Department of City Manager’s Office
Reference: Assignment of the City of Brighton’s 2021 Private Activity Bond Allocation
To: Mayor Gregory Mills and Members of City Council
Through: Jane Bais DiSessa, City Manager
Maria Ostrom, Director of Finance
Prepared By: Nicole Samson, Senior Management Analyst
Date Prepared: May 2021
PURPOSE
To assign Brighton’s 2021 Private Activity Bond allocation to the Colorado Housing and Finance Authority (CHFA) to issue bonds for the purpose of financing affordable housing in Brighton.
STRATEGIC FOCUS AREA
Financially Responsible
BACKGROUND
Each year the Colorado Division of Housing invites the City of Brighton to assign an amount of the State's Private Activity Bonds to eligible, local housing project(s). Private Activity Bonds are tax-exempt bonds that offer 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, the Colorado Division of Housing directs Private Activity Bonds to housing projects because there are other bonds that are better suited for non-housing projects. This year the City can assign up to $2,308,911 in Private Activity Bonds.
Private Activity Bonds are issued by a government authority and then investors purchase the bonds. The underwriters use the investors' money or bond proceeds to create a low-interest loan for the project. The project manager pays back the loan and the investors get repaid with interest. CHFA is the primary agency that issues bonds for housing projects in Colorado.
In the last three years, Brighton’s Private Activity Bonds have funded home loans, as well as down payment and closing cost assistance for first-time homebuyers and qualified veterans to purchase homes in Brighton. In 2018, Brighton’s Private Activity Bonds funded 45 home loans. In 2019, the bonds funded 47 home loans, and in 2020, the bonds funded 33 home loans.
The Brighton Housing Authority (BHA) notified the City that BHA would like to use Brighton’s Private Activity Bonds to refinance and rehabilitate Hughes Station Apartments at 233 N Main Street in Brighton. BHA asked that Brighton assign the 2021 Private Activity Bonds amount to CHFA, because CHFA will need to issue the bonds. BHA will work directly with CHFA to obtain the bond proceeds and combine this with other funding sources.
Hughes Station Apartments was built in 2003 by the nonprofit organization Almost Home. The apartments are at the site of the first train depot in Brighton built in 1862, and the complex is named after this depot. Owned and operated by the Brighton Housing Authority since 2017, this multi-family apartment complex has 120 units that are rented to low- and moderate-income families.
FINANCIAL IMPACT
There are no financial implications for the City since CHFA will issue the bonds for this project and will work directly with BHA, and/or the organization managing the project, on the finances. The City's role is strictly to decide whether the City would like the bonds allocated to projects benefitting Brighton residents.
STAFF RECOMMENDATION
Staff recommends approving the resolution which authorizes assigning Brighton’s 2021 Private Activity Bond amount to CHFA, requests that the Brighton Housing Authority’s Hughes Station project be given priority for the bond proceeds, and authorizes the City Manager to execute the Assignment of Allocation document.
OPTIONS FOR COUNCIL CONSIDERATION
1. Approve the resolution as presented.
2. Do not approve the resolution. This will result in the Private Activity Bonds automatically defaulting to the statewide balance for use by a project anywhere in Colorado.
ATTACHMENTS
City Council Resolution
Assignment of Allocation Agreement
Letter from the Brighton Housing Authority