HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/20/2020 - RESOLUTION 2020-094 AUTHORIZING A PARTIAL REASSIGN (2) Agenda Item 8
Item # 8 Page 1
AGENDA ITEM SUMMARY October 20, 2020
City Council
STAFF
Sue Beck-Ferkiss, Social Policy and Housing Program Manager
Ingrid Decker, Legal
SUBJECT
Resolution 2020-094 Authorizing a Partial Reassignment of the City's 2020 Private Activity Bond Allocation
from Mercy Housing to Housing Catalyst.
EXECUTIVE SUMMARY
Based on direction from the State, the purpose of this Resolution is to reassign $5 million in Private Activity
Bond (PAB) capacity from Mercy Housing to Housing Catalyst. This reassignment conforms with the State’s
requirement that all PABs are assigned to entities that have issuing authority. There is no impact on the
project’s outcome or the City due to this reassignment.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
The Colorado Division of Housing requires that the assignment of PAB capacity be made directly to an entity
with the authority to issue bonds. This Resolution (proposed to replace Resolution 2020-052) will authorize the
assignment of $5 million of the City’s 2020 Private Activity Bond capacity to Housing Catalyst with direction
that the PAB capacity the Mercy Housing development at Northfield in Fort Collins. The City, as instructed, will
seek an administrative reallocation from the State for this transaction if the new Resolution is approved.
The State of Colorado Private Activity Bond allocation program is established by the Colorado Private Activity
Bond Ceiling Allocation Act, Colorado Revised Statutes Section 24-32-1707, et seq., (the 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. In 2020, the City’s allocation was
$8,885,119.
On June 2, 2020, Council adopted Resolution 2020-052 authorizing the assignment of the City’s private activity
bond allocation for 2020 to Housing Catalyst and Mercy Housing to finance the new construction and
rehabilitation of affordable housing units. The Resolution provided PAB capacity to several projects including
those being developed by Housing Catalyst and a project being developed by Mercy Housing. Of the total
capacity, $5 million was awarded to Mercy Housing for its Northfield project and the remainder to Housing
Catalyst. Housing Catalyst has authority to issue tax exempt bonds and will issue them for the projects they
are developing. They have also agreed to be the issuer of the bonds for the Mercy Housing affordable housing
project because Mercy Housing cannot issue the bonds themselves.
Agenda Item 8
Item # 8 Page 2
CITY FINANCIAL IMPACTS
The City will not issue the Private Activity Bonds and the bonds will not be obligations of the City. 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.
BOARD / COMMISSION RECOMMENDATION
The Affordable Housing Board supported the original allocation of the 2020 PAB capacity which the new
Resolution does not change. (Attachment 1)
ATTACHMENTS
1. Affordable Housing Board Minutes, May 2020 (PDF)
AFFORDABLE HOUSING BOARD
REGULAR MEETING
May 7, 2020, 4:00-6:00pm
Remote/Online via Zoom due to COVID-19
5 /7 /2020 – MINUTES Page 1
1. CALL TO ORDER: 4:01
2. ROLL CALL
• Board Members Present: Jen Bray, Catherine Costlow, Diane Cohn, Rachel Auldridge,
• Recused Board Members: Kristin Fritz, Bob Pawlikowski, Tatiana Zentner
• Staff Members Present: Beth Rosen, Yaz Haldeman, Sylvia Tatman-Burruss, Adam Molzer,
Lindsay Ex, Sue Beck-Ferkiss, Brittany Depew
• Guests: Marilyn Heller, Steve Kuehneman, Jenny Maeda, Dustin Harrington
3. AGENDA REVIEW
4. CITIZEN PARTICIPATION
5. APPROVAL OF MINUTES
6. NEW BUSINESS
A. Review of Private Activity Bond Committee’s Recommendations—Sue, Social
Sustainability
Every year, the Internal Revenue Service (IRS) gives the state of Colorado private activity bond
capacity and can be paired with 4% tax credits. City has prioritized affordable housing projects
for PABs in the past. Previously, have had enough capacity to meet demand. More projects are
using these 4% credits than previously. Received $44.5 million in requests which shows great
activity in our community but only have $8.9 million in capacity to provide. Decided to prioritize
new construction and projects in better position to move forward. Committee (with
representation from Social Sustainability, Finance & Economic Health Office) recommended
that Housing Catalyst receive $3.89 million and Mercy Housing receive $5 million.
Comments/Q&A:
• Diane: Request from Housing Catalyst is a partnership, why did the request just come
from them?
o Sue: Housing Catalyst is the project manager so they took the lead on the
application, and they will be issuing the bonds.
• Diane: The gap between capacity and request amount is the largest I’ve ever seen. Is
CHFA (Colorado Housing & Financing Authority) looking at that?
o Sue: There is some discussion about changing the legislation at the federal level.
• Jen: When it comes to new construction, are they unable to proceed without PAB?
o Sue: The tax credits are contingent on PAB, but there are other possibilities for
them to acquire bond capacity.
• Diane: What if they don’t get the 4% tax credit?
o Sue: Once you have the bonds, it’s not competitive for the 4%.
AFFORDABLE HOUSING BOARD
REGULAR MEETING
5 /7 /2020 – MINUTES Page 2
• Jen: I’d feel comfortable going with the committee’s recommendations, but also want to
encourage other applicants to apply again in the future.
Diane moves to support the Private Activity Bond Committee’s recommendation to
allocate bond capacity to Housing Catalyst and Mercy Housing.
Catherine seconded.
Passed unanimously 4-0-0.
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RESOLUTION 2020-094
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING A PARTIAL REASSIGNMENT OF THE CITY’S
PRIVATE ACTIVITY BOND ALLOCATION FOR 2020 FROM
MERCY HOUSING TO HOUSING CATALYST
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” or “PAB”) which may be issued in the
State (the “State Ceiling”); and
WHEREAS, pursuant to the Code, the Colorado General Assembly 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 received a direct allocation of the 2020 State Ceiling for the issuance of Private Activity
Bonds in the aggregate principal amount of $8,885,119 (the “2020 Allocation”); and
WHEREAS, the City received four applications for the 2020 Allocation seeking PAB
capacity for a total of nine housing projects; and
WHEREAS, the City’s PAB Committee reviewed the applications and recommended
assigning $3,885,119 of the 2020 Allocation to Housing Catalyst, and $5,000,000 to Mercy
Housing, pursuant to Section 24-32-1706 of the Allocation Act; and
WHEREAS, on June 2, 2020, the City Council adopted Resolution 2020-052 making
assignments as recommended by the PAB Committee; and
WHEREAS, Mercy Housing would use its portion of the 2020 Allocation for
construction of new affordable units at Northfield (the “Mercy Project”), but City staff has since
learned that Mercy Housing does not have authority to issue tax exempt bonds, and so cannot
directly receive a portion of the City’s 2020 Allocation; and
WHEREAS, Housing Catalyst has the authority to issue bonds and has agreed to
collaborate with Mercy Housing on the Mercy Project and to attempt to issue bonds on Mercy
Housing’s behalf in an amount equal to or greater than $5,000,000; and
WHEREAS, the City Council finds that the portion of the 2020 Allocation previously
assigned to Mercy Housing can be utilized most efficiently by assigning it to Housing Catalyst to
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issue Private Activity Bonds for financing the Mercy Project, and that such assignment 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 State Department of Local Affairs (DOLA) has advised staff that this
approach is acceptable, subject to approval by DOLA of an administrative reallocation; and
WHEREAS, the Council wishes to revoke the prior assignment to Mercy Housing and
reassign $5,000,000 of the 2020 Allocation to Housing Catalyst to be used for the Mercy Project,
which assignment is to be evidenced by an Assignment of Allocation agreement between the
City and Housing Catalyst; and
WHEREAS, a draft of the proposed Assignment of Allocation is attached as Exhibit “A”
and incorporated herein by reference.
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 City Council hereby rescinds its prior assignment to Mercy
Housing of $5,000,000 of the City’s 2020 Allocation for the Mercy Project as described herein
and reassigns such portion of the City’s 2020 Allocation to Housing Catalyst for the benefit of
the Mercy Project.
Section 3. That the City Council hereby authorizes the Mayor to execute an
Assignment of Allocation with Housing Catalyst in substantially the form attached 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.
Section 4. That the City Council also authorizes the Mayor to execute such
documents as are necessary to terminate the prior Assignment of Allocation with Mercy
Housing.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this
20th day of October, A.D. 2020.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
ASSIGNMENT OF ALLOCATION
THIS ASSIGNMENT (the “Assignment”), dated ________ , 2020 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. On June 2, 2020, the Fort Collins City Council adopted Resolution 2020-052
making assignments of the Assignor’s 2020 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”).
B. Such Resolution assigned $5,000,000 of the Allocation to Mercy Housing
Mountain Plains, a Colorado nonprofit corporation (“Mercy Housing”) to finance the
construction of 84 new units of rental housing at Northfield, for households with incomes
ranging from 30% to 70% of area median income (the “Project”.)
C. Mercy Housing does not have authority to issue tax exempt bonds, and Assignee
has agreed with Mercy Housing to issue the bonds for financing Mercy’s Housing’s project.
D. On October 20, 2020, the Fort Collins City Council adopted Resolution 2020-___
rescinding its prior assignment to Mercy Housing and reassigning Mercy Housing’s portion of
the Allocation to Assignee.
E. On behalf of Mercy Housing 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. 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”).
C. The Assignee has requested that the Assignor assign to the Assignee $5,000,000
of the for use in connection with the financing of the Projects.
D. Subject to the terms and conditions set forth herein, and subject to approval of an
administrative reallocation by the State Department of Local Affairs (DOLA), the Assignor
desires to assign to the Assignee, and the Assignee desires to accept, $5,000,000 of the
Assignor’s 2020 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:
EXHIBIT A
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1. The Assignor hereby assigns and transfers to the Assignee $5,000,000 of the
Assignor’s 2020 Allocation from the State Ceiling for private activity bonds. 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, 2020, or (b) Section 24-32-1706(3)(c),
C.R.S., applies, or (c) DOLA approves an administrative reallocation.
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 $5,000,000 of the Assignor’s Allocation from
the State Ceiling described above;
(b) agrees to use its best efforts to issue, and arrange with Mercy Housing to
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 a 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
____________________________________
Wade O. Troxell, Mayor
ATTEST: APPROVED AS TO FORM:
____________________________________ ____________________________________
City Clerk Assistant City Attorney
____________________________ _______________________________
(print name) (print name)
HOUSING CATALYST, as Assignee
By: ________________________________
Its: ________________________________
ATTEST:
By: ________________________________
Its: ________________________________