Federal Home Loan Bank of Atlanta Provides Credit Support for Tax-Exempt Municipal Bonds To Stimulate Community Economic Development
FHLBank Letters of Credit Behind $47 Million of Municipal Financings; Lowers Cost of Borrowing
|Contact: Sharon Cook
Federal Home Loan Bank of Atlanta
ATLANTA, May 21, 2009 - Federal Home Loan Bank of Atlanta (the Bank) today announced that it recently utilized new authority approved by Congress to provide letters of credit for non-housing-related tax-exempt bond transactions, stimulating community economic development and lowering the cost of borrowing for public finance projects.
The Housing and Economic Recovery Act of 2008 (HERA) was approved last year and it authorizes the Bank to provide credit support for tax-exempt bonds issued between July 30, 2008 and December 31, 2010. Traditionally, the Bank provided letters of credit for housing-related financing, but HERA now permits the Bank to support a wider range of public projects, including economic development, public utility, and healthcare facilities.
FHLBank Atlanta’s triple-A credit rating allows local governmental entities to borrow at lower costs while helping to maintain the flow of low-cost financing within a tighter credit market. In a typical transaction, FHLBank Atlanta member institutions work directly with bond issuers, and use the Bank as a provider of credit enhancement for the transaction.
Most recently FHLBank Atlanta provided letters of credit for the Magnolia Regional Health Care Center Refunding Project in Corinth, Miss., and the King Edward Hotel Project in Jackson, Miss.
Magnolia Regional Health Center is a tax-exempt, 164-bed governmental community hospital owned jointly by the City of Corinth and Alcorn County. The Bank is providing a $35,335,617 letter of credit to confirm the letter of credit issued by Regions Bank as support for the $35,000,000 Mississippi Development Bank Special Obligation Refunding Bonds (Magnolia Regional Health Center Refunding Project), Series 2009 issued for the hospital’s revitalization.
The Bank also is providing an $12,344,325 letter of credit to confirm the letter of credit issued by Capital One, N.A. to allow the King Edward Revitalization Company, LLC to secure $11,940,000 Mississippi Business Finance Corporation Gulf Opportunity Zone Variable Rate Demand Revenue Bonds (King Edward Hotel Project), Series 2009 for the acquisition and restoration of the King Edward Hotel for its future use as a 186-room Hilton Garden Inn.
“By lowering the cost of tax-exempt bond transactions, the Bank extends the abilities of our members to support economic development activities in their communities,” said Richard A. Dorfman, the Bank’s President and Chief Executive Officer. “The HERA authority providing enhanced credit support for these transactions allows FHLBank Atlanta to make a difference in the lives of individuals our members serve and it creates opportunities for members to attract business to their communities.”
About the Federal Home Loan Bank of Atlanta
FHLBank Atlanta offers competitively-priced financing, community development grants, and other banking services to help more than 1,200 member financial institutions make affordable home mortgages and provide economic development credit to neighborhoods and communities. The Bank’s members—its shareholders and customers—are commercial banks, credit unions, savings institutions, thrift and loans, and insurance companies headquartered in Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. FHLBank Atlanta is one of 12 district banks in the Federal Home Loan Bank System which since 1990 has contributed more than $3 billion to the Affordable Housing Program.
-- END --