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An Ordinance Approving The Transfer And Reallocation Of Volume Cap In Connection With Private Activity Bond Issues, And Related Matters
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Introduction
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Staff are seeking approval of an ordinance to execute the transfer of Private Activity Bond Volume Cap and supporting documents.
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Recommended Action
Approve the ordinance.
Prior Board Action
The Board has taken the following prior action(s):
• ID 26-142: Study Session on Homeownership Programs Part 2
• ID 25-185: Study Session on Homeownership Programs
• RES 24-167: A Resolution Adopting the Strategic Vision for Housing Plan Prepared by the Metropolitan Mayors Caucus
• RES 24-115: A Resolution Adopting the 2024-2025 Village Board Goals as Reviewed at the July 10, 2023, July 11, 2023, July 17, 2023 and September 14, 2023 Board Meetings
Background
At the Board’s February 24, 2026, study session on homeownership, the Board gave staff feedback that it was supportive of the Village allocating its Private Activity Bond Cap to the Illinois Assist Mortgage Credit Certificate Homeownership program to provide mortgage credit certificates to make homeownership more affordable for low- to moderate-income first-time homebuyers and veterans purchasing in Oak Park.
A Mortgage Credit Certificate (MCC) is a federal tax credit program that helps make homeownership more affordable for low- to moderate-income first-time homebuyers and veterans. The homebuyer can receive a federal tax credit equal to a percentage of the interest they pay on their home loan each year, up to a maximum of $2,000. The remaining mortgage interest paid may still be calculated as an itemized deduction. The credit can then be used to reduce the homebuyer’s federal income tax liability each year. Homebuyers can use the dollar-for-dollar credit each year for the life of the original mortgage, provided they continue to live in the home.
The MCC program includes both income and purchase price limits. The current maximum purchase price is $544,232 for a single-unit property. The maximum income for 1- and 2-person households is $119,900. The maximum income for 3+ person households is $137,885. Those equate to approximately 133% of AMI and 116% of AMI, respectively. MCCs are created by converting the private activity bond (PAB) volume cap authority to MCC authority on a four‐to‐one basis. Only authorized state and/or local housing finance authorities are authorized to issue MCCs. The issuer’s role is largely limited to issuing the MCC. It is up to the borrower to file the IRS form and claim the credit annually.
The PAB cap is a federally mandated annual limit on the amount of certain tax-exempt bonds a state can issue to finance projects for private entities. Municipalities use this cap to allocate their portion of the state's PAB volume, which is a limited pool of funds used for projects like housing and economic development that have a public purpose but are privately owned or developed. The cap is typically based on a state's population and is allocated among state and local issuers. When the Village does not use its allocation each year, that authority automatically goes back to the state for its use.
The Illinois Assist MCC Homeownership Program is the authorized entity to do those conversions and issue credits. Illinois Assist is sponsored through the Town of Normal. Towns that enter into an intergovernmental agreement with Normal to contribute a portion of their PAB can have MCCs issued to households purchasing in their towns. Illinois Assist is currently working with more than 14 municipalities statewide.
Timing Considerations
To join the Illinois Assist program and transfer the Village’s Private Activity Volume Cap to the Homeownership Program sponsored by the Town of Normal, the Village must enter into the agreement, pass the necessary ordinance, and report the transfer to Illinois Assist and the State of Illinois by May 10, 2026.
Financial Impact
The proposed Mortgage Credit Certificate program does not require direct funding from the Village. MCCs are created by converting private activity bond (PAB) volume cap authority to MCC authority on a four‐to‐one basis. Only authorized state and/or local housing finance authorities are authorized to issue MCCs. The Village would enter into an intergovernmental agreement with the Town of Normal to contribute a portion of its PAB to have MCCs issued to households purchasing in Oak Park. The Village has not used its PAB allocation for several years. When the Village does not use its allocation each year, that authority automatically goes back to the state for its use.
Operations Impact
There is no operational impact with this item. Staff will provide program information to local Realtors so they are aware of the opportunity.
DEI Impact
This is part of the Village’s identified homeownership program. The Board’s adopted frameworks call out that any potential homeownership program must:
- Respond to racial disparities in access to homeownership.
- Expand the variety of homeownership opportunities.
Staff designed the proposed homeownership program to address both points based on research showing that racial/ethnic barriers to homeownership include process, finances, and availability. The proposed program includes measuring the outcomes using two success measures:
- Supporting approximately 250 homeowners earning less than 120% of AMI to access homeownership over the next 5 years.
- Increasing homeownership rates by race and ethnicity to meet regional levels for Black, Asian, Latino, and multiracial households over the next 5 years.
Community Input
The recommendation to proceed with this program came via discussions with the Housing Programs Advisory Committee at its August, September, and October 2025 meetings, as well as the Board at is February 24, 2026 meeting.
Staff Recommendation
Staff recommends that the Board pass the ordinance.
Advantages:
• Provides an additional tool to help make homeownership more affordable for low- to moderate-income first-time homebuyers and veterans purchasing in Oak Park.
Disadvantages:
• Allocates all of the Board’s 2026 Private Activity Bond Volume Cap to creating Mortgage Credit Certificates.
Alternatives
Alternative 1:
The Board could not pass the ordinance.
Advantages:
• This action allows the Board to consider other potential uses for Private Activity Bond Volume Cap.
• This action allows the Board to consider other potential supports for homeownership.
Disadvantages:
• Delays the implementation of a homeownership effort that the Board had previously been supportive of.
Anticipated Future Actions
Staff will take the needed actions to transfer the Private Activity Bond Volume cap for 2026.
Prepared By: Jonathan Burch, Assistant Village Manager/ Neighborhood Services Director
Reviewed By: Jack Malec, Assistant to the Village Manager
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Ordinance and supporting documents