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TO: Mayor Thomas J. Weisner
FROM: Brian W. Caputo, Chief Financial Officer/City Treasurer
DATE: March 17, 2016
SUBJECT:
An Ordinance Reserving 2016 Volume Cap in Connection with Private Activity Bond Issues, and Related Matters.
PURPOSE:
To obtain the City Council’s approval of an ordinance that will serve to reserve the city’s 2016 private activity bond (PAB) volume cap.
BACKGROUND:
PABs are tax-exempt securities that are issued in the name of a state or local government for a variety of purposes that advance public interests. Classifications of PABs include, but are not limited to, economic development revenue bonds, industrial development revenue bonds (IDRBs), single-family mortgage revenue bonds, and multi-family mortgage revenue bonds. Although PABs are issued under the authority of a state or local government, the government concerned typically has no responsibility for repaying the debt. The development project concerned is usually responsible for repaying. PABs are commonly referred to as “conduit debt.”
The Internal Revenue Code places a “cap” on the dollar amount of certain PABs that a state or local government may issue in a calendar year. Currently, municipalities are limited to an amount equal to $100.00 per resident.
The Illinois Private Activity Bond Allocation Act requires that Illinois municipalities declare their intent to use their allocation of volume cap for the current year. Any volume cap that is not “reserved” is automatically ceded to the State of Illinois.
DISCUSSION:
Based upon the city’s currently estimated population of 200,456, Aurora’s volume cap allocation for 2016 is $20,045,600. Some of the 2016 volume cap may be dedicated to the issuance of IDRBs in support of manufacturing enterprises in the city. Any volume cap not used for IDRBs will be used for single-family mortgage revenue bonds and/or mortgage credit certificates.
IMPACT STATEMENT:
Not applicable.
RECOMMENDATIONS:
That the City Council approve the attached ordinance that will serve to reserve the city’s 2016 PAB volume cap.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance Reserving 2016 Volume Cap in Connection with Private Activity Bond Issues, and related matters.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, Section 146 of the Internal Revenue Code of 1986, as amended (the “Code”), provides that the Municipality has volume cap equal to $100.00 per resident of the Municipality in each calendar year, which volume cap may be reserved and allocated to certain tax-exempt private activity bonds; and
Whereas, the Illinois Private Activity Bond Allocation Act, 30 Illinois Compiled Statutes 2000, 345/1 et seq., as supplemented and amended (the “Act”), provides that a home rule unit of government may transfer its allocation of volume cap to any other home rule unit of government, the State of Illinois or any agency thereof or any non-home rule unit of government; and
Whereas, it is now deemed necessary and desirable by the Municipality to reserve its entire volume cap allocation for calendar year 2016 to be applied toward the issuance of private activity bonds (the “Bonds”), as provided in this Ordinance, or to be transferred, as permitted by this Ordinance;
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
Section 1. That, pursuant to Section 146 of the Code and the Act, the entire volume cap of the Municipality for calendar year 2016 is hereby reserved by the Municipality, which shall issue the Bonds using such volume cap, or shall transfer such volume cap, as hereinafter determined by the City Council of the Municipality.
Section 2. That the Municipality shall maintain a written record of this Ordinance in its records during the term that the Bonds or any other such bonds to which such volume cap is allocated remain outstanding.
Section 3. That the Mayor, the Chief Financial Officer/City Treasurer, the City Clerk and all other proper officers, officials, agents and employees of the Municipality are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents and certificates as may be necessary to further the purposes and intent of this Ordinance.
Section 4. That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision of this Ordinance shall for any reason be declared to be invalid, such declaration shall not affect the remainder of the sections, phrases and provisions of this Ordinance.
Section 5. That all ordinances, resolutions or orders, or parts thereof, in conflict herewith are, to the extent of such conflict, hereby superseded; and that this Ordinance shall be in full force and effect upon its adoption and approval.
Presented, passed, approved and recorded this 12th day of April, 2016.
Approved:
_________________________________
Mayor
[Seal]
Attest:
_________________________________
City Clerk
Ayes: _________
Nays: _________
Absent or Not Voting: _________