State school-construction funds go to Lexington middle-school project
Gov. Timothy M. Kaine today announced the allocation of $71.6 million in Qualified School Construction Bonds for eight projects in seven Virginia localities. The no-interest bonds, established by the American Recovery and Reinvestment Act, are available to localities for K-12 school construction, renovation, and land acquisition for schools. Today’s announcement is the first allocation from approximately $191 million authorized for Virginia through the QSCB program in 2009.
One of the projects on the list is the Lylburn Downing Middle School project in Lexington. That project will get a $7.5 million bond under the stimulus plan.
“When I urged citizens earlier this year to provide their ideas for use of the ARRA funds, they overwhelmingly pointed to education and infrastructure and I am pleased that the ARRA has emphasized these areas as well,” said Kaine. “Some of these projects have waited over a year for financing and I’m glad they will move forward with funding from the Recovery Act. I am certain that this funding will ease some of the need in these communities by creating jobs and improving learning environments for our children.”
Allocation of the QSCB funds was made at the discretion of Gov. Kaine and he has issued Executive Order 90 outlining his allocation decision for this initial issuance of bonds. Later this fall, the Governor will announce the use of the remainder of the $191 million for 2009. Virginia expects to receive an additional $191 million from the QSCB program in 2010.
In June, after reviewing potential project ideas submitted to the Stimulus.Virginia.Gov website and consulting with the General Assembly, Governor Kaine decided to use the first bond allocations to address projects on the Literary Fund’s First Priority Waiting List. Thirty-two projects are on the First Priority Waiting list, however, some were not eligible because they were nearing construction completion or did not meet federal requirements.
The bonds, which are expected to be sold in October, will not affect the state’s debt capacity. These bonds are considered attractive financing mechanisms for localities because investors receive a tax credit in lieu of interest payments, meaning the issuer of the bonds repays only the principal—effectively making them a no-interest loan. For example, if $7.5 million was borrowed for 15 years, the locality would pay back $500,000 a year to the Virginia Public School Authority instead of $526,000 that would be required if a Literary Fund loan had been received.