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Qualified Energy Conservation Bonds (QECB) are qualified tax credit bonds that were originally authorized by the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (Pub. L.110-343) with a national limitation of $800 million. The American Recovery and Reinvestment Tax Act of 2009 (the “Act”), which was signed into law in 2009, increased the amount of QECBs that may be issued from $800 million to $3.2 billion. This expansion is intended to enable states to issue QECBs to finance, among other purposes, retrofits of existing public and private buildings through loans, grants or other repayment mechanisms to individual homeowners or businesses. Other repayment mechanisms can include periodic fees assessed on a government bill or utility bill that approximates the energy savings of energy efficiency or conservation retrofits. Retrofits can include heating, cooling, lighting, water-saving, storm water-reducing, or other efficiency measures. For additional information on QECBs, click here.
The Act provides that the term “qualified tax credit bond” means, in part, a qualified energy conservation bond that is part of an issue that meets the requirements of §54A(d)(2), (3), (4), (5), and (6) regarding expenditures of bond proceeds, information reporting, arbitrage, maturity limitations, and prohibitions against financial conflicts of interest. As a tax credit bond, holders of QECBs receive payments in the form of tax credits from the federal government. The tax credits permit an issuer of QECB to potentially borrow for “qualified conservation purposes” at rates of interest which may be significantly lower than rates of interest on taxable debt or even tax-exempt bonds. The credit rate is 70% of the credit rate that would allow the QECB to sell at par.
- Arizona received an allocation of $67,436,000 of volume cap.
- At least 70% of the total allocation to the state must be used for governmental bonds. No more than 30% can be used for Private Activity bond purposes.
- Allocation of volume cap is made to large local governments (100,000+ population) and all the tribal governments in Arizona.
- 100% of the available project proceeds of such issue are to be used for one or more qualified conservation purposes.
QECB ALLOCATIONS & APPLICATION MATERIALS
Based on federal guidance, ACA has allocated the QECBs to cities, town and tribal governments. Download the QECB Allocation Matrix for details.
A jurisdiction that received an allocation may waive any or all of their portion of the QECB allocation, by completing the Waiver of QECB Allocation form. Otherwise, the jurisdiction is responsible for issuing its portion of the QECBs.
Parties interested in applying for QECB volume cap, should download the Program Guidelines for additional information.
Questions regarding QECBs can be directed to the Program Manager