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Council allows assignment of TIF bonds to accredited investors, with investor-letter protections
Summary
The council approved a resolution to permit tax-allocation (TIF) bonds to be assigned to accredited investors, a change bond counsel said increases flexibility for redevelopers while requiring investor-letter acknowledgments of risk.
The City Council voted to authorize tax-allocation (TIF) bonds to be assigned to accredited investors, allowing developers and current bondholders to transfer notes to individuals or entities that meet federal accreditation standards.
Abby Littrell of the law department explained the resolution would allow the finance office to issue or assign TIF bonds to accredited investors; bond counsel Mike Rogers explained accredited status is defined by the Securities and Exchange Commission (income or net-worth thresholds) and that the city will require prospective purchasers to sign investor letters acknowledging risks, illiquidity and lack of city representation on repayment likelihood.
Rogers said these requirements and investor letters limit the city's exposure because the instruments are payable only from tax-increment revenues. Council members asked about municipal practice in other Nebraska jurisdictions and risk exposure; counsel said many cities allow accredited investors or evaluate transfers case by case. The resolution passed 6'0' 0 on roll call.
