CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Pass the ordinance approving the transfer of $17,892,480 of the 2023 Volume Cap to the Town of Normal
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Director of Finance
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
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 the authority, bond issuers can finance projects at interest rates below the conventional market.
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.
On January 17, 2023, City Council passed ordinance 23-001 which reserved the 2023 Volume Cap amount of $17,892,480. The bonding authority may be used for financing projects within the City or it may choose to sell or cede the Volume Cap for projects in other Illinois communities. The City has until December 31, 2023 to use or transfer the Volume Cap.
In the past, the City transferred all or portions of its Volume Cap to other entities, these include:
1. In 2009 and 2010, the City transferred the Volume Cap to two homebuyer programs: Illinois Housing Development Authority and the City of Aurora First-Time Homebuyer Down Payment Assistance Program.
2. In 2011, the City transferred the Volume Cap to the Will Kankakee Regional Development Authority. The organization works with home rule communities to accumulate Volume Cap and identifies expanding businesses that can benefit from the tax-exempt borrowing rates.
3. In 2012, the Council approved a transfer of $4 millio...
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