HomeMy WebLinkAboutMINUTES - 12091997 - C29 Contra
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TO: BOARD OF SUPERVISORS Coin
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FROM: Dennis M. Barry, AICP
Interim Community Development Director
DATE: December 9, 1997
SUBJECT: H.R. 979 and S.,1251 -Legislation to Increase the Private Activity Bond Allocation
SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
AUTHORIZE the Chair of the Board of Supervisors to send letters to Congressmembers George Miller
and Ellen Tauscher and Senator Dianne Feinstein supporting legislation to amend the Internal Revenue
Code of 1986 to increase the private activity tax-exempt bond cap from $50 per capita limit to $75 per
capita (H.R. 979 and S. 1251).
FISCAL IMPACT
No County General Funds are involved.
CONTINUED ON ATTACHMENT: X YES SIGNATURE:
_RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMM NDATION OF ARD COMMIT E
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON December 9, 1997 APPROVED AS RECOMMENDED X OTHER_
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE AND
X UNANIMOUS (ABSENT District V ) CORRECT COPY OF AN ACTION TAKEN AND
AYES: NOES: ENTERED ON THE MINUTES OF THE BOARD OF
ABSENT: ABSTAIN: SUPERVISORS ON THE DATE SHOWN.
Contact: Kathleen Hamm, 335-1257 ATTESTED December 9, 1997
cc: County Administrator PHIL BATCHELOR, CLERK OF
County Counsel THE BOARD OF SUPERVISORS
Community Development AND COUNTY ADMINISTRATOR
BY ,DEPUTY
1
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BACKGROUND/REASONS FOR RECOMMENDATIONS
The federal government allocates private activity bond authority to each state on a per capita basis. State and local
governments issue private activity bonds to provide resources to the private sector to finance the acquisition and
development of affordable single and multifamily housing, and to support other public benefit projects. The bonds are
tax-exempt and, therefore, carry lower interest rates than for example, general obligation bonds. Private sector
borrowers repay their loans and these loan payment proceeds are used to repay bond investors.
California's FY 1996 bond authority($1.57 billion) provided:
• $1.278 billion of allocation to single family and multifamily affordable housing (over 10,000 mortgages for low
and moderate income first-time homebuyers, creation of 6,800 units of rental housing, creation of an estimated
17,400 new jobs);
• $113.5 million of financing for pollution control;
• $83.4 million for economic development (including creation of 2000 new jobs); and
• $96 million in student loan assistance (serving over 20,000 low-income college students).
Since 1982 the County of Contra Costa has issued over $1 billion of tax exempt bonds requiring private activity bond
authority. The County has provided financing for approximately 6,000 first-time homebuyers, and financed the
development of over 3,300 rental units. The County has also financed a nursing home with Medi-Cal beds and a steel
manufacturing facility with private activity bonds.
In 1986 the federal government enacted tax reform legislation which imposed an annual limit on the dollar amount of
private activity bonds that may be issued by each state. This is currently capped at the greater of$50 per capita, or $150
million, thus limiting cap growth to annual state population increases, and ignoring the effects of inflation. (The
California Housing Finance Agency estimates that the cumulative impact of the annual rate of inflation has eroded the
purchasing power of the private activity bond authority by 44 percent since 1986.) The 1987 volume cap was $14.3
billion. In 1997, it is $15 billion, a five percent increase in ten years. Most importantly, in California, as in most states,
the current demand for these resources greatly exceeds the supply. The Office of the Treasurer of the State of California
estimates that demand for private activity bond financing is three times the amount of authority, and that the proposed
increase in the cap would provide:
• assistance to an additional 7,000 first-time homebuyers;
• student loans to an additional 6,000 low-income students; and
• creation of an additional 12,000 jobs.
Congress is considering bipartisan legislation (H.R. 979 and S. 125 1)which, if passed, would increase the per capita
private activity bond authority amount to $75. A large number of cosponsors for each bill is needed to demonstrate
to the various tax committees the strength of interest in this issue, which will be considered as part of any future tax bill.
As of November 18, 1997, 134 Congressmembers, including eight California Representatives have co-sponsored H.R.
979, and ten Senators, including one California Senator (Barbara Boxer) have co-sponsored S. 1251. (To date
Congressmembers Miller (D-7th) and Tauscher(D-10th) and Senator Dianne Feinstein have not yet cosponsored this
legislation.)
EG-c:datal...HR979.wpd
Phil Batchelor
The Board of Supervisors Contra Clerk of Board
and
County Administration Building Costa County� �is�oro�
651 Pine Street, Room 106
Martinez,California 94553-1293 County
Jim Rogers,1 st District s e
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Gayle S.IJllkema,2nd District
Donna Gerber,3rd District % •,
Park DeSatdnier,4th District I<
Joe Canclamilla,5th District z
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December 10, 1997
The Honorable George Miller
United States House of Representatives
Washington,DC 20515
RE: H.R. 979
Dear Congressman Miller:
I am writing to urge you to support bipartisan efforts to increase the private activity bond cap from$50 to
$75 per capita,and to co-sponsor H.R. 979. In California we see tremendous demand for eligible uses of the
private activity bond--capital to build affordable housing,to protect the environment,to begin small
businesses,and to provide student loans.
Since 1982 the County of Contra Costa has issued over$1 billion of tax exempt bonds requiring private
activity bond authority. The County has provided financing for approximately 6,000 first-time homebuyers,
and financed the development of over 3,300 rental units. The County has also financed a nursing home with
Medi-Cal beds and a steel manufacturing facility with private activity bonds.
According to the California Debt Limit Allocation Committee(CDLAC),which oversees the allocation of
private activity bonding authority in our state,demand surveys show potential projects with total capital
needs of nearly three and one-half times the amount of allocation currently available in California. An
increase in the cap will stimulate the California economy and provide public benefits for citizens,including:
assistance to an additional 7,000 first-time homebuyers;student loans to an additional 6,000 low-income
students; and creation of an additional 12,000 jobs.
If you have any questions,please call Linda Braunschweiger at the California Housing Finance Agency at
(916)324-4638.
Sincerely,
Mark DeSaulnier
Chair,Board of Supervisors
cc: Linda Braunschweiger