HomeMy WebLinkAbout5.3 Motion to Waive two readings - Ordinance Reserving Volume Cap in Connection with Private Activity Bond Issues Page 1 of 3
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Agenda Item Details
Meeting Mar 05, 2019 - REGULAR MEETING OF THE MOUNT PROSPECT VILLAGE BOARD -
7:00 p.m.
Category 5. CONSENT AGENDA
Subject 5.3 Motion to waive the rule requiring two readings of an ordinance and adopt an
ORDINANCE RESERVING VOLUME CAP IN CONNECTION WITH PRIVATE ACTIVITY
BOND ISSUES AND RELATED MATTERS
Access Public
Type Action (Consent)
Preferred Date Mar 05, 2019
Absolute Date Mar 05, 2019
Fiscal Impact No
Budgeted No
Recommended Approval of ordinance reserving volume cap in connection with private activity
Action bond issues for the 2019 program year.
Public Content
Information
The Internal Revenue Code allows state and local governments to issue tax-exempt debt for the benefit of
certain qualified private development projects and first-time homebuyer programs. Development projects
include the acquisition or construction of industrial facilities, apartments for low and moderate-income
families', or for senior housing. The amount of such private activity debt issued in 2019 cannot exceed the
equivalent of $105 per resident. The Village's private activity bond volume cap is currently
$5,,662,,650 based on a population of 53,,930 (population count used by the Governor's Office for volume
cap allocation).
These tax-exempt bonds are issued by or on behalf of local or state government for thin purpose of
providing special financing benefits for qualified projects. The financing is for use by the private developer
and Mount Prospect does not pledge its credit or repayment on the bonds.
According to state statute, any volume cap not reserved or committed by a municipality by April 30 is
automatically transferred to the State of Illinois. If a community does not have any specific projects that
would qualify for the tax exempt financing,, it can cede, or transfer, the volume cap to another community.
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The Village can choose to hold onto the volume cap after it is reserved until a project is identified. The cap
can also be carried over for three years depending on the type of project being considered. There
is currently one local project at this time placing a request on the Village's volume cap. That project is the
planned unit development (PUD) with senior housing located at 1101-1111 Linneman Road. Village Board
approval of the PUD ordinance was November 7,, 2018.
The., proposed financing would be an issuance of conduit multifamily housing bonds. The Village of Mount
Prospect would be the issuer of these bonds. The bonds would not be sold through a public offering, but
rather through direct placement with a single institutional investor. The bonds will be secured by a gross
revenue pledge of the project with a capitalized interest component to get the project up and running
before revenues start to flow. The developer is projecting about $25 million in bonds would be needed at
this time. Again,, the Village would simply be the conduit issuer of these no recourse bonds. This structure
would allow interest on the bonds to be tax-exempt.
Since the Villa---in private activity bond volume cap is limited to $5.6 million, additional call from other
home rule entities would be needed to generate the $25.0 million requested for the project. It would
appear that acquiring volume cap from those entities represented by Klein, Thorpe and Jenkins (KTJ) could
provide a substantial amount of the needed volume cap while also streamlining administration of this
program. Based on 2019 numbers, the following is a list of the KTJ represented home rule entities and
their cap amounts. Mount Prospect ($5,,662,,650 of possible cap); Orland Park ($6,,170,,325 of possible cap),
Carol Stream ($4,198,,845 of possible cap), and Schaumburg ($7,,789,,320 of possible cap). Depending on
willingness of the various entities to cede their cap, the Village would have approximately $23.8 million to
allocate towards the project. The balance of volume cap could then be requested from another home rule
community. An alternative would be to limit the issuance of these conduit bonds to the amount generated
from the KTJ communities.
The initial offer from the underwriter to purchase this bonding authority from communities other than
Mount Prospect,, is 25 basis points (BPS). The amount requested by the Village as issuer of the bonds
should be 100 BPS. If the Village is unable to assemble the entire amount of volume cap to satisfy the
request,, reserving the cap still allows for it to be transferred for another project or held for future
development.
Alternatives
1. Reserve the Village's allocation of Private Activity Bonding Authority.
2. Action at discretion of Village Board.
Staff Recommendation
It is recommended the Village Board adopt the attached ordinance reserving the Village's private activity
bond volume cap for 2019.
Reservation Ordinance - Mount Prospect - 2019.pdf (261 KB)
Administrative Content
Executive Content
All items under Consent Agenda are considered routine by the Village Board and will be enacted by one
motion. There will be no separate discussion of those items unless a Board member or member from the
audience so requests, in wnifich the item will be removed from the Consent Agenda and considered I n its
sequence on the agenda.
Page 3 of 3
Motion &Voting
(not specified)
Motion by Richard Rogers, second by Colleen Saccotelli.
Final Resolution: Motion Carries
Yeas. William Grossi, Eleni Hatzis, Paul Hoefert', Richard Rogers,, Colleen Saccotelli, Michael Zadel
ORDINANCE NO.
AN ORDINANCE RESERVING VOLUME CAP IN CONNECTION WITH
PRIVATE ACTIVITY BOND ISSUES,AND RELATED MATTERS.
Passed and approved by
the President and Board of Trustees
this day of March, 2019.
Published in pamphlet form by authority
of the corporate authorities of the
Village of Mount Prospect, Illinois,
this day of March, 2019.
ORDINANCE NO.
AN ORDINANCE RESERVING VOLUME CAP IN CONNECTION WITH
PRIVATE ACTIVITY BOND ISSUES,AND RELATED MATTERS.
WHEREAS, the Village of Mount Prospect, Cook County, Illinois (the "Municipality"), is
a municipality and a home rule unit of government under Section 6 of Article VII of the 1970
Constitution of the State of Illinois; and
WHEREAS, Section 146 of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that the Municipality has volume cap equal to $105.00 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
1998, 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 all of
its volume cap allocation for calendar year 2019 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 President and the Board of Trustees of the Village
of Mount Prospect, Cook County, 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 2019 is hereby reserved by the Municipality, which shall
issue the Bonds using such volume cap, or shall use or transfer such volume cap, without any
further action required on the part of the Municipality, and the adoption of this Ordinance shall be
deemed to be an allocation of such volume cap to the issuance of the Bonds or such other bonds;
provided, that any such transfer shall be evidenced by a written instrument executed by the Village
President or any other proper officer or employee 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 President, the Village 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 S. 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.
AYES:
NAYES:
ABSENT:
PASSED and APPROVED this day of March, 2019.
Arlene A. Juracek
Village President
ATTEST: [SEAL]
Karen Agoranos
Village Clerk