Private Activity Bonds

Private Activity Bonds (PABs) are a special class of tax-exempt bond that benefits private (non-governmental) borrowers that can be issued by states, local governments, or housing authorities to fund privately developed projects. PABs are tax-exempt and the amount of the bonds issued are limited by the Internal Revenue Service (IRS). Underwriters use investor money called “bond proceeds,” to make a loan to a project. The project then pays back the loan and the investors are repaid the loan principal plus interest. The interest paid is exempt from Federal income tax, which generally results in lower borrowing costs.

We look forward to working together to make your project a success.

Uses of Private Activity Bonds

In Colorado, the Department of Local Affairs (DOLA) administers the State of Colorado’s PAB cap. The city receives an annual PAB allocation from DOLA. This allocation is not a cash grant or funding award, but an allocation of limited PAB (debt issuance) resources. The city’s 2025 PAB allocation is $4,403,780, which is a 7.7% increase over the city’s 2024 PAB Allocation amount of $4,087,661. This allocation can be used in one of the four manners below:

  1. Local issuers can issue the bonds.
  2. Local issuers can assign their volume cap to another local issuer.
  3. Local issuers can assign their volume cap to the Colorado Housing Finance authority (CHFA).
  4. Local issuers can do nothing and let their cap revert to DOLA’s Statewide Balance.

Eligible uses of PABs are:

  • Affordable multifamily housing including new construction or acquisition and rehabilitation for low- and moderate-income individuals and families.
  • Single Family Mortgage Revenue Bonds (SFMRBs) used to finance the purchase of mortgages made to income-qualified first-time homebuyers.
  • Mortgage Credit Certificates (MCCs), a financing enhancement for income eligible first-time homebuyers (can’t be combined with SFMRB financing).
  • Industrial Development Bonds for smaller manufacturing projects (less than $10 million) that produce any type of goods.
  • Qualified Redevelopment Bonds used to acquire and redevelop blighted areas (typically not used in Colorado).
  • Solid Waste Disposal Bonds used to finance certain disposal facilities utilizing certain waste disposal processes.

Applying for PAB Assignments

Applications for PAB Assignments shall include the following elements:

  • Request letter describing project and providing applicant’s contact information
  • Demonstrated financing gap, supported by a project pro forma. This pro forma will be reviewed by a third party, and review costs will be passed to the applicant
  • Bond counsel contact information
  • Description of applicant’s local projects and history of operations
  • Number of years doing business in the State of Colorado
  • Description of assets to be purchased or constructed
  • Explanation of how the project aligns with City Council Goals and the City’s Strategic Plan
  • Explanation of how the city’s participation is a critical funding source for the development project
  • Number of housing units and target demographics (if applicable)
  • Demonstration the project or development is market feasible
  • Statement from bond council that project is eligible for Private Activity Bonds Deadline

Submission and Review Schedule:

Completed applications are due to the city by April 1, and applicants must be available to answer staff questions within two weeks of the submittal. During a City Council meeting, staff will present and make recommendations regarding all annual PAB requests to the Council. The formal allocation will not occur until September. 

Recent Updates and Highlights

In 2024, no applications were received from private developers by the deadline and the City Council chose to allocate the city's PAB funds to CHFA instead of letting the funds revert to the statewide balance.

In 2025, the city worked on streamlining the PAB process and providing more publications to the community through social media and other online platforms.

Helpful Links and Additional Information

Additional information can be found under the DOLA and CHFA links below:

Questions and Application Submittal

 Questions and applications may be submitted to Jordan Roberts at jroberts@c3gov.com.

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