Under the federal tax reform act enacted in 1986, the State of Nevada receives an annual allocation of tax-exempt Private Activity Bond Capacity (PABC).  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 2019, the City of Sparks’ allocation of PABC is $5,217,476.03.  The City does not issue PABC bonds on behalf of third parties. Instead, each year the City requests (by resolution) that the State of Nevada reserve the City’s allocation for a specific project(s) or for a specific 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 for its 2019 PABC allocation from both agencies for their respective housing programs (see attached letters from NHD and NRHA).

The City received requests from NHD and NRHA for use of the City’s 2019 PABC to capitalize their respective affordable housing programs.  Both agencies have consistently provided mortgage products to benefit City of Sparks’ residents such as:

• Mortgages
• Down Payment Assistance Programs
• Grant Programs

These agencies document the benefits of their programs to Sparks residents in the materials they submitted to the City.

After reviewing the requests, staff recommends the City’s 2019 capacity be split equally (50%/50%) between NHD and NRHA to support implementation of their respective housing programs. Splitting the PABC between NHD and NHRA supports a wider range of affordable housing programs than allocating the entire PABC amount to a single agency. Per the information submitted with its request, NHD proposes to use PABC from the City of Sparks to support their homeownership programs for first-time homebuyers, veterans, military families, and teachers, and for the issuance of bonds for affordable multi-family housing.  NRHA proposes to use a PABC allocation from the City to offer down payment assistance and mortgage credit certificates. Dividing the PABC between NHA and NRHA therefore potentially benefits a more diverse range of Sparks (and other Washoe County) residents.

1. Council may elect to allocate the City’s PABC equally (50%/50%) between NHD and NRHA, as recommended by City staff.
2. Council may elect to allocate the City’s entire PABC amount to either NHD or NRHA, or otherwise divide the City’s PABC as the Council may see fit.
3. Council may elect to take no action at this time in which case the City’s PABC allocation will automatically revert to the State of Nevada after August 31, 2019.

I move to adopt Resolution No. 3350, authorizing the transfer of the City’s 2019 Private Activity Bond Capacity (PABC) allocation of $5,217,476.03 to be divided equally (50%/50%) between the Nevada Housing Division (NHD) and Nevada Rural Housing Authority (NRHA) to support implementation of their respective affordable housing programs.