March 13, 2008

Urge Your U.S. Rep. and Senators to Support Legislation for Tax-Exempt  Bond Guarantees

Action:
Please urge your U.S. Representative to cosponsor H.R. 2091 and Sens. Durbin and Obama to cosponsor S. 1963. This legislation will provide hospitals and other tax-exempt organizations with a new way to guarantee their tax-exempt bonds. To send a letter directly from IHA’s web site click here.

Background:
Current financial problems in the bond insurance market due to the subprime mortgage crisis are causing interest rates on some hospitals’ debt sold through auction to soar. These hospitals are seeing interest on their tax-exempt bonds double or triple, even though their financial status or credit worthiness is unchanged.

Legislation currently is in Congress that will help provide some relief for this situation. The House bill, H.R. 2091, introduced by Reps. Sander Levin (D-MI) and Phil English (R-PA), and Senate bill, S. 1963, introduced by Sens. John Rockefeller (D-WV) and Mike Crapo (R-ID), would give hospitals and other tax-exempt organizations another way to guarantee tax-exempt bonds without jeopardizing the bonds’ tax-exempt status.

Currently, banks can issue letters of credit promising to pay off bonds issued by a hospital should the hospital be unable to do so. But the IRS Code restricts banks participating in the Federal Home Loan Bank system from doing so for tax-exempt bonds. This legislation would include those banks in the list of Federal organizations exempt from this restriction and allow them to issue letters of credit.

In the House, 41 members of the House Financial Services Committee, including Illinois Representatives Don Manzullo, Melissa Bean, Peter Roskam and Luis Gutierrez, recently sent a letter (click here to view) to the Ways & Means Chairman and Ranking member in support of H.R. 2091 and urging action as soon as possible. We urge you to thank these members for their support.

Attempts will be made to attach this provision to legislation later this spring. However, to do so will require broad support in both the House and Senate.

Please ask your Representative to cosponsor H.R. 2091 and Senators Durbin and Obama to cosponsor S. 1963.