The Municipal Investment and Neighborhood Transformation Act modifies tax law to clarify that state and local bonds backed by letters of credit from Federal Home Loan Banks should retain their tax-exempt status, even with that bank backing. Currently, certain bonds lose their tax-exempt status if they are considered "federally guaranteed," but this bill removes language limiting that designation to bonds issued between 2010 and 2010, effectively restoring tax-exempt treatment for bonds with Federal Home Loan Bank guarantees going forward. The legislation also updates safety standards for these guarantees to be set by the Federal Housing Finance Agency rather than a fixed standard. The changes apply to any guarantees issued after the bill becomes law and are intended to make it easier and more affordable for municipalities to invest in neighborhood improvements by lowering borrowing costs through tax-exempt financing.
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