[Congressional Record Volume 143, Number 28 (Thursday, March 6, 1997)]
[Extensions of Remarks]
[Page E397]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


         LEGISLATIVE TO INCREASE THE PRIVATE ACTIVITY BOND CAP

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                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                        Thursday, March 6, 1997

  Mrs. KENNELLY of Connecticut. Mr. Speaker, today, Mr. Houghton of New 
York and I will introduce legislation to increase the private activity 
bond cap.
  The current gap is the greater of $50 per capita or $150 million. It 
applies to issuers of tax-exempt bonds for affordable single and 
multifamily housing, manufacturing facilities, environmental, energy, 
and utility projects, redevelopment of blighted areas, and student 
loans. The Tax Reform Act of 1986 created the cap and forced States to 
allocate the authority among eligible activities.
  While cap growth is limited to annual population growth, the cap has 
not been adjusted for inflation since 1986. Therefore, those States 
with declining populations have been doubly disadvantaged. This means 
private activity bonds have lost a huge amount of their buying power.
  Demand for the private activity bond authority exceeds supply in most 
States. One example is the overwhelming demand for mortgage revenue 
bonds [MRBs], issued primarily by State housing finance agencies 
[HFA's] to finance modestly priced first-time homes for low- and 
moderate-income families. In 1995, State housing financial agencies 
issued $8 billion in MRB's for more than 103,000 mortgages, according 
to the National Council of State Housing Agencies [NCSHA].
  But home ownership remains out of reach for thousands more families 
whom HFA's could serve with more private activity bond authority. State 
HFA's could have used a additional $1.8 billion in 1995 cap authority, 
according to HCSHA. Other private activity bond issuers face equally 
high unmet demand.
  The current cap is strangling the ability of States and localities to 
make much-needed investment in their citizens and communities. Please 
join us in supporting a long overdue increase of the cap.

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