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• <br />E <br />CJ <br />Ah <br />ullllll�Il league of minnesota cities <br />l� <br />D ,, <br />Jul y 8, 1981 <br />TO: Mayors, Managers and Clerks <br />FROM: Donald A..Slater, Executive Director <br />RE: 1. "ALL SAVER CERTIFICATES" THREATEN MUNICIPAL BOND MARKET <br />2. CONGRESS MAY ACT TO RESTRICT OR PROHIBIT INDUSTRIAL REVENUE BONDS <br />P ding Federal Legisl <br />1. All Savers Certificates <br />Congress may soon pass new legislation which would effectively increase municipal bond in <br />fr <br />1<erest rates. Congress may authorize savings and loan institutions (and maybe even cpm- <br />mercial banks) to issue All Savers Certificates ". These certificates would pay tax - ee <br />interest at 70% of the latest one -year treasury bill rate. They would be federally insured, <br />and thereby more secure than municipal bonds. <br />about 10% - nearly the same as in- <br />The current interest rate_ on these certificates would be <br />terest rates on long -term municipal bonds and more than three percentage points better than <br />average rates cities.pay for short -term notes. <br />rs would Lar a numbers ofindividual The SecuritiestAssociation hasmestimatedlt at and <br />ard <br />Savers <br />1 1 short -term borrowing costs could be increased by as much as 40 %. Long -term borrowing <br />costs would also increase. <br />2. Industrial Revenue Bonds <br />The House Ways and Means Committee will soon vote on whether to accept or reject an amendment <br />to Pres. Reagan's tax bill de- <br />l which would abolish all small issue IDB (also known as Indus (de- <br />Revenue Bonds) ) financing after 1983. All IDB projects except manufacturing facilities <br />until 1983. wly), hospitalsoandCnursinsionalssource ,hMinnes to has "pockets <br />under the proposed criteria. <br />An alternative amendment is offered by Rep. Richard Gephardt of Missouri. <br />expected to be offer It <br />ou d allow small is IDB entertain ent , wouldacontinue re to IDBis <br />(after public hearings and special public purpose findings) as they see fit. . <br />Other alternatives may be considered which restrict IDIsswhich v U be Wbu S uch a5 the areas <br />built. <br />where IDB projects can be built or the types of P OVER <br />300 hanover building. 4BO cedar street, saint Paul. Minnesota 5510 C6123 222 -2BE31 <br />D3- /!C <br />