City of Lawrence for the purpose of financing this distribution center.  Berry wishes to receive a portion of the bonds from both the County and the State in order to fully finance their project with Facility Bonds.  The City could then consider a single IRB issuance of all the Facility Bonds received.

As part of the County Facility Bond policy, the County requires that any sub-jurisdiction receiving an allocation of bonds acknowledge that they are willing to issue the bonds for the project that is requesting the allocation.  The attached letter states that Lawrence will be willing to issue bonds for the Berry Plastics distribution center, provided that Berry Plastics meets all requirements for the City Issuance.  This includes following all procedures for the issuance of an IRB as per City policy, as well as going through all proper public hearings and PIRC for any abatement they might seek.

Action Requested

Authorize the Mayor to sign a letter to the County acknowledging that the City is willing to issue any bonds it is allocated for the purpose of financing a new distribution center for Berry Plastics, provided that Berry Plastics meets all requirements for the City issuance of these bonds.