Update: The most recent version of the tax bill that came out of committee late Friday preserves subsidies for private activity bonds.

The tax cut bill being pushed through Congress threatens to abolish a crucial economic development tool for Montana communities. The Montana Commerce Department estimates that $270 million in projects are at risk in 2018 alone.

Those five local health care and affordable housing projects won’t have financing they were banking on — unless pending legislation is changed. Both the Senate and House bills would curtail the ability of private, nonprofit hospital, elder care and affordable housing organizations to finance capital projects with tax-exempt bonds. Loss of this option would mean that some projects aren’t financially feasible. Those that are done will cost more because of higher interest expense.

Consider how Montana nonprofits are using these Private Activity Bonds, as reported by the Montana Department of Commerce. Thirty outstanding bond issues totaling $950 million include bonds issued by Rimrock (addiction treatment), St. John’s Lutheran Ministries (elder care), Billings Clinic and the Sisters of Charity, who operate St. Vincent Healthcare, along with Holy Rosary Healthcare in Miles City and St. James Healthcare in Butte. Community hospitals in Dillon, Glendive, Great Falls, Hamilton, Helena, Kalispell, Ronan, Shelby, Wolf Point and Poplar have financed projects with these tax-exempt bonds. The private, nonprofit organization repays the entire debt, but the payments are lower because the bond buyers accepted a lower interest rate in exchange for the tax exemption on their interest income.

The local community benefits from construction, new and expanded services and ongoing jobs supported by these bond projects. The patients and residents benefit directly because the tax exempt bonds reduce the hospital’s cost of doing business.

“The ramifications extend beyond bricks and mortar,” Dick Brown, president of the Montana Hospital Association told The Gazette. “Hospitals and nursing homes rely on tax-exempt financing to invest in the health of our state and create good-paying jobs. Projects range from making quality and safety improvements to purchasing the technology or equipment that is needed to provide Montanans more options when it comes to accessing care in their local communities.”

The House bill would eliminate the tax-exemption for private-activity bonds, including for qualified 501(c)(3) hospitals and nursing facilities. Both the House and Senate bills would end the tax exemption for “advance refunding” of outstanding tax-exempt bonds. Refunding allows the hospital or other organization to take advantage of a drop in interest rates to refinance debt at a lower rate.

Since 1996, the Montana Board of Housing has used private activity bonds in collaboration with local developers to finance construction of 1,504 low-income housing units in 20 projects statewide. The Board of Housing is rushing to complete financing on housing projects in Butte, Billings and Great Falls before the end of the month, according to a Commerce Department spokeswoman. Those projects probably won’t happen without private activity bonds to finance a portion of their costs.

No wonder affordable housing developers, the Montana Board of Housing and Montana bankers joined the Montana Facility Financing Authority in a Dec. 10 Gazette guest opinion telling our congressional delegation: “Don’t take away our ability to make smart investments for Montana’s future.”

Let us amplify that call to Sen. Steve Daines who voted for the Senate bill and Rep. Greg Gianforte who voted for the House bill. (Sen. Jon Tester voted against the Senate bill.) Insist that private activity bonds and the bond refunding remain as they are in present law in the final tax bill that will be up for votes this week.