This morning, the Federal Reserve announced the creation of a new liquidity facility to ensure that municipal governments can maintain cash flows and continue to operate.  Under the new Municipal Liquidity Facility, the Federal Reserve will lend up to $500 billion to a special purpose vehicle that will purchase eligible notes directly from eligible issuers.  “Eligible notes” includes tax anticipation notes, tax and revenue anticipation notes, bond anticipation notes, and other short-term notes with maturities less than 2 years.  “Eligible issuers” include US states, Washington DC, cities with a population over 1 million, and counties/parishes with a population over 2 million.  Political subdivisions must each designate one eligible issuer.  Issuers can borrow up to 20% of 2017 revenues and the proceeds may be used for most cash flow management purposes as a result of reduced revenue or increased expenses due to COVID-19.  Importantly, eligible issuers may also use proceeds to assist other entities that are not directly eligible for the facility.  The facility will expire September 30, 2020, unless extended.