CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
title
Pass the ordinance reserving the City’s 2019 Volume Cap
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Director of Finance
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
The Tax Reform Act of 1986 established a unified state volume cap to regulate the activities permitted to be financed with tax-exempt private activity bonds. Private activity bonds are issued by states and local authorities to provide affordable financing for a wide range of public purpose projects, such as single-family mortgages, manufacturing facilities, multifamily housing, economic development, student loans, and certain non-profit and environmental facilities.
The Volume Cap Program is a federally authorized program, which allows the state to allocate tax-exempt bond authority to various projects throughout the state. With this authority, bond issuers are able to finance projects at interest rates below that of the conventional market.
DISCUSSION:
Every year each home rule municipality receives their allocation of the Volume Cap for the issuance of private activity bonds. The home rule municipality must allocate the volume cap or reserve it by May 1.
On January 1, 2019 the City received its allocation for the 2019 Volume Cap. The 2019 allocation adjusted for inflation is $105.00 per capita. Based on a population of 147,682 under federal legislation through the State of Illinois for the issuance of private activity bonds, the total allocation the City received for 2019 is $15,506,610. The bonding authority may be used for financing projects within the City or it may choose to sell or cede our volume cap for projects in other Illinois communities.
According to the Governor’s Office of Management & Budget, the allocation approval letter to Home Rule units of government is valid for a period of 60 calendar days from the date of the letter or through December 31, 2019, whichever date comes first.
FISCAL IMPACT:
N/A