School Construction Bonds
The stimulus legislation includes tax-related provisions designed to promote the use of several kinds of bonds for public projects. Two of them are targeted specifically for school construction.
Qualified School Construction Bonds: Under this program, up to $11 billion worth of tax-credit bonds can be issued in each of 2009 and 2010 to support the construction, rehabilitation, and repair or land acquisition for a school facility or for equipment for a new facility.
Click here to review the Internal Revenue Service’s interim guidelines for this program. This document also provides the allocation of bonding authority for each state and, more specifically, for the 100 school districts with the most low-income students.
Qualified Zone Academy Bonds: The stimulus act also provides additional bonding authority for an existing program of tax-credit bonds called Qualified Zone Academy Bonds. Under this program, 85 percent of the proceeds from the bonds must be used for rehabilitation and repair of school buildings and equipment, including state-of-the-art technology equipment and vocational equipment. This program, however, cannot be used to support new school construction.
Under the rules, the private sector must provide a match of 10 percent of the project cost. However, the rules specify that “any contribution of a type and quality acceptable to a school district” can qualify for that match, including corporate employees’ time as mentors or technical assistance to help teachers make use of technology.
A school can qualify for this bonding option if 35 percent or more of its students qualify for the federal school lunch program, or it is located in a federally designated empowerment zone or enterprise community.
Click here to review the IRS’s interim guidance for this program, as well as its allocations of bonding authority for each state for the next two years.
Click here for a tool you can use to determine if your school is in an Empowerment Zone or Enterprise Community.
The stimulus act also includes other kinds of bonds that state and local governments can use to finance capital projects, including those designed to promote energy conservation in public buildings, including schools. More details can be found in the state and local section of the Dell funding site.