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 ...
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