Department of Finance
Reference: Brighton Housing Authority Update and Proposed Assignment of the City of Brighton’s 2024 Private Activity Bond Allocation
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Catrina Asher, Director of Finance
Date Prepared: April 9, 2024
PURPOSE
To provide Council an update from the Brighton Housing Authority and to propose assignment of Brighton’s 2024 Private Activity Bond allocation to the Brighton Housing Authority (BHA) for affordable housing projects.
BACKGROUND
The Brighton Housing Authority’s Executive Director, Deb Bristol, will provide an update on the authority’s projects and activities. Refer to the attached presentation for more information.
In addition, staff is proposing allocation of the City’s 2024 Private Activity Bond allocation to the Brighton Housing Authority for use towards affordable housing projects as discussed below.
Each year, cities throughout the State of Colorado receive an allocation of Private Activity Bonds which are tax-exempt bonds offering low-cost financing for private projects that serve a public purpose. Examples of eligible projects include acquisition, construction or rehabilitation of housing for low- and moderate-income individuals and families, mortgage loans or mortgage credit certificates for income-qualified, first-time home buyers. While Private Activity Bonds can fund projects other than housing, they are primarily directed towards housing projects because there are other financing options that are better suited for non-housing projects.
The City of Brighton has a 2024 allocation of $2,587,111 in Private Activity Bonding capacity.
In order to utilize the bonding capacity, a government authority would partner with a private organization to finance a project. Private Activity Bonds are issued by a government authority and the bond proceeds are used to create a low-interest loan for the project. The project manager pays back the loan and the investors get repaid with interest. The organization issuing the bonds and coordinating the project is typically a housing authority or the Colorado Housing Finance Authority (CHFA).
It is always the priority of staff to work towards directing funding to projects within the City of Brighton, and in recent years, Private Activity Bonds have been allocated to the Hughes Station rehabilitation project located within the City. This bonding capacity is highly restricted and time constrained, so it is important to identify projects that can utilize the bonding capacity within the allotted time.
For 2024, the Brighton Housing Authority has two projects underway that can utilize the Private Activity Bond allocation.
1. Adams Point, located at 19th & Bridge Street. 180 total units
2. Ravensfield, located at 510 South 27th Avenue, 100 total units
If Council is supportive of assigning the City’s Private Activity Bond allocation to these projects, this would be accomplished through a resolution assigning the bonds to the Colorado Housing Finance Association on behalf of the Brighton Housing Authority.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
Council has the option to assign the bonding capacity to the Brighton Housing Authority for use on these projects. Council also has the option to not assign bonds to any specific project. In that case, the bonding capacity would revert to the State to be used on statewide projects at the State’s discretion.
FINANCIAL IMPACT
There are no financial implications for the City as the bonds would be issued and managed by CHFA in partnership with BHA who will work directly with the project developer. The City's role is strictly to decide whether the City would like the bonds allocated to these projects.
STAFF RECOMMENDATION
Staff recommends approving a resolution which authorizes assigning Brighton’s 2024 Private Activity Bond allocation to the Brighton Housing Authority in support of the affordable housing projects described above and in the attached presentation.
If Council is supportive, this resolution will be brough forward at the City Council Meeting on April 16th.
Attachments:
Ø Presentation