HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/21/2017 - RESOLUTION 2017-018 AUTHORIZING THE ASSIGNMENT OFAgenda Item 16
Item # 16 Page 1
AGENDA ITEM SUMMARY February 21, 2017
City Council
STAFF
Sue Beck-Ferkiss, Social Sustainability Specialist
Beth Sowder, Director of Social Sustainability
SUBJECT
Resolution 2017-018 Authorizing the Assignment of the City's Private Activity Bond Allocation for 2017 to
Housing Catalyst to Finance the Rehabilitation of Affordable Housing Units at The Village on Shields.
EXECUTIVE SUMMARY
The purpose of this item is to assign the City's 2017 Private Activity Bond (PAB) allocation in the amount of
$8,046,750 to Housing Catalyst (HC) for the purpose of the rehabilitation of 285 units of affordable housing
located at the Village on Shields. Annually, the City receives a PAB allocation from the State of Colorado. If
the City does not use or assign this allocation, it is returned to the State on September 15. Via this assignment,
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 2017 PAB allocation.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
The State of Colorado Private Activity Bond (PAB) allocation program is established by the Colorado Private
Activity Bond Ceiling Allocation Act, Section 24-32-1707, et seq., C. R S. (Allocation Act). PABs 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. Historically, PAB financing has also been used
by the City for economic and industrial development purposes.
In 2017, the total amount available statewide is $554,054,500. 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, its
allocation of the state ceiling for 2017 is $8,046,750. (Attachment 1) This is the authority to take on debt and
is not an allocation of funding. The City will not incur debt by assigning this allocation and this will not affect the
City's credit rating. If a local government does not issue bonds or assign the bond cap to an eligible entity for a
local project or projects by September 15 annually, the City allocation automatically reverts back to the state’s
pool of available bond capacity.
Historically, Fort Collins has assigned its annual allocation on a first come, first served basis. From 2009
through 2012, the Fort Collins allocation was not used locally and therefore reverted back to the state’s pool of
available bond capacity. In 2013, 2014, and 2015 the City assigned its full allocation to the Fort Collins
Housing Authority (FCHA), now HC, for the rehabilitation of affordable rental housing units. In 2016, the PAB
was assigned to the Colorado Housing Finance Authority (CHFA) for the benefit of two local affordable housing
projects. CHFA’s 4% Low Income Tax Credit Program is a financing mechanism for the development and
Agenda Item 16
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rehabilitation of affordable housing. CHFA requires these types of financing deals to include private activity
bonds. For 2017, HC will be the issuer of the bonds.
This request is for the entire 2017 PAB allocation. The proposed and allowable use of bond proceeds is the
substantial rehabilitation of 285 units of affordable housing serving households with income from 30-60% of the
area median income. (Attachment 2) The 4% Low Income Housing Tax Credit program being utilized to
finance this project requires at least 50% of the development projects total budget to be financed through
PABs. Tax credit investors typically require that the project issue bonds for 53%-55% of the total costs to
create a buffer for the project. HC currently has $35,000,000 in PAB for this development project, but the total
development budget for this project is now $80,000,000. Adding the City’s 2017 bond cap would increase the
amount of bond cap available to the project to $43,046,750, which is 54% of the total budget. Closing of the
financing for the development of this project is scheduled to occur in May, 2017.
The intended use of rehabilitating for preservation existing affordable rental housing units is a permissible and
beneficial use of the City’s 2017 allocation, and supports the outcomes sought by the City’s Affordable Housing
Strategic Plan. The City has not received any other requests for the 2017 PAB Allocation.
For these developers to use this financing tool, the City Council must adopt a resolution assigning the 2017
PAB allocation to HC. Additionally, the use of the City’s allocation is evidence of local support for this
affordable housing project, which helps leverage other funding sources and is important to CHFA’s 4% Low
Income Tax Credit Program. The investment of tax credit equity will trigger a new affordability period for the
Village on Shields project.
In addition to assigning the past years PAB allocation to the FCHA and CHFA, the City has used 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 who issued the bonds. Prior to that, the City was the issuer of
multifamily housing revenue bonds for Bull Run (1997) and Courtney Park Apartments (1995). HC has
authority to issue bonds and will be the issuer of the bonds for the development project requesting the 2017
PAB capacity.
CITY FINANCIAL IMPACTS
The Private Activity Bonds will be issued by HC 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 developments and does not
constitute a debt of the City. This action will not affect the City's credit rating. The rehabilitation of 285 existing
units will require goods and labor which will benefit the local economy.
BOARD / COMMISSION RECOMMENDATION
The Affordable Housing Board recommends that the City grants this request and that City Council adopt a
resolution assigning the 2017 PAB Allocation to HC. (Attachment 4)
PUBLIC OUTREACH
This matter was discussed at both the February Affordable Housing Board meeting and the January Housing
Catalyst Board meeting. Both these meetings are open to the public.
ATTACHMENTS
1. 2017 City Allocation Letter (PDF)
2. 2017 Housing Catalyst request letter (PDF)
3. Affordable Housing Board support memo (PDF)
4. Village on Shields map (PDF)
ATTACHMENT 1
ATTACHMENT 2
ATTACHMENT 3
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ATTACHMENT 4
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RESOLUTION 2017-018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE ASSIGNMENT OF THE CITY’S PRIVATE
ACTIVITY BOND ALLOCATION FOR 2017 TO HOUSING CATALYST
TO FINANCE THE REHABILITATION OF AFFORDABLE
HOUSING UNITS AT THE VILLAGE ON SHIELDS
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 2017 State Ceiling for the issuance of Private
Activity Bonds in the aggregate principal amount of $8,046,750 (the “2017 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, Housing Catalyst (“HC”) has requested that the City assign all of the 2017
Allocation (the “Assigned Allocation”) to HC pursuant to Section 24-32-1706 of the Allocation
Act; and
WHEREAS, HC intends to use the Assigned Allocation to help finance the substantial
rehabilitation of 285 units of affordable rental housing serving households with income from 30
to 60% of the area median income at the Village on Shields (the “Project”); and
WHEREAS, the HC has expressed its willingness to attempt to issue Revenue Bonds in
an amount equal to or greater than the 2017 Allocation assigned herein; and
WHEREAS, the City has determined that the 2017 Allocation can be utilized most
efficiently by assigning it to HC 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 HC 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 2017 Allocation to HC, which assignment
is to be evidenced by an Assignment of Allocation between the City and HC in substantially the
form attached and incorporated herein as Exhibit “A” (the “Assignment of Allocation”).
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That the assignment to Housing Catalyst of the City’s 2017 Allocation of
$8,046,750, for the Project described herein, is hereby approved.
Section 3. 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
21st day of February, A.D. 2017.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Exhibit A
ASSIGNMENT OF ALLOCATION
THIS ASSIGNMENT (the “Assignment”), dated _________ , 2017 is between the
City of Fort Collins, Colorado, a municipal corporation (the “Assignor”), and Housing Catalyst,
a body corporate and politic (the “Assignee”).
RECITALS
A. The Assignee intends to finance the rehabilitation of 285 units of rental housing at
the Village on Shields, located at West Horsetooth Road and South Shields Street, Fort Collins,
Larimer County, Colorado (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
$8,046,750 of the Assignor’s 2017 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 Projects.
D. Subject to the terms and conditions set forth herein, the Assignor desires to assign
to the Assignee, and the Assignee desires to accept, $8,046,750 of the Assignor’s 2017 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 2017
Allocation from the State Ceiling for private activity bonds in an amount equal to $8,046,750.
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, 2017, or (b) Section
24-32-1706(3)(c), C.R.S., applies.
2. The Assignor represents that it has received no monetary consideration for the
assignment set forth above.
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3. The Assignee hereby:
(a) accepts the assignment of $8,046,750 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, 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]
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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
HOUSING CATALYST, as Assignee
By: ________________________________
[SEAL] Its: ________________________________
ATTEST:
By: ________________________________
Its: ________________________________