Legislation has been introduced in the U.S. Senate and House of Representatives aimed at supporting community development projects nationwide.
Senators Catherine Cortez Masto (D-Nev.) and Todd Young (R-Ind.) introduced the Municipal Investment and Neighborhood Transformation (MINT) Act, a bill that would allow Federal Home Loan Bank (FHLBank) member institutions to support local development authorities by credit-enhancing tax-exempt bonds for non-housing-related community development projects.
The MINT Act was introduced in the House of Representatives by Lisa McClain (R-Mich.-09) and Sam Liccardo (D-Calif.-16).
“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. “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.”
Young touted the bill’s ability to enable local projects.
“The Federal Home Loan Banks play a critical role in providing reliable liquidity to financial institutions to make local economic projects possible. Our bill will restore a proven financing tool to help lower costs for community development projects in towns across America. Bureaucratic red tape should not stand in the way of local communities accessing affordable financing,” Young said.
Access for Community-Based Lenders
Ryan Donovan, President and CEO of the Council of Federal Home Loan Banks, said the legislation will have an impact on providing market access for community-based lenders.
“The Federal Home Loan Banks appreciate Senator Cortez Masto’s leadership on this important legislation. 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 – more affordably. For more than 90 years, the FHLBanks, through their more than 6,400 members, have been a critical financial partner to municipalities across the country, and this legislation improves market access for community-based lenders, promotes private investment, and eases pressure on local taxpayers,” Donovan said.
Currently, FHLBank member institutions are allowed to support municipalities when they’re setting up housing-related tax-exempt bonds, but are unable to do so for a variety of other community development projects, such as infrastructure improvements, water and sewage treatment facilities, transportation centers, industrial development, healthcare facilities, or schools.
The legislation would include these non-housing community development projects as eligible for Letters of Credit from FHLBank member institutions, making it easier for municipalities and their development authorities to secure a tax-exempt bond to fund these projects. The FHLBanks previously had this authority from 2008 to 2010.
“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.
Liccardo cited her experience as a city mayor in supporting the legislation.
“As Mayor of San José, I saw firsthand how bonds help cities put more shovels in the ground on critical infrastructure. The MINT Act cuts red tape and gives local communities a green light on projects that expand hospitals, rebuild crumbling bridges, and improve our children’s schools. I look forward to working with colleagues in both houses and both parties to pass this bill, and help deliver the resources our cities need to thrive,” Liccardo said.
Strong Voice in Congress
Cortez Masto has been a strong voice in Congress, demanding that the FHLB System finance more homes and community development investments.
Last year, she secured $40 million in investments from the FHLBank of San Francisco to support the single-family bond program in Nevada, and in the past few years, she secured more than $15 million from the bank’s affordable housing fund created for Nevada.
She has also pushed to reform the FHLB system as a whole. In April, Cortez Masto introduced the Federal Home Loan Banks’ Mission Activities Act, which would ensure the FHLBanks are refocused on their mission to support housing finance and community development.
Donovan touted the impact that FHLBanks can have in helping communities.
“Permanently restoring the authority for FHLBanks to provide letters of credit supporting non-housing tax-exempt bonds will expand access to dependable, competitively priced credit enhancement for small and mid-sized issuers – particularly those that may not have ready access to large national providers. During the period when this authority was previously available, FHLBank letters of credit supported nearly $4 billion in community investments that had a tangible impact across the country, many of them smaller projects that otherwise faced limited financing options,” Donovan said.
He also said the MINT Act strengthens the bank’s commitment to aid financial institutions.
“Committed to empowering local communities, the FHLBanks provide reliable, collateralized liquidity through local financial institutions in support of housing and community development. The MINT Act strengthens that commitment – and the mission of the FHLBanks – by improving market access for municipalities, promoting private capital participation in infrastructure finance, and helping reduce borrowing costs for projects such as educational facilities, healthcare facilities, water systems, and other essential community assets,” he said.
