- Key insight: A bill offered by Sens. Catherine Cortez Masto, D-Nev., and Todd Young, R-Ind., would allow Federal Home Loan bank members to set up tax-exempt bonds for community development projects, much the same way they already do for housing projects.
- Expert quote: "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." — Sen. Catherine Cortez Masto, D-Nev.
- Forward look: With support for community lending on both sides of the aisle, the bill could have a future even if Democrats gain ground in the Senate and House after this year's elections.
WASHINGTON — A group of bipartisan lawmakers are introducing a bill today that would expand the ability of Federal Home Loan bank members to support tax-exempt bonds for community development projects.
The legislation, introduced by Sens. Catherine Cortez Masto, D-Nev., and Todd Young, R-Ind., would allow Federal Home Loan bank member institutions to set up tax-exempt bonds — much the way that they're currently allowed to do to support housing-related projects — for other community development infrastructure, such as water and sewage treatment facilities, transportation centers, industrial development, health care facilities, or schools.
The bill, known as the Municipal Investment and Neighborhood Transformation, or MINT, Act, would make such projects eligible for Letters of Credit from Federal Home Loan bank member institutions. The bill would effectively restore an authority that was granted to the Federal Home Loan banks as part of the Housing and Economic Recovery Act of 2008. The provision expired in 2010. Extending the provision was,
The bill is bipartisan, meaning it has a better chance of passing the tightly divided Congress than it would have otherwise. There's also an appetite — stemming from long-held policy convictions on both sides of the aisle and vocal push from President Donald Trump — to pursue housing-related legislation.
"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," Cortez Masto said in a statement. "Our legislation unlocks more options for these communities that were previously unavailable to them and empowers the Federal Home Loan Bank System to better fulfill its mission to support community development."
Federal Home Loan bank legislation could find a home in a housing package or a number of other vehicles in the coming years. With support for community lending on both sides of the aisle, a bill like this doesn't have the same short lifespan as issues that are quickly becoming more political and could wane as Democrats retake parts of Congress after the midterm elections.
"The Federal Home Loan banks play a critical role in providing reliable liquidity to financial institutions to make local economic projects possible," Young said in a statement. "Our bill will restore a proven financing tool to help lower costs for community development projects in towns across America."
A companion bill is being introduced in the House by Reps. Lisa McClain, R-Mich., and Sam Liccardo, D-Calif.
"Communities shouldn't have to pay higher borrowing costs simply because they lack access to Wall Street financing. 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 said in a statement.
