Garfield County uses $4.1 million in private activity bonds for affordable housing solutions

By Julianne O’Driscoll | Post Independent

Garfield County commissioners voted unanimously Monday to allocate almost $4.1 million in private activity bonds to the Colorado Housing and Finance Authority (CHFA) to support local affordable housing projects.

Private activity bonds are tax-exempt loans used to fund private development projects, according to the Colorado Division of Housing. Every year, the Internal Revenue Service assigns each state a private activity bond limit. Colorado then allocates the bonds to cities and counties based on area population. This year, Garfield County received a private activity bond cap of nearly $4.1 million based on a population count of 62,722. 

Local governments decide how to use the bonds. Garfield County on Monday authorized the CHFA to use its private bonds for local housing programs. CHFA can now sell almost $4.1 million in tax-exempt bonds to private investors for eligible activities such as low-income housing construction, mortgage credits for first-time homeowners, and land redevelopment in blighted areas. 

The proceeds from the bonds can then be used by CHFA “to do that good work of supporting single-family mortgages or financing affordable rental housing,” Kathryn Grosscup, CHFA housing tax credit manager, told commissioners Monday.

“(CHFA) is a statewide, independent standalone authority, and we utilize this resource — which essentially allows us to go into capital markets and raise funds and lend them at a tax exempt rate — so the cost of borrowing is lower,” Grosscup said. “That creates opportunity for supporting first-time and moderate home buyers in Garfield County, and in some cases, supporting multifamily transactions where that tax exempt financing also leverages federal housing tax credits and brings additional equity into projects.

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