SUBJECT:
Title
A Resolution of the Town Council of the Town of Erie Approving the Assignment of the Town's 2024 Private Activity Bond Allocation to the Colorado Housing and Finance Authority for the Spine Road Affordable Apartments Development
Body
DEPARTMENT: Planning & Development
Department
PRESENTER(S): MJ Adams, AICP, Affordable Housing Manager
First Name Last Name, Title
POLICY ISSUES:
The proposed resolution supports action in alignment with the Town of Erie Affordable Housing Policy adopted in June 2024 to actively collaborate with the Boulder County Regional Housing Partnership to advance efforts to achieve the region’s goal of 12% affordable housing by 2035.
STAFF RECOMMENDATION:
Recommendation
Staff recommends that the Town assign its 2024 PAB allocation of $2,144,308 to the Colorado Housing Finance Authority (CHFA) for use on the Spine Road Affordable Apartments Development so the allocation may be used towards an affordable housing development in the City of Boulder.
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SUMMARY AND BACKGROUND OF SUBJECT MATTER:
Private Activity Bonds (PAB) are allocated annually by the State to the Town of Erie and other local governments. Erie’s 2024 allocation is $2,144,308. PABs are federally tax-exempt bonds and are often used as debt instruments by affordable housing developments. For 2024, we first offered the PABs to Brothers Redevelopment who are planning to expand their existing senior housing in Erie. Brothers indicated the funding for their development cannot use the PABs. Staff reached out to other communities in Boulder County and received a request for the assignment of Town of Erie PABs for use with an affordable rental development - The Spine Road Affordable Apartments - to be developed in Gunbarrel.
Overview of PABs
Private activity bonds (PAB’s) are tax-exempt bonds issued by or on behalf of local or state government for the purpose of providing special financing benefits for qualified projects. The financing is most often applied to private developments, and the government generally does not pledge its credit. These bonds are used to attract private investment for projects that have some public benefit. This type of bond results in reduced financing costs because of the exemption from federal tax.
Each year the IRS publishes the maximum number of PABs each state may issue, referred to as its “cap”. Pursuant to Federal legislation, each state is authorized to allocate rights to issue PABs to various state agencies, county and local governments. In Colorado, just under half of the State cap is allocated to the Colorado Housing and Finance Authority (CHFA). The remaining cap is allocated to the State’s counties and municipalities that exceed a minimum population size. Erie received an allocation of $2,144,308 in 2024.
Allocations of PAB expire each Sept. 15 unless one of two actions is taken. If a specific project is planned that will utilize PABs, the local government can roll over its allocation for up to three years. Alternatively, the local government can reallocate its allocation to CHFA, which then can use the allocated PAB cap in the furtherance of its mission “to increase the availability of affordable, decent, and accessible housing for lower income Coloradans.”
The PABs are best used with financing for rental housing development. Given that the Town of Erie does not have an immediate need for the PABs and a neighboring community has a rental development that is seeking additional PABs, staff recommend assigning the Town’s PABs to CHFA for use on the Spine Road Affordable Apartments Development.
COUNCIL PRIORITY(S) ADDRESSED:
ü Prosperous Economy
ü Effective Governance
ü Environmentally Sustainable
ü Fiscally Responsible
ATTACHMENT(S):
1. Resolution 24-340
2. Private Activity Bond Allocation Letter
3. Koelbel Request for PABs
4. Assignment of Allocation
5. Attorney Certificate
6. Town of Erie Affordable Housing Policies