Under the federal tax reform act enacted in 1986, the State of Nevada receives an annual allocation of tax exempt private activity bond cap (PABC) authority. PABC provides states and local governments authority to issue federally tax-exempt bonds on behalf of private infrastructure, utility and affordable housing projects and programs. For 2018, the City of Sparks’ share of PABC is $5,108,114.57.  The City Council may request (by resolution) that the State of Nevada reserve the City’s allocation for a specific project(s) or program(s).

In recent years, the City Council has allocated their PABC for first time homebuyer programs operated by the Nevada Housing Division (NHD) and the Nevada Rural Housing Authority (NRHA).  This year, the City received requests from both agencies requesting transference of the City’s 2018 PABC allocation for their respective housing programs (see Attachments # 2 & 3 - letters from NRHA and NHD dated June 19, 2018).

The City received requests from NRHA and NHD for use of the City’s 2018 PABC to capitalize their respective housing programs. Per its request, NHRA will use any PABC it is allocated by the City of Sparks to assist Nevada households to achieve home ownership through programs that include down payment assistance. The NHD is requesting the City’s PABC to capitalize both home ownership programs and provide financing for affordable rental housing programs. The agencies document the benefits of their programs to Sparks residents in their respective letters (see attachments # 02 and # 03).

After reviewing the request, City staff recommends that the City Council split the City’s 2018 capacity between NRHA (75% or $3,831,085.93) and NHD (25% or $1,277,028.64) to support implementation of their respective programs. (see Attachment # 1 – Certificate of Transfer). The proposed split reflects the fact that NHD has access to unused PABC from other jurisdictions throughout Nevada, which automatically reverts to the State every year. NRHA has a more limited stream of revenue, having to rely on allocations from qualifying rural communities.

1. The Council may allocate the City’s PABC allocation to NRHA and NHD as recommended by staff.
2. The Council allocate the City’s PABC allocation between NRHA and NHD differently (e.g., 50-50%).
3. The Council may elect to take no action at this time in which case the City’s PABC allocation will automatically revert to the State after August 31, 2018.

I move to adopt Resolution No. 3339 authorizing the transfer of the City’s 2018 Private Activity Bond Capacity allocation of $5,108,114.57 to the Nevada Rural Housing Authority in the amount of $3,831,085.93 and the Nevada Housing Division in the amount of $1,277,028.64 for use in their respective single-family homebuyer and affordable rental housing programs.