Ann M. Murphy, Retired Partner

Publications & Media

Stimulus Bond Programs At A Glance: Build America Bonds, Tax Credit Bonds and Others Compared

Public Finance Update Elizabeth S. Blutstein, Julianna Ebert, Brian G. Lanser, Ann M. Murphy, Jeff Peelen, Jennifer V. Powers, Michael L. Roshar, Rebecca A. Speckhard, Bridgette DeToro, Allison M. Buchanan

We previously sent you a Public Finance Update providing information about the public finance provisions of the American Recovery and Reinvestment Act of 2009 ("ARRA"). The Treasury recently released interim guidance for some of the bond programs created or expanded under ARRA. We provided you with links to the Treasury releases. Based on the Treasury's interim guidance and the legislation itself, we have created and attached a matrix regarding the bond programs found in ARRA. We have also included a column comparing the ARRA programs to traditional tax-exempt bonds. You will be able to see the similarities and differences between the ARRA bond programs and traditional tax-exempt bonds. As more guidance is released by the Treasury, we will update the matrix as necessary.

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With all bond programs discussed in the matrix, whether tax credit, taxable or tax-exempt, keep in mind that in addition to federal tax requirements, issuers must comply with all applicable state laws, including but not limited to, constitutional and statutory debt limits, maximum maturity limits and any referendum or other approval requirements for the particular type of obligation being issued.


If you are considering issuing Qualified School Construction Bonds ("QSCBs"), Qualified Zone Academy Bonds ("QZABs"), New Clean Renewable Energy Bonds ("New CREBs") or Qualified Energy Conservation Bonds ("QECBs"), please keep in mind the reimbursement rules for these tax credit bond programs.  Expenditures can only be reimbursed if the issuer adopts an initial resolution, reimbursement resolution or declaration of intent (the "Reimbursement Resolution") after the Secretary of the Treasury has made an allocation and before the expenditure is paid. For QSCBs and QZABs, the Secretary of the Treasury made allocations on April 3, 2009. For QECBs, the Secretary of the Treasury made allocations on April 6, 2009. For New CREBs, allocations will be made after the application deadline of August 4, 2009. Even if you previously adopted a Reimbursement Resolution with respect to a financing that you are now anticipating doing with one of the above mentioned tax credit bond programs, you must re-adopt a Reimbursement Resolution after April 3, 2009 with respect to QSCBs and QZABs and after April 6, 2009 with respect to QECBs before you can be reimbursed for any preliminary expenditures. The Reimbursement Resolution must declare the issuer's intent to be reimbursed with qualified tax credit bonds. No reimbursement can be made later than 18 months after the original expenditure is paid, and, notably, the "preliminary expenditure" exception does not apply. Please contact one of the public finance attorneys at Quarles & Brady LLP if you would like assistance in preparing an appropriate Reimbursement Resolution.


Please also keep in mind that for QSCBs and QZABs, < ?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Wisconsin issuers need to obtain an allocation from the Wisconsin Department of Public Instruction. For New CREBs, all issuers must obtain an allocation from the Secretary of the Treasury by filing an application before August 4, 2009. For QECBs, each municipality or county with a population over 100,000 will be allocated a portion of the State's allocation in proportion to its population. For Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds, allocations will be made to states based on the 2008 employment decline, and states will then allocate to counties and large municipalities (municipalities with a population of more than 100,000) based on the county's or large municipality's 2008 employment decline.


ARRA provides for tax credit bonds as well as taxable bonds. Traditionally, states and local governments have issued tax-exempt obligations. For information regarding the marketability of the ARRA bonds, please contact your financial advisor.

If you have any questions regarding any of the ARRA bond programs or traditional tax-exempt bonds, please contact any of the Quarles & Brady Public Finance attorneys.

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