City transfers bond capacity

Kevin Hickey, of the Nevada Rural Housing Authority, has been making pretty much the same presentation to the council annually thanking the city for transferring nearly $1 million in bond capacity to the group he represents.

But this year, several council members seemed to be in more of a “what’s in it for Boulder City” frame of mind than in years past.

Starting with the dry stuff and get it out of the way so it’s clear what is being talked about. That $1 million (actually $959,415.23 to be exact) is not actually money. The city did not give the Rural Housing Authority anything concrete. What was transferred was the 2025 Private Activity Bond Volume Cap. And in the end, that is really about taxes and investment.

Private Activity Bonds (PABs) are a type of municipal bond issued by state or local governments to finance projects that serve a public purpose but are owned by private entities. These bonds are designed to attract private investment for projects that benefit the public, such as hospitals, airports, and affordable housing.

A key characteristic of PABs is that, under Internal Revenue Service rules, interest earned on qualified PABs may be exempt from federal income tax, making them attractive to investors. Unlike traditional municipal bonds, where the government is responsible for repayment, private entities are responsible for repaying PABs.

Every year, the state allocates an upper amount of PABs that a city can issue. The cap is based on population. If the city does not issue PABs, then the potential amount reverts back to the state, meaning that the state can issue more PABs for projects they are working on.

Boulder City has never issued PABs and so, for the past nearly 20 years, the council has voted to transfer the amount the city could have issued to the Nevada Rural Housing Authority, which issues PABs that are aimed at providing home ownership opportunities for residents in rural areas.

As housing has gotten more expensive and rents have risen throughout the region, the Rural Housing Authority also distributes rental assistance vouchers provided to them by the federal government.

Based on population, Boulder City is considered a rural area so one might think the city could benefit from the vouchers that Hickey’s agency offers. But there is a catch.

While BC is considered rural, the Nevada Rural Housing Authority’s vouchers cover the entire state — except Clark and Washoe counties.

“So here in Boulder City, that all falls under the Southern Nevada Regional Housing Authority,” Hickey said in response to a question from Councilwoman Denise Ashurst. “We don’t have the authority to offer those vouchers here in Clark County or Washoe County.”

According to Hickey, his group assists about 1,300 renters each year through vouchers and are developing 600 new rental units set to be completed by 2027. Again, none in Boulder City.

The group also provides mortgage assistance.

“One of the most exciting outcomes of your recent support is our Launchpad home ownership program,” Hickey said. “This program, made possible by bond cap transfers, initially provided $25 million in mortgage funds to around 80 families. And thanks to its success, our partnership with Nevada Housing Division, we now have another 25 million in mortgage volume ready to deploy, offering even more opportunity to rural home buyers.”

On this count, Boulder City has actually benefited as Hickey reported that, “Since our home ownership programs began, Nevada Rural Housing has assisted 25 homebuyers in Boulder City, providing $5 million in mortgages and over $160,000 in down payment assistance.”

Councilwoman Sherri Jorgensen cut to the chase. “Are we the kind of community that this program is meant for?” she asked. “Because, though the numbers look good, when I factor in it’s almost 20 years, then the numbers significantly look less beautiful.”

The issue of housing prices — which have spiked in Boulder City in recent years — was one that kept coming up.

“So, an observation now and maybe you can either debunk it or validate it,” Councilman Steve Walton began after Hickey explained that the two main mortgage assistance programs his group offered were only available to house holds making between $100,000 and $165,000 per year, depending on the program.

“If the income cap is between 100 and 165 and the home prices in Boulder City are what they are, do you really believe we’ll see many numbers increase? Because this is not really the market where people could qualify for a first-time home,” Walton continued noting that the loans Hickey’s group is involved in average $314,000.

“There’s not many of those available in our city,” Walton said.

Ashurst continued the affordability questions.

“One of the things that I had in my heart was for our young people here that are graduating high school,” she began. “Most of them cannot live here because they can’t afford to live here. And I would like to see something like a lottery where if they could come up with half and then the city or the state or federal government would meet that other half.”

Ashurst continued, “I’m from New York. There’s no way I can live in New York. They have pretty much pushed everybody who was born and raised there out unless your family owned a home. Same thing here in Boulder City.”

Mayor Joe Hardy summed up the opportunity and the challenge.

“By transferring it (the PAB volume cap) to Nevada housing, we can make sure that it stays rural. We can’t ensure that it stays here in Boulder City. But we’d very much like for that to be the case. We’d like to have more activity here.”