HomeMy WebLinkAbout5. OLD BUSINESS 3/7/06
INTEROFFICE MEMORANDUM
Village of Mount Prospect
Mount Prospect, Illinois
TO: MICHAEL E. JANONIS, VILLAGE MANAGER
FROM: DIRECTOR OF FINANCE
PURPOSE:
To present for the Village Board's consideration an ordinance that would reserve the
Village's 2006 private activity bond volume cap.
DISCUSSION:
The Internal Revenue Code allows state and local governments to issue tax-exempt
debt for the benefit of certain qualified private development projects. These projects
include the acquisition or construction of industrial facilities and apartments for low
and moderate-income families. The amount of such private activity debt issued in
any given year cannot exceed the equivalent of $80 per resident. The Village's
private activity bond volume cap is currently $4,501,200.
According to the regulations, any volume cap not reserved or committed by a
municipality by April 30th is automatically transferred to the state government. 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.
Over the past several years, it has become common for municipalities to transfer
their unused volume cap to other municipalities in exchange for a fee. The fee is
actually paid by the ultimate beneficiary of the tax-exempt financing. The amount of
the fee paid depends upon the economy and the current interest rate environment.
For the past few years, the fee received for the Village's cap has been 1-2%. The
Village of Mount Prospect has ceded its authority to other governments in previous
years.
SUMMARY:
At this time, the Village has not been approached by any company interested in our
volume cap for a project in Mount Prospect. Nor have we been approached by any
investment banker about ceding our 2006 volume cap to them.
A
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2006 Private Activity Bond Volume Cap
2/15/2006
Page 2
The Village has a total of $4,501,200 of private activity bond volume cap it must
reserve by April 30th or it will be transferred to the State government.
The Village can choose to hold onto the volume cap after it is reserved until a
project is identified. It may also be able to carry over the cap for up to three years
depending on the type of project being considered.
RECOMMENDATION:
It is recommended the Village Board adopt the attached draft ordinance reserving
the Village's private activity bond volume cap for 2006.
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DAVID O. ERB
DIRECTOR OF FINANCE
DOE/
1:\Private Activity Bonds\2006\Memo to Janonis - March 2006.doc
ORDINANCE No.
AN ORDINANCE RESERVING VOLUME CAP IN CONNECTION WITH
PRIV ATE ACTIVITY BOND ISSUES, AND RELATED MATTERS.
WHEREAS, the Village of Mount Prospect, Cook County (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 $80.00 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 2006 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 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 2006 is hereby reserved by the Municipality, which
shall issue the Bonds using such volume cap, or otherwise use or transfer such volume cap in a
lawful manner without any further action required on the part of the Municipality. 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 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 toIfurther 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.
AYES:
NA YES:
ABSENT:
PASSED and APPROVED this
day of February, 2006.
Irvana K. Wilks, Mayor
ATTEST:
[SEAL]
M. Lisa Angell, Village Clerk
H:\CLKO\files\WlN\ORDINANC\Volume Cap Reservation Ordinance - 2006.doc
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