Citing the savings for local municipal tax payers paying for capital improvements with bank qualified bonds, Congressmen Tom Reed (R-NY) and Richard E. Neal (D-MA) have formally introduced the Municipal Bond Market Support Act of 2012.
The act will amend the Internal Revenue Code and save taxpayer dollars by expanding the use of local bank qualified bonds for capital projects. Under the bill, local municipal governments and school districts will see their annual ability to utilize bank qualified bonds increase from $10 million to $30 million. The interest rate on bank qualified bonds can be as much as a half percentage point lower than traditional financing, meaning that taxpayers can save hundreds of thousands of dollars on a single bond issuance by using these bonds.
"This legislation is good public policy--it provides a means for school districts and local governments to make vital improvements in a more cost-effective manner," Reed said. "Bank qualified bonds save tax dollars. Using local bonds also keeps the control, financing and benefits of capital improvements right in the local economy."
Reed noted that the Salamanca City School District used bank qualified bonds to successfully make facility improvements including installation of a geothermal heating system which has significantly lowered the district's energy costs. Bank qualified bonds ultimately saved taxpayers more than $100,000 on the financing of this project. "It was a win-win for the district and taxpayers," Reed observed.
"I'm pleased to join Congressman Tom Reed on this important bipartisan legislation which will strengthen bank-qualified municipal bonds. These bonds are crucial because they provide small municipalities with access to lower cost borrowing, which allows them to provide services and invest in schools, roads and other projects. For example, the City of Chicopee recently issued a $3.7 million bank qualified bond, the proceeds of which were used to remodel the local schools and update water infrastructure. I am hopeful that my colleagues on both sides of the aisle will support initiative which saves taxpayers millions of dollars," said Congressman Richard E. Neal.
"I thank my colleague Mr. Neal for joining me to present this bill on a bi-partisan basis," Reed commented. "I am optimistic that we can move forward winning support on both sides of the aisle for this common sense solution."