The Buffalo and Rochester school districts “have taken actions” to transfer their allocations of qualified school construction bonds to New York before they expired, state Division of Budget spokesman Matthew Anderson said last week in an e-mail.
“At this time there is no plan to use these allocations,” he said.
The two schools were among 100 large districts in the country that received allocations separate from state allocations made by the Treasury Department last year. Buffalo received a $34.4 million allocation and Rochester received $29.5 million.
Congress created the QSCB program as part of the American Recovery and Reinvestment Act. Its intent was to allow issuers to sell bonds and pay only principal while giving investors a federal tax credit instead of interest payments.
But the program has not caught on like other ARRA bond programs. In 2009, only $2.8 billion of the bonds were sold nationally, according to Thomson Reuters, far less than the $11 billion allocated to states and municipalities across the country. While states can roll their 2009 allocations of QSCBs into 2010, municipalities cannot.
The Dormitory Authority of the State of New York issued $59 million of the tax-credit bonds last year as a pooled financing using the state’s $192 million allocation for 2009. Gov. David Paterson’s fiscal 2011 executive budget proposal called for the state to issue the remainder of its 2009 allocation in fiscal 2011.
The status of New York City’s allocation, $699 million in 2009 — the second-largest single allocation in the nation, behind California’s — remains unclear.
Anderson referred questions about the city’s allocation to officials who declined to comment. Budget director Mark Page last week said the city is looking to Congress to enact legislation that would change the QSCB program to allow a direct subsidy to issuers — similar to the popular Build America Bond program — instead of a tax credit to investors.