IRS Tax-Exempt Bond Office Guidance
The IRS Tax-Exempt Bond office has issued guidance on the effect of the sequester on direct pay bonds. Payments made to issuers on or after March 1, 2013, through and including September 30, 2013, will be reduced 8.7 percent, unless Congressional action changes the reduction percentage. Issuers should complete Form 8038-CP as directed in the instructions. The form and the instructions continue to be the versions that were revised as of January 2012. Issuers will receive correspondence concerning the reduction after they have filed the form.
Note: Qualified School Construction Bond allocations are not grants; they are simply an authorization to seek out and utilize an interest-free bond from an entity desiring a tax credit in lieu of interest. Before submitting an application for a Qualified School Construction Bond authorization, it is advised that the Local Educational Agency meet with bond counsel to determine the appropriate use of funds.
2010 Qualified School Construction Bond Program Update
The California Department of Education received 130 QSCB applications by certified mail dated November 5 and three applications by certified mail after November 5. The total allocation available is $866,405,568 and the total estimated value of the November 5 applications is $2.2 billion, therefore the program is oversubscribed and the Department will be utilizing the priority ranking system prescribed in Assembly Bill 2560 for awarding allocations. First priority is the date of postmark, the second priority is Division of State Architect approval of the project(s) listed in the application, and the third priority is the greater percentage of district enrollment that qualifies for free and reduced priced meals. The Department is in the process of reviewing all applications and anticipates awarding allocations by the end of the year or in the first weeks of 2011.
Office of Management and Budget Report Pursuant to the Sequestration Transparency Act of 2012 (P.L. 112-155)
(See page 346) The California Department of Education was recently provided this information from the United States Office of Management and Budget regarding sequestration. Districts should consult with their Bond Counsel regarding the consequences of sequestration.