American Recovery and Reinvestment Act (ARRA) School Bond Opportunities

The American Recovery and Reinvestment Act has made available new and expanded bond opportunities for school districts to include Qualified School Construction Bonds (QSCBs), Qualified Zone Academy Bonds (QZABs) and Qualified Energy Conservation Bonds (QECBs). These programs can provide interest free bonds to schools for construction, rehabilitation, repair, energy saving renovations, teacher training and land acquisition.

Qualified Zone Academy Bonds
A QZAB is a taxable interest free bond issued by a school district. The proceeds of a QZAB may be used to rehabilitate or repair certain eligible public schools. A QZAB, however, may not be used to acquire or construct new public schools. The school district must have received a commitment from a private business to contribute to the public school certain equipment, property, services or cash with a value equal to at least 10% of the principal amount of the QZAB. Further, the eligible public school must be located either in an empowerment zone or an enterprise community, or have reasonable expectation that at least 35% of the students attending such school will be eligible for free or reduced cost lunches. Federal law provides a limitation on the amount of QZABs that may be issued for each calendar year by each state. In Washington, OSPI allocates the amount of QZABs to eligible school districts.

• Qualified Zone Academy Bond Application (Word)
• OSPI Bulletin 006-11 - Qualified Zone Academy Bonds—2011 Authorization
• IRS Notice 2011-19 (Guidance for QZABs)
• Child Nutrition Free and Reduced Lunch
• Empowerment Zone Information
• U.S. Department of Education QZAB

Qualified School Construction Bonds
A QSCB is a taxable interest free bond issued by a school district. Like a QZAB, the proceeds of a QSCB may be used to rehabilitate or repair certain eligible public schools. However, unlike a QZAB, a QSCB may be used to construct new public schools and acquire land on which those new public schools will be constructed. Further, unlike a QZAB, there are no requirements to receive private contributions or that the public school be located either in an empowerment zone or an enterprise community, or have reasonable expectation that at least 35% of the students attending the public school will be eligible for free or reduced cost lunches. Federal law provides a limitation on the amount of QSCBs that may be issued for each calendar year by each state. In Washington, OSPI allocates the amount of QSCBs to eligible school districts.

• 2010 Qualified School Construction Bond Allocations (announced January 2011)
• Qualified School Construction Bond Issuances by School Districts
• IRS Notice 2009-35 (Guidance for QSCBs) (PDF)
• IRS Notice 2010-17 (Qualified School Construction Bond Allocations for 2010) (PDF)
• IRS Notice 2010-35 (Guidance on the Direct Payment Subsidy Option) (PDF)
• OSPI Bulletin 079-10 - 2010 Qualified School Construction Bond Allocation  - American Recovery and Reinvestment Tax Act of 2009 (Word)

Qualified Energy Conservation Bonds
The American Recovery and Reinvestment Act of 2009 expanded the funding for the Qualified Energy Conservation Bond program. Washington State Department of Commerce will be allocating authority for approximately $68 million of bonds through this program. Energy conservation capital projects and public education campaigns are eligible to be financed with this type of bond. Visit Washington State Department of Commerce for more information.