Seal Beach to issue bonds for solar panel factory

The Seal Beach City Council voted 4-1 on Monday, Nov. 9, to approve a resolution of intent to issue private activity bonds for a company that manufactures solar panels in Seal Beach. The city could issue as much as $10 million in bonds for Amonix, Inc., a company that manufactures photovoltaic solar panels. Councilman Gary Miller voted against the resolution. Miller was not convinced the city of Seal Beach would benefit from facilitating a loan from the state to help Amonix, Inc. expand its Seal Beach factory.

The bond issue was originally on the consent calendar, but pulled for discussion at Miller’s request.

Seal Beach would not be financially liable for issuing the proposed bonds, even though the city’s name would appear on the bonds, according to Interim Director of Development Services Terry Belanger.

“The company’s projections for the Amonix Seal Beach facility indicate that the capital investment will generate 180 jobs as well as generate additional sales tax and property tax revenue and otherwise improve economic and physical conditions in the city,” Belanger wrote in his staff report to the council.

He told the council that Seal Beach’s “full faith and credit” would not be pledged to the loan.

Councilman Michael Levitt asked if there was a downside to approving the bond issue.

Belanger said no.

Mayor Gordon Shanks said the bond issue allowed the company to get a loan at a lower interest rate.

However, Councilman Miller was concerned that there was very little financial information in the report.

“Why does the city have to be involved if there’s no benefit to the city?” Miller asked.

Belanger said the city was making an application on behalf of the company.

City Manager David Carmany said Amonix officials claimed the factory expansion would produce more than 100 new jobs and significantly increase sales tax revenues. Carmany said he had doubts about the increased sales tax revenues.

Carmany also said the issue was jobs. Amonix needs to be located in the nation’s sunbelt region, but the company does not necessarily need to be in Seal Beach or in Southern California.

Carmany told the council that Amonix would come back to the council in the near future with a request for a sales tax discount.

Carmany said the state of California required site-specific information about private activity bonds.

Belander said the state was more likely to improve a project that was certain to take place rather than a theoretical project.

Miller said: “For me, I’d like more information.”

He said he didn’t know the economics of the proposal.

City Attorney Quinn Barrow said issuing the bonds would not cost the city money or expose the city to liability. He said the state of California would impose safeguards to prevent Amonix from leaving the state before paying off the debt.

“To me, it’s well worth the risk,” Barrow said.

In response to concerns expressed by both Miller and Seal Beach resident Robert Goldberg, Barrow said staff costs could be added to the bond if the loan was approved. He said staff could add a reimbursement agreement with Amonix if they walked away from the bond.

Miller said you could not put a value on staff time. He also said staff had not told him how Seal Beach benefited.

“I was also surprised that we don’t have the finance director involved,” Miller said.

Levitt pointed out that a lot of the solar panels would be sold out of the country and that Seal Beach might not see much in the way of sales taxes.

Carmany said the purpose of all this was to protect jobs. He also said Seal Beach was competing with other states for businesses.

As to the sales tax issue, Carmany said he was not a fan of sales tax discounts. However, at the present time other cities are “aggressively” offering large sales tax discounts to attract or keep companies.

Carmany said Levitt was correct in pointing out that much of Amonix’s sales would not be taxable in Seal Beach.

Miller wanted to know how much money Seal Beach was getting from Amonix now as well as how much money the city might get in the future.

Shanks said it was not always possible to have answers to all questions about an issue.

Councilman Charles Antos moved to approve the resolution. As a separate issue, he wanted to be sure staff costs were covered if the bonds were not approved.

Miller asked why they couldn’t continue the issue to the next meeting.

Shanks said Miller was “continuing, continuing all the bloody time.” He said that sometimes people need to move ahead.

Antos said that if the council was unhappy with information about the issue at the next meeting, the council could bring back a resolution to rescind the bond approval.