Bancroft-Rosalie School received an allocation of $330,000 in Qualified School Construction Bonds (QSCB). The plan is to use the money to build a two classroom addition to the north end of the existing secondary school building. Using modular construction will reduce the cost of the project by roughly 50%. The new addition will be for a K-12 music room and a social studies classroom. The exsting music room would be renovated into two elementary classrooms.
QSCB's (also known as Q-Scabs) are authorized by the federal government through the American Recovery and Reinvestment Act (ARRA) of 2009. The bonds provide federal tax credits for bond holders in lieu of interest in order to significantly reduce an issuer’s cost of borrowing for public school construction projects. The bond's will be provided at nearly 0% interest.
What are the uses and restrictions?
* Use of Proceeds. 100% of available project proceeds must be used for the construction, rehabilitation, or repair of a public school facility, or for the acquisition of land on which such a facility is to be constructed with part of the proceeds of such issue.
* Tax Credit. Credit to investor of 100% of Tax Credit Rate.
* Maturity Limit. Maximum maturity and Tax Credit Rate are set by the IRS as of the date that there is a binding, written contract for the sale of the bonds (as of May 2009, the maximum maturity was set at 15 years).
* Arbitrage Rules. The entity issuing the bonds must enter into contract to spend at least 10% of the proceed within six months of issuance, and must spend 100% of proceeds within 3 years or redeem the bonds.
* Projects funded with the bonds must comply with all ARRA provisions including the Davis-Bacon Fair Labor Act governing federal prevailing wage requirements, whistle-blower protection.
