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TEA Correspondence

A Microsoft Word version of this letter is available for download and PRINTING.

May 17, 2010

Subject: 2010 Qualified School Construction Bond Program Allocation Availability


With the passage of the American Recovery and Reinvestment Act of 2009, Congress authorized the creation of the Qualified School Construction Bond (QSCB) program. The program allows school districts and charter schools to obtain interest-free or very-low-interest financing for qualified construction projects. The program provides an incentive in the form of federal tax credits to lenders who purchase bonds from issuing school districts and charter schools. A recent modification to federal law (found in Public Law No. 111-147) allows a refundable tax credit to issuers of specified tax credit bonds. For school districts participating in this program, a “bond” may be in the form of a bond, lease purchase, time warrant, or maintenance tax note. For charter schools participating, a “bond” may only be in the form of a revenue bond.

The 2010 Texas QSCB program application cycle is now open. Applications will be accepted until 5:00 p.m. (CDT), June 30, 2010. You may access the application and other program information from the QSCB website at the following address:

The 2010 Texas allocation for the QSCB program consists of a $547.674 million general allocation to the state and a direct allocation of approximately $467 million to 18 school districts selected by the U.S. Department of Education. Of the state’s general allocation, $100 million is reserved exclusively for charter schools, and an additional amount, still to be determined, will be reserved exclusively for use by some of the large school districts that were not able to fully use their 2009 direct allocations. If the allocations reserved for charter schools and the allocations reserved for the large school districts are not fully committed by the application deadline of June 30, 2010, the reservations will lapse, and the uncommitted allocations will return to the state’s overall allocation balance.

QSCB proceeds are to be used as a funding source for:

  •  construction of a public school facility;
  • the acquisition of land on which such a facility is to be constructed with part of the proceeds of such issue;
  • rehabilitation of a public school facility; or
  • repair of a public school facility.

The maximum bond authorization that may be requested per school district or charter school per allocation year is based on the greater of:

  1. $5,000,000; or
  2. {$5,000,000 + [$500 x (2009­­­­–2010 PEIMS student enrollment – 400)]} (Results from this calculation are to be rounded up to the nearest thousand.)

The maximum bond authorization that may be requested per school district or charter school per allocation year will be increased by an additional 5 percent (rounded up to the nearest thousand) if the school district or charter school commits to designing and constructing its projects so that they receive certification under a high-performance building standard such as:

  •  the Leadership in Energy and Environmental Design (LEED) Green Building Rating System;
  • the Texas Collaborative for High Performance Schools (TX-CHPS) criteria;
  • the Green Building Initiative's Green Globes criteria; or
  • an equivalent standard adopted by the municipality or county in which the projects are located.

There are restrictions applicable to the QSCB program and other tax credit programs under the Food, Conservation, and Energy Act of 2008 (P.L. 110-246). Issuers must spend 100 percent of the QSCB proceeds within three years of the sale of the bonds and must expect to enter into a binding commitment with a third party to spend at least 10 percent of the proceeds within six months. Issuers must also comply with arbitrage rebate and information reporting requirements and with the requirements of the Davis-Bacon Act.

We encourage you to review the information on this bond program that is available on our website and to consult with appropriate legal and financial professionals to determine whether your district would be interested in participating in this program.

If you have any questions, please contact either Gary B. Marek at (512) 463-9190 or Sam Lester at (512) 475-2029 in the State Funding Division.


Twanna Buford
Facilities and Transportation Manager

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