SUBJECT: A Resolution Authorizing Assignment To The Colorado Housing And Finance Authority Of A Private Activity Bond Allocation Of The Town Of Erie Pursuant To The Private Activity Bond Ceiling Allocation Act
DEPARTMENT: Finance
PRESENTER: Steve Felten
FISCAL INFORMATION:
Cost as Recommended: n/a
Balance Available: n/a
Budget Line Item Number: n/a
New Appropriation Required: n/a
STAFF RECOMMENDATION: Approve resolution for transfer of PAB allocation to CHFA.
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
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 for projects of a private user, and the government generally does not pledge its credit. These bonds are used to attract private investment for projects that have some public benefit. There are strict rules as to which projects qualify (e.g., single-family mortgage revenue bonds sold by local or state agencies, low-income housing projects, hazardous waste facilities, small-issue manufacturing industrial development bonds for construction of manufacturing facilities, among others). This type of a bond results in reduced financing costs because of the exemption from federal tax.
Each year the IRS publishes the maximum amount of PAB's each state may issue, referred to as its "cap". For 2017, Colorado's cap was approximately $554 million. Pursuant to Federal legislation, each state is authorized to allocate rights to issue PAB's 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. The Town received an allocation of $1,074,200 for 2017.
Allocations of PAB expire each September 15th unless one of two actions is taken. If a...
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