Bond Program Is Little Known
A state program of tax-exempt financing for private companies creating new jobs is making local manufacturers like Perry Sheth smile.
Sheth, president and partner of Moore Printed Circuits, Inc., said once a state committee gives its blessing, he’ll be able to obtain a loan for new equipment of up to $1 million at two to three points below the prime lending rate.
Business for the maker of printed circuit boards used in a variety of high-tech machinery has been fairly good in recent years, despite strong competition from Asia.
Over the past two years, the 33-year-old company has recorded an average of some $5 million in sales, but that could change this year.
“We’re nearly 90 percent moved into our new plant,” Sheth said of a 43,000-square-foot facility, more than double the size of its former plant in Kearny Mesa.
Along with a new home, the company is installing lots of new equipment, machines that can range from $50,000 to about $200,000.
To finance this considerable capital investment, Sheth investigated the state’s tax-exempt Industrial Development Bond (IDB) program, a loan a program he heard about but knew little about. After getting some direction from the local chamber of commerce, he contacted the city’s economic development division.
Mark Sullivan, business manager for the division, said the state IDB program is tailor-made for small manufacturers such as Moore Circuits, which are creating new jobs, and those located in special enterprise zones.
Last week, the City Council approved issuing the bonds for Moore and two other private firms, Finest City Oil Corp. and the Institute for Defense Analysis. Finest City plans to obtain $3 million in financing to build a market and gas station in City Heights.
The Institute for Defense Analysis, a nonprofit research company based in Alexandria, Va., will use $5 million for the refinancing of its existing leasehold at the Eastgate Technology Park, Sullivan said.
The latter project will result in the retention of 112 jobs and create five new ones, while the retail gas station will create about 40 new jobs, according to a city report.
At Moore Circuits, growth is already evident.
“In the past four months, we’ve added seven people, and within the next two years we should add about 20 new people,” Sheth said.
The council’s approval is only the first step in getting the tax-exempt bonds issued, Sullivan said.
The project next needs approval from the California Debt Limit Allocation Committee, a board under the supervision of state Treasurer Philip Angelides.
The committee administers about $1.6 billion in tax-exempt bond financing this year for a number of different uses, including reducing the interest rates for buyers of single family homes; for the development of affordable rental housing; and for economic development.
The bonds issued by either a city or joint powers agency are guaranteed by the state, but the actual funding comes from a private lender, usually a large financing company.
Sullivan said a critical factor in getting the bond financing depends on the borrower and the private lender agreeing to terms and entering into a contract.
