Qualified School Construction Bonds and Qualified Zone Academy Bonds
are Now Interest Free

On March 17, 2010, Congress passed the "Jobs on Main Street" bill which includes provisions permitting issuers of Qualified School Construction Bonds (QSCBs) and Qualified Zone Academy Bonds (QZABs) to receive Build America Bond-type direct payments instead of providing investors with tax credits.  This means that a school corporation will receive payments from the federal government equal to 100 percent of the interest payments, effectively allowing a school corporation to fund a project interest free. 

In 2009, Ice Miller worked extensively with school corporations issuing QSCBs.  We are anticipating that this new legislation will not only make the projects more affordable to school corporations, but that there will be more buyers in the market, thus making QSCB transactions an effective and efficient way to finance energy savings projects and other renovation and construction projects for which school corporations may no longer be able to afford to pay out of the capital projects fund.

Watch for a memo from the Indiana Department of Education with more details regarding the application process for the QSCB allocation.

 Download the QZAB application and memorandum from the Indiana Department of Education.

If you have further questions on these legislative changes or on the procedures for financing projects, please call Jane Herndon, Todd Ponder, Kristin McClellan or Erik Long.

* Chart represents law firms serving as bond counsel for QSCBs issued by public school corporations in Indiana.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.