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Qualified School Construction Bonds (QSCB)


The Iowa Department of Education has distributed $130,674,000 in Qualified School Construction Bonds (QSCBs) authority through the American Recovery and Reinvestment Act (ARRA) of 2009. The state of Iowa was issued $64,252,000 for 2009 and $66,422,000 for 2010 in QSCB bonding allocations. ARRA created this new tax credit program to provide no interest financing for the renovation, repair and construction of school buildings, the purchase of land on which school buildings will be built and the purchase of equipment to be used in the portion or portions of the public school facility that is being constructed, rehabilitated, or repaired. This program is similar to the Qualified Zone Academy Bond Program except that this program is designed for new construction as well as renovation. QSCBs are less restrictive in their uses than QZABs. For a QSCB that is issued by a state or local government where a public school is located, 100 percent of available project proceeds must be used for the construction, rehabilitation, or repair of the public school facility. In addition, a portion of the proceeds of such a bond may be used for the acquisition of land on which a public school facility is to be constructed.

This program provides credits, in lieu of interest to lenders who issue bonds to eligible school districts. Because the federal government provides for the "interest" payment, the school district is only responsible for repayment of the bond principal. The federal government covers all of the interest in the form of tax credits on these bonds, resulting in potential savings up to 50 percent of the cost of renovation and improvement projects. School districts may use the Voter Approved School Physical Plant and Equipment Levy (VPPEL) and/or the Local Option/Statewide Sales and Services Tax for School Infrastructure to repay the principal.

Section 1601 of ARRA of 2009 requires that projects that are funded with the proceeds of QSCB must comply with the Davis-Bacon Act (Subchapter IV of Chapter 31 of the Title 40 of the United States Code).


U.S. Department of Education QSCB webpage

Internal Revenue Service QSCB Allocations

Printed from the Iowa Department of Education website on June 27, 2022 at 2:53am.