English: Law aids public projects

U.S. Rep Phil English visited Hermitage on Thursday.

STAFF REPORT

HERMITAGE, Pa. — A new law that he helped orchestrate will make it easier to fund public projects, says U.S. Rep. Phil English, R-3rd.

President Bush signed the legislation into law in late July as part of the Housing and Economic Recovery Act.

English talked about what he says is good news for communities and the community banks who lend money for public projects to municipalities, hospitals and nursing homes, among other “public mission organizations.”

He spoke Thursday to a crowd gathered at First National Bank’s headquarters on Hermitage Road.

The law, HR 2091, allows municipal bonds backed by Federal Home Loan Bank letters of credit to be tax exempt, English explained.

The Internal Revenue Service had classified FHLBank letters of credit as a federal guarantee, so they weren’t eligible for tax-exempt status, he said.

The FHL bank partners with “practically every financial institution in Pennsylvania,” said Dana Yealy, general counsel for FHLBank Pittsburgh.

English said that under the law, community banks that are affiliated with the FHLBank system will determine the credit worthiness of a tax-exempt bond issue in need of support.

“They will put their own letter of credit on the bond. In turn, the FHL Bank will extend its own guarantee to the bond issue using its strong credit rating,” English said.

“Financing for the project can then occur at a lower interest rate or under more flexible terms — a major victory for municipalities that want to jump-start a variety of infrastructure projects,” English said.

“The banking environment over the last 12 to 15 months has been very, very difficult,” said Raymond T. Slovesko, senior vice president of First National Bank.

“Now, community banks have good news,” he said. “If there was ever a need for good news, it is now.”