While Congress tries to resolve issues with voter registration legislation, the war in Iran and cabinet appointments, interest in housing bond issues is still percolating.
"Communities shouldn't have to pay higher borrowing costs simply because they lack access to Wall Street financing," said Rep. Lisa McClain, D-Mich.
"This bill levels the playing field by giving local lenders the tools they need to help their communities invest in infrastructure, health care, and economic development without putting taxpayers on the hook for higher interest rates. It will help unlock investment where it's needed most."
McClain, who sits on the House Financial Services Committee, is sponsoring the Municipal Investment and Neighborhood Transformation Act which would allow members of the Federal Home Loan Bank to support tax-exempt municipal bonds used to finance essential housing-related infrastructure projects.
The FHLB is a government-sponsored entity (GSE) nested in the Federal Housing Finance Agency.
It includes 11 cooperatively owned, regional banks scattered across the country.
The FHLB serves a membership that includes 6,400 thrift institutions, commercial banks, credit unions, and insurance companies.
The "MINT Act" seeks to reverse a chain of public finance events that started when the Tax Reform Act of 1984 ended federal guarantees on tax exempt bonds and put a cap on private activity bonds in an attempt to reduce the federal budget.
The law exempted GSEs including Fannie Mae and Freddie Mac, who at the time, were issuing Letters of Credit.
The FHLBs chose not to seek exemption because they weren't issuing LOCs and because they didn't think LOCs were considered a federal guarantee.
By the early 1990's the FHLB was issuing LOCs. The Internal Revenue Service stepped in, deciding that a LOC was a federal guarantee. They allowed the FHLBs to issue LOCs on a temporary basis but sunset the provision at the end of 2010.
The Council of Federal Home Loan Banks notes that during the period when FHLBs were authorized to issue non-housing tax-exempt bonds, "LOCs supported 129 tax- exempt bond transactions, financing nearly $4 billion in projects across the country."
"Most of these transactions involved small bond issuances that traditionally have difficulty finding other sources of credit enhancement."
The MINT Act in the House is now linked with a companion bill introduced in the Senate late last month. It's sponsored by Sens. Catherine Cortez Masto, D-Nev. and Sam Liccardo, D-Calif.
"For too long, communities across the country have had a hard time raising the funds they need to make improvements to sewer and water systems, hospitals, schools, and more," said Cortez Masto.
"Our legislation unlocks more options for these communities that were previously unavailable to them."
"The MINT Act permanently restores letters of credit supporting non-housing tax-exempt bonds as a proven tool that empowers local communities to finance critical infrastructure – including schools, healthcare facilities, water systems, and other essential projects," said Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks.
In the Senate, the MINT Act has been referred to the Committee on Finance. The bill was introduced in the House and referred to the Ways and Means Committee.
