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THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on August 12, 1986 , by the following vote:
AYES: Supervisors Schroder, McPeak, Torlakson, Powers
NOES: None
ABSENT: Supervisor Fanden
ABSTAIN: None
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SUBJECT: Tax Reform and Tax Exempt Housing Bonds
The Board received a memorandum dated August 12, 1986 from
Harvey Bragdon, Director of Community Development (attached hereto
and by reference incorporated herein) relative to tax reform and tax
exempt housing bonds, recommending that the Board express its con-
cern to the County' s congressional delegation and to Congressman
Stark, who is a member of the House-Senate Tax Reform conference.
IT IS BY THE BOARD ORDERED that the Chairman is AUTHORIZED
to execute letters to the County' s congressional delegation and. to
the House-Senate Tax Reform conferences regarding tax exempt housing
bond provisions.
IT IS FURTHER ORDERED that the County Administrator is
AUTHORIZED to send a telegram to Congressman Pete Stark expressing
the Board' s concern about the potential harm of the various tax
reform proposals on tax exempt bonds.
cc: County Administrator
Community Development Director
thereby certify that this Is a true and correct copy of
an action taken and entered on the minutes of the
Board of Supervisors on the date shown.
ATTESTED: Ayjf6�J /�4 �98�
PHIL BATCH OR, Clerk of the Board
of Supervisors and County Administrator
By , Deputy
CONTRA COSTA COUNTY
COMMUNITY DEVELOPMENT DEPARTMENT
TO: Board of Supervisors DATE: August 12, 1986
FROM: Harvey Bragdon
Director of Community Development
SUBJECT: Tax Reform and Tax Exempt Housing Bonds
BACKGROUND
The House-Senate Conference Committee is currently deliberating on tax reform.
It is the intent of the chairmen of the respective tax writing
committes--Chariman Rostenkowski and Chairman Packwood--to reach an accord prior
to the Congressional summer recess scheduled to begin August 16. A tax reform
bill would then be before the Congress upon their return from recess in early
September.
The Board of Supervisors has expressed its concern about the potential harm of
the various tax reform proposals on tax exempt housing bonds for affordable own-
ership and rental housing. At ten different times over the past eighteen
months, letters providing comments have gone to our Congressional delegation
under the signature of the Board Chair. The essential message of these letters
has been the need to continue tax exempt housing finance for legitimate public
purpose. A copy of the most recent letters sent last week is attached.
CURRENT STATUS
The negotiations within the House-Senate Tax Reform Conference Committee have
proceeded to the extent that the basic outlines of the bill are known. In order
to remain revenue neutral and retain the major pieces of the legislation, i .e. ,
27% top take rate, and popular benefits for the middle and upper class, the con-
ferees need to find $30 billion over five years. The tax exempt bond
provisions are an area that is being looked at to realize some of this gain.
The stringent House tax exempt bond provisions would bring in about $4.3 billion
over five years when compared to current law, whereas the Senate tax exempt bond
provisions would lose an estimated $1.2 billion over five years when compared to
current law. The primary method, by which the revenue gain is being achieved is
through the drastic imposition of volume caps.
In the latest negotiations the Senate conferees have turned away from being a
friend of tax exempt financing, and have proposed a draconian $50 per capita
uniform volume cap for all nongovernmental bonds. Because of the many types of
bonds included under the cap--multi-family housing, student loans, industrial
development, water and sewer, etc.--the amount available for multi-family hous-
ing would be severely cut. The Associate of Local Housing Finance Agencies
estimates multi-family part of this cap to be $334 million for California, which
is less than 10 percent of the amount actually issued in California last year.
Contra Costa County issued over $75 million in multi-family bonds alone.
SUGGESTED STRATEGY
It is too late for letters. It is recommended that the Board members individu-
ally make calls to Congressman Pete Stark, a member of the conference committee,
today. The outline of a workable program would include:
1) No volume cap on multi-family bonds. Should a volume cap be necessary
support the House bill -which contains a $75/capita set aside for hous-
ing;
2) Any allocation formula should not penalize heavy issuers;
3) "Marry" or allow the use of tax exempt multi-family bonds with the low
income housing tax credit contained in the Senate bill .
4) Eliminate the "sunset clause" on single family bonds.
Justification for this position includes:
1) A. large need for affordable housing;
2) Loss of direct funding programs for housing; and
3) The greater responsiveness and administrative efficiency of mortgage
bond programs.
Contact Congressman Pete Stark (202) 225-5065
Staff for tax matters: Ann Zeppenfeld
HEB/jn
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