CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Pass the ordinance reserving the City's 2021 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 its allocation of the Volume Cap for the issuance of private activity bonds. The home rule municipality must either allocate the volume cap or reserve it by May 1.
On January 1, 2021, the City received its allocation for the 2021 Volume Cap. The 2021 allocation has increased to $110 per capita. Based on a population of 148,304, under federal legislation through the State of Illinois for the issuance of private activity bonds, the total 2021 allocation for the City is $16,313,440. The bonding authority may be used for financing projects within Naperville or used to sell or cede the cap to projects in other Illinois communities. The City has no immediate plans to use the 2021 amount, but will reserve funds or, should the need arise, allocate to other jurisdictions in need of funds.
According to the Governor's Office of Management and Budget, the allocation approval letter to home rule units of government is valid for a pe...
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