HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/19/2014 - RESOLUTION 2014-071 AUTHORIZING THE ASSIGNMENT OFAgenda Item 16
Item # 16 Page 1
AGENDA ITEM SUMMARY August 19, 2014
City Council
STAFF
Sue Beck-Ferkiss, Social Sustainability Specialist
Bruce Hendee, Chief Sustainability Officer
Mary Atchison, Director of Social Sustainability
John Voss, Controller/Assistant Financial Officer
SUBJECT
Resolution 2014-071 Authorizing the Assignment of the City's Private Activity Bond Allocation for 2014 to the
Fort Collins Housing Authority to Finance the Rehabilitation of Affordable Housing Units at the Villages at
Cunningham Corner.
EXECUTIVE SUMMARY
The purpose of this item is to assign the City's 2014 Private Activity Bond Allocation (PAB) in the amount of
$7,408,350 to the Fort Collins Housing Authority (FCHA) for the purpose of affordable housing rehabilitation.
Specifically, the bond proceeds will be used to finance the rehabilitation of 284 affordable housing units located
at the Villages on Cunningham Corner.
Annually, the state allocates a portion of its ceiling for PAB to the City. If the City does not use or assign this
allocation, it is returned to the state on September 15. The City will not incur debt and this will not affect the
City's credit rating. There have not been any other requests to use the 2014 PAB allocation.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
Private Activity Bonds (PAB) are tax-exempt bonds that can be issued by eligible authorities. The proceeds of
the sale of the bonds may be used for specific purposes as determined by the Internal Revenue Service.
Permitted purposes include, but are not limited to, affordable housing development and rehabilitation. PAB
financing has also been used by the City for economic and industrial development purposes. The State of
Colorado PAB allocation program is established by the Colorado Private Activity Bond Ceiling Allocation Act,
Section 24-32-1701, et seq., C.R.S. (the Allocation Act).
In 2014, the total amount available statewide is $526,836,700. Fifty percent of the state ceiling is allocated
directly to statewide authorities and the other half is allocated directly to local governments based on
population size. The City has been notified that, pursuant to Section 24-32-1706 of the Allocation Act, it has an
allocation of a portion of the state ceiling (as defined in the Allocation Act) for 2014 in the amount of
$7,408,350 (Attachment 1). If a local government does not issue bonds or assign the bond cap to an entity for
a local project by September 15th annually, the cap automatically reverts back to the state’s pool.
Historically, Fort Collins has assigned its annual allocation on a first come, first serve basis. From 2009
through 2012, the Fort Collins allocation was not used and reverted back to the state's pool. The 2013 PAB
Allocation, in the amount of $6,962,218 was assigned to the Fort Collins Housing Authority for the rehabilitation
of 95 affordable housing rental units in the Village on Plum project, located at the southwest corner of Plum
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Street and Taft Hill Road. The FCHA is the issuer of the bonds for this rehabilitation project. While this was the
first FCHA request for the City's PAB allocation, market conditions make the Colorado Housing Finance
Authority’s (CHFA) 4% Low Income Tax Credit Program a viable way to finance affordable housing
development. The City anticipates more requests to use the annual PAB allocation for this purpose in the
future. This year's request from FCHA was anticipated. CHFA requires these types of financing deals to
include private activity bond financing.
The City has received a formal request from the FCHA for the entire 2014 PAB allocation (Attachment 2). The
proposed use of the bond proceeds is the financing of the rehabilitation of 284 affordable units located in the
Villages on Cunningham Corner (Attachment 3). The property, owned by the non-profit development arm of
FCHA, serves households with incomes of 30%-80% of the Area Median Income. FCHA estimates utilizing
approximately $25,000,000 in bond cap for this project. It is likely that FCHA will need to use several years’
allocations to get to that sum. It can aggregate PAB allocations from the City, county or other local jurisdictions
to help achieve this goal in a timely fashion. (Last year FCHA requested and received allocations from Larimer
and Weld Counties in addition to the Fort Collins 2013 PAB allocation).
If FCHA has not used the entire 2014 Allocation by December 2014, it can apply for a three-year carryover. If it
does not do this, the unused bond cap will revert to the state’s pool. FCHA’s intended use of affordable
housing rehabilitation supports the City’s goal of preserving existing affordable rental housing units. This is a
permissible and beneficial use of the City’s 2014 allocation.
For FCHA to use this financing tool, the City Council must adopt a resolution assigning the 2014 Allocation or a
part thereof to the FCHA so it can submit this with its application to the state no later than September 15, 2014.
Additionally, the use of the City’s allocation is evidence of local support for this project, which helps FCHA
leverage other funding sources and is important to CHFA’s 4% Low Income Tax Credit Program. The
investment of tax credit equity in the project will extend the affordability period for the Village on Cunningham
Corners by a minimum of 30 years.
In addition to last year's assignment of the PAB allocation to FCHA, the City has used the PAB allocation to
finance multifamily low and moderate income rental housing at Fox Meadow Apartments (2000) and Caribou
Apartments (2002), and multifamily senior housing at Oakbrook Manor (2005). In these examples, the City’s
allocation was assigned to CHFA. Prior to that, the City was the issuer of multifamily housing revenue bonds
for Bull Run (1997) and Courtney Park Apartments (1995).
The City has not received any other requests for the 2014 PAB allocation.
FINANCIAL / ECONOMIC IMPACTS
The Private Activity Bonds that will be issued by the FCHA cannot and will not be obligations of the City of Fort
Collins. The debt service on the bonds will be repaid from revenue generated by the housing projects, and
does not constitute a debt of the City. This action will not affect the City’s credit rating. The rehabilitation of
284 units will require goods and labor which will benefit the local economy.
ENVIRONMENTAL IMPACTS
Affordable housing programs help provide for a healthy environment. By offering affordable housing options for
lower income people, more of Fort Collins’ work force can live in the community instead of being forced to live
outside the community and commute into the city for work. This helps reduce traffic congestion and, thus,
improves air quality. The rehabilitation will include specific improvements required by CHFA that will result in
energy savings.
BOARD / COMMISSION RECOMMENDATION
At its June 5, 2014 meeting, the Affordable Housing Board reviewed the request of the FCHA and
recommended that the City assigns its entire 2014 Allocation to the FCHA (Attachment 4).
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Item # 16 Page 3
ATTACHMENTS
1. 2014 DOLA Allocation Letter (PDF)
2. FCHA Request Letter, April 2014 (PDF)
3. Affordable Housing Board Minutes, June 5, 2014 (PDF)
4. The Villages on Cunningham Corner Location Map (PDF)
ATTACHMENT 1
ATTACHMENT 2
ATTACHMENT 3
The Villages on Cunningham Corner
Willow
Grove
Village
Hickory
Hill
Village
Rosetree
Village
ATTACHMENT 4
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RESOLUTION 2014-071
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE ASSIGNMENT OF THE CITY’S PRIVATE ACTIVITY BOND
ALLOCATION FOR 2014 TO THE FORT COLLINS HOUSING AUTHORITY
TO FINANCE THE REHABILITATION OF AFFORDABLE HOUSING UNITS
AT THE VILLAGES AT CUNNINGHAM CORNER
WHEREAS, the City of Fort Collins is authorized and empowered under the laws of the
State of Colorado (the “State”) to issue revenue bonds for purposes including the financing of
multi-family rental housing projects for low- and moderate-income persons and families; and
WHEREAS, the Internal Revenue Code of 1986, as amended (the “Code”), restricts the
amount of tax-exempt bonds (“Private Activity Bonds”) which may be issued in the State (the
“State Ceiling”); and
WHEREAS, pursuant to the Code, the Colorado legislature adopted the Colorado Private
Activity Bond Ceiling Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised
Statutes (the “Allocation Act”), providing for the allocation of the State Ceiling among various
State and local governmental units, and further providing for the assignment of such allocations
from such governmental units to any entity or person with the authority to issue bonds; and
WHEREAS, pursuant to an allocation under Section 24-32-1706 of the Allocation Act,
the City has received a direct allocation of the 2014 State Ceiling for the issuance of Private
Activity Bonds in the aggregate principal amount of $7,408,350 (the “2014 Allocation”); and
WHEREAS, if the City does not issue bonds or assign its annual allocation to another
entity by September 15 of each year, its allocation is relinquished to the statewide balance; and
WHEREAS, the City of Fort Collins Housing Authority (the “Authority”) has requested
that the City assign all of the 2014 Allocation (the “Assigned Allocation”) to the Authority
pursuant to Section 24-32-1706 of the Allocation Act for the purpose of assisting in the financing
of the rehabilitation of 284 affordable housing units (the “Project”) located in the Villages at
Cunningham Corner, which is owned by the non-profit development subsidiary of the Authority
and consists of three rental housing projects whose names and respective addresses are: Hickory
Hill Village Apartments, 3425 Windmill Drive, Fort Collins, Larimer County, Colorado; Rose
Tree Village Apartments, 1000 Horsetooth Road, Fort Collins, Larimer County, Colorado; and
Willow Grove Village, 1025 Cunningham Drive, Fort Collins, Larimer County, Colorado; and
WHEREAS, the City has determined that the 2014 Allocation can be utilized most
efficiently by assigning it to the Authority to issue Private Activity Bonds for the purpose of
financing the Project; and
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WHEREAS, the City has determined that such assignment to the Authority will advance
the City’s objective of increasing the availability of adequate affordable housing for low- and
moderate-income persons and families within the city; and
WHEREAS, the Council wishes to assign the 2014 Allocation to the Authority, which
assignment is to be evidenced by an Assignment of Allocation between the City and the
Authority in substantially the form attached and incorporated herein as Exhibit “A” (the
“Assignment of Allocation”).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fort Collins
as follows:
Section 1. That the assignment to the Authority of the City’s 2014 Allocation of
$7,408,350, for use by the Authority for the purposes set forth herein, is hereby approved.
Section 2. That the City Manager is hereby authorized to execute the Assignment of
Allocation in substantially the form attached hereto as Exhibit “A”, along with such other terms
and conditions as the City Manager, in consultation with the City Attorney, determines are
necessary or appropriate to protect the interests of the City or effectuate the purposes of this
Resolution.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this
19th day of August, A.D. 2014.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
DMWEST #10080442 v3
ASSIGNMENT OF ALLOCATION
THIS ASSIGNMENT (the “Assignment”), dated August ____, 2014, is between the City
of Fort Collins, Colorado, a municipal corporation (the “Assignor”), and the Fort Collins
Housing Authority, a body corporate and politic (the “Assignee”).
RECITALS
A. The Assignee intends to finance the rehabilitation of 284 affordable housing units
located at the Villages at Cunningham Corner which consists of three rental housing projects
whose names and respective addresses are as follows: Hickory Hill Village Apartments, 3425
Windmill Drive, Fort Collins, Larimer County, Colorado; Rose Tree Village Apartments, 1000
Horsetooth Road, Fort Collins, Larimer County, Colorado; and Willow Grove Village, 1025
Cunningham Drive, Fort Collins, Larimer County, Colorado (collectively, the “Project”). The
Project will be designed to qualify as a “project” within the meaning of Title 29, Article 4, Part 2,
Colorado Revised Statutes, as amended (the “Act”).
B. The Assignee intends to provide for the issuance of its Multifamily Housing
Revenue Bonds (the “Proposed Bonds”), pursuant to the provisions of the Act for the purpose of
financing the Project.
C. The Assignee has requested that the Assignor assign to the Assignee all
$7,408,350 of the Assignor’s 2014 allocation (the “Allocation”) under the bond ceiling for the
State of Colorado and its issuing authorities (the State Ceiling”) computed under Section 146(d)
of the Internal Revenue Code of 1986 (the “Code”) as provided for the Assignor as a “designated
local issuing authority” under part 17 of article 32 of title 24, Colorado Revised Statutes (the
“Allocation Act”), for use in connection with the financing of the Project.
D. Subject to the terms and conditions set forth herein, the Assignor desires to assign
to the Assignee, and the Assignee desires to accept, $7,408,350 of the Assignor’s 2014 allocation
from the State Ceiling.
ASSIGNMENT
In exchange for the agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. The Assignor hereby assigns and transfers to the Assignee the Assignor’s 2014
Allocation from the State Ceiling for private activity bonds in an amount equal to $7,408,350.
The Assignor and the Assignee understand that such assigned allocation shall automatically be
relinquished to the “Statewide Balance” as defined under the Allocation Act unless (a) the
Proposed Bonds are issued by the Assignee on or before September 15, 2014, or (b) Section
24-32-1706(3)(c), C.R.S., pertaining to the carryforward of the assigned allocation, applies.
EXHIBIT A
DMWEST #10080442 v3
2
2. The Assignor represents that it has received no monetary consideration for the
assignment set forth above.
3. The Assignee hereby:
(a) accepts the assignment of $7,408,350 of the Assignor’s Allocation from
the State Ceiling described above;
(b) agrees to use its best efforts to issue and use the Proposed Bonds for the
purpose of financing the Project; and
(b) agrees to abide by each of the terms and conditions of this Assignment in
connection with the use of such Allocation.
4. The Assignor hereby consents to the election by the Assignee, if the Assignee in
its discretion so decides, and if the Project has a carryforward purpose, to treat all or any portion
of the assignment set forth herein as an allocation for a project with a carryforward purpose.
5. This Assignment shall not constitute the debt or indebtedness or financial
obligation of the Assignor within the meaning of the constitution or statutes of the State of
Colorado, nor give rise to a pecuniary liability or charge against the general credit or taxing
power of the Assignor.
[The remainder of this page is intentionally left blank]
[Signature Page to Assignment of Allocation]
S-1
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this instrument to
be executed to be effective as of the date and year first written above.
CITY OF FORT COLLINS, COLORADO,
as Assignor
____________________________________
[SEAL] Darin A. Atteberry, City Manager
ATTEST: APPROVED AS TO FORM:
____________________________________ ____________________________________
City Clerk Assistant City Attorney
FORT COLLINS HOUSING AUTHORITY,
as Assignee
By: ________________________________
[SEAL] Its: ________________________________
ATTEST:
By: ________________________________
Its: ________________________________