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QUALIFIED SCHOOL CONSTRUCTION BONDS (QSCB) North Carolina Guidelines The following define and describe the QSCB program and its implications for public schools in North Carolina. 1. The Qualified School Construction Bonds program was established as a part of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) (ARRA) effective February 17, 2009. 2. Bond proceeds must be used for construction (including new construction), rehabilitation, or repair of a public school; or for land acquisition for such a facility. a. Eligible equipment expenditures: equipment to be used in the portion of the public school facility to be constructed, rehabilitated, or repaired with QSCB funds. This may include wiring and other infrastructure improvements related to providing technology and equipment for the new construction and rehabilitation or repair of existing structures, but not for personal computers or similar technology. b. The land purchase and building project on such land must be with the same bond proceeds and be completed within 3 years of bond issuance (not land for a future project). c. QSCB funds may not be used for stadiums or other facilities primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public; or stand alone facilities whose purpose is not the education of children, including the central office. d. Up to 2% of the bond proceeds may be used for QSCB issue administrative costs. 3. The QSCB program offers tax credits, at a level set by the Treasury Department that is intended to allow the issuance of bonds without interest, to holders of the bonds. QSCB holders (these include banks, insurance companies, and corporations actively involved in the business of lending money, as well as private and individual businesses) receive a federal income tax credit in an amount equal to a percentage of the face value of the bond. 4. The maximum term of indebtedness, about 12 years under current market conditions which are subject to change, is set by the U.S. Treasury so that the local government's obligation to repay in present value terms will be 50 percent of the borrowed amount. 5. The U.S. Treasury Department has allocated for 2009 the authority to issue QSCBs in North Carolina in the face value amount of $275,772,000. a. See Appendix B at the end for the proposed allocations for each LEA's amount. b. Allocations to the five largest LEA's (Mecklenburg, Cumberland, Forsyth, Guilford QSCB Guidelines Page 1 of 3 Attachment number 3 Page 148 of 315 F-7