Title
City Strategies for Maximizing the Use of Private Activity Bonds
Presenter:
Steve Posey, HUD Program Administrator, Community Development Division
Kutak Rock, City Tax-Exempt Bond Counsel
Body
Summary:
According to the most recent Council of Development Finance Agencies report, the issuance of private activity bonds (PAB) is on the rise nationwide. From 2015 to 2016, PAB use increased 67% for a total of $20.4 billion in PAB funded activity. Government entities act as conduit issuers of PAB, often collecting fees for service, while assuming no debt responsibility. Though PAB can be used for multiple purposes, some of which include light manufacturing, redevelopment of blighted areas, and capital projects for qualified non-profits, by far the most common use of PAB is for the production of affordable single- and multi-family housing. In 2016, 90% of PAB issues nationwide were used to finance the development and preservation of affordable housing. Since 2015, 100% of PAB issued in the El Paso County region, including the City of Colorado Springs, has been used to finance affordable housing.
The amount of available PAB (called the Volume Cap) is determined annually based on population. The City's 2018 volume cap, as determined by the Colorado Department of Local Affairs, is $24,200,033. El Paso County's 2018 volume cap is $10,482,833. 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), or relinquish its volume cap to the statewide balance for use on other projects in Colorado. In recent years, the City has routinely assigned its volume cap to El Paso County.
Rather than assign its volume cap to El Paso County in 2018, staff recommends retaining the City's allocation of PAB to support various developme...
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