U.S. Reps. Terri Sewell, D-Ala., and Tom Reed, R-N.Y., on July 25 introduced the Municipal Bond Market Support Act of 2019, legislation aimed at helping local governments, non-profits, schools, hospitals, universities and other entities reduce costs associated with infrastructure and development projects.
Sewell and Reed are both members of the House Ways and Means Committee.
The Municipal Bond Market Support Act of 2019 (H.R. 3967) will expand access to low-cost capital for municipalities and non-profits.
The legislation will increase the annual limit for municipal bank qualified bond borrowing from $10 million to $30 million for each and indexes this level to inflation going forward.
The $10 million limit was set in 1986 and in today’s dollars is not sufficient to fund most community projects, making many local projects more expensive than if they were financed under bank-qualified tax-exempt loans, Sewell’s office said in a news release.
About one fourth of public power bond issuances meet the current $10 million small issuer exception. The American Public Power Association estimates that about one half would qualify if the exception were increased to $30 million.
The legislation also applies the bank qualified debt limit on a borrower-by-borrower basis, rather than aggregating all bank qualified bonds issued by a conduit issuer, so that schools, hospitals and other community organizations can more easily access capital.