Title
Resolution declaring the intent of the City of Colorado Springs, Colorado to carry forward its 2024 allocation of private activity bonds for the purpose of constructing multi-family housing for low-and middle-income families or persons.
Presenter:
Katie Sunderlin, Acting Chief Housing Officer, Housing and Community Vitality Department
Body
Summary:
The City’s 2024 Private Activity Bond (PAB) volume cap, as determined by the Colorado Department of Local Affairs, is $30,523,317. By September 15th of each year, the City must decide whether to issue bonds for a specific project or projects, assign the City’s volume cap to another government entity such as El Paso County (EPC), assign the City’s volume cap to another issuer such as the Colorado Housing Finance Authority (CHFA), carry the allocation forward, or relinquish its volume cap to the statewide balance for use on other projects in Colorado.
PAB can be used for multiple purposes, some of which include construction or expansion of light manufacturing facilities, redevelopment of blighted areas, and capital projects for qualified non-profits. The Housing and Community Vitality Department established a PAB working group made up of staff from the Finance Department, Economic Development, Public Works, Colorado Springs Utilities, and the Colorado Springs Airport, to circulate information about the City’s PAB volume cap and identify projects potentially qualified for PAB financing.
The Department has been contacted by multiple developers interested in using PAB to finance qualified affordable multi-family rental projects. There have been no qualifying requests for PAB for other purposes. Staff recommends carrying forward the City’s 2024 allocation of PAB to support the development of qualified residential rental projects. PAB can be carried forward a maximum of three years.
Background:
PAB is one of many financing tools available to private developers. As a result, PAB use is sensitive to local market conditions such as the cost of conventional financing, the experience level and willingness of the developer to use PAB, ease of access to PAB funds and the overall volume cap of the issuer.
This item supports the City’s 2024-2028 strategic plan goal of implementing policies, fostering community partnerships, and securing sustainable funding to increase housing choices so that residents have options that are right for them. Furthermore, this item is supported by and implements PlanCOS Vibrant Neighborhoods Policy VN-2-A pertaining to attainable housing and providing variety of housing types for various life stages and income levels.
Previous Council Action:
August 28, 2018: City Council resolution 88-18 to ‘carry-forward’ 2018 allocation for the purpose of “…financing residential facilities for low- and moderate-income families or persons…”
August 13, 2019: City Council resolution 72-19 to carry-forward 2019 allocation for the purpose of “…financing residential facilities for low- and moderate-income families or persons…”
July 27, 2020: City Council Resolution 63-20 to carry-forward 2020 allocation for the purpose of ”...financing residential facilities for low- and moderate-income families or persons...”
August 24, 2021: City Council Resolution 114-21 to carry-forward 2021 allocation for the purpose of ”...financing residential facilities for low- and moderate-income families or persons...”
August 9, 2022: City Council Resolution 106-22 allocation for the purpose of ”...financing residential facilities for low- and moderate-income families or persons...”
August 22, 2023: City Council resolution 115-23 to ‘carry-forward’ 2023 allocation for the purpose of “…financing residential facilities for low- and moderate-income families or persons…”
Financial Implications:
All expenses related to bond issuance are paid by the developer. These include legal fees and servicing costs of other third parties involved in the bond transaction. The City’s Administrative regulation establishes issuer fees totaling 1% of par value of bond issue. The Housing and Community Vitality Department intends to use the City’s issuer fees to rebate eligible development expenses for affordable housing construction.
City Council Appointed Board/Commission/Committee Recommendation:
N/A
Stakeholder Process:
The Acting Chief Housing Officer convened members of the PAB working group on January 31, 2024. Staff from Economic Development, Finance, the Colorado Springs Airport and City Attorney’s Office were present to discuss potential uses for PAB. There were no industrial or light manufacturing projects identified as eligible for PAB financing.
Alternatives:
Local governments that fail to notify the State by September 15 of the intent to carry forward PAB automatically relinquish their allocation to the Statewide Balance.
Recommended Action
Proposed Motion:
Adopt the Resolution as presented.
Summary of Ordinance Language
N/A