Bond Deal Considered to Lure Firm : Moorpark: City studies a $10-million state plan to build a plant. Otherwise, company says it’s cheaper to move to Arizona.
In its latest effort to lure a 500-employee Newhall company to Moorpark, the City Council may support a $10-million state bond to help finance construction of the new plant.
State and local officials tried to put together an $8-million incentive package to bring Special Devices Inc.--which makes small detonators used to spring car air bags--to Moorpark. But a $5-million state tax break that was the cornerstone of the package fell through three weeks ago.
Officials are still offering about $3 million worth of incentives, but representatives of the fast-growing company said that is not enough to keep them from moving to Mesa, Ariz., where they have another plant.
Although company officials say they prefer to remain in California, they maintain that state taxes and local fees would make a Moorpark plant $10 million more expensive than if they built in Arizona.
Now city officials are considering sponsorship of the company for state-issued industrial revenue bonds. The tax-exempt bonds are underwritten by the California Industrial Development Authority, and Moorpark would not assume any direct liability for repayment of bond holders, city officials said.
Councilman Scott Montgomery has already contacted company officials about the bonds, said Joe Saline, vice president of the company’s automotive division.
“The savings on interest could be substantial for us,” he said.
Saline said the company would spend up to $15 million to construct the planned 150,000-square-foot plant. Interest paid on the revenue bonds would be about 1.5% lower than the market rate, Saline said. The difference could amount to a savings of about $20,000 a month for the company, he said.
Several City Council members said they were interested in the bond deal, but concerned that the city might be partly responsible for paying off the bonds. Assistant City Manager Richard Hare said the only obligation the city would have would be to sign the company up for the program and act as its sponsor.
“The way these things work, the manufacturer has to show that they are adding value to a product or creating new jobs,” he said. “The city would not be liable.”
A city-sponsored industrial bond was issued to help auto-parts manufacturer Kavlico build its Moorpark plant, Hare said.
“We have done this sort of thing in the past, it’s just been awhile,” he said.
The bond could not be issued for more than $10 million, Hare said. The application process, which would include several public hearings, would take about six months, he said. Community support for the new company could affect whether the state Industrial Development Authority issues the bond, he said.
The City Council will consider the bond sponsorship at a Feb. 15 meeting.
Company representatives said they are hoping for city support.
“The big question is whether the city is willing to go along with this,” Saline said. “We’ll be waiting for their call.”