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Council holds public hearing on tax‑exempt bonds for Salem Home HVAC; city to act as conduit issuer
Summary
Hillsboro held a public hearing on a proposed not‑to‑exceed $3,000,000 conduit revenue bond to replace Salem Home's antiquated HVAC system; staff emphasized the city would have no liability and no decision was made.
The Hillsboro City Council held a public hearing on the possible issuance of a not‑to‑exceed $3,000,000 tax‑exempt revenue bond to fund a new HVAC system for Salem Home.
Staff explained the issuance would be an industrial revenue bond (IRB) with the city acting as a conduit issuer — the borrower and operator (Salem Home) would make lease/rental payments that pay principal and interest, and the bondholders would look to those payments rather than the city for credit. Staff emphasized the city would not bear financial liability if the borrower defaulted; bondholders assume that risk.
Speakers noted federal rules that require a public hearing when tax‑exempt bonds benefit a private entity (reference made to the Tax Equity and Fiscal Responsibility Act). Members of the public asked whether the city would be liable if Salem Home failed to make payments; presenters reiterated that the city is not responsible for bond repayment.
No council action was taken at the hearing. Staff said the hearing is required before the city can act as conduit for a tax‑exempt issuance and that any future steps would be separate from the hearing itself.
