Qualified Energy Conservation Bonds (QECBs)
Qualified Energy Conservation Bonds 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, please visit: http://www.irs.gov/pub/irs-drop/n-09-29.pdf
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 bond. No more than 30% can be used 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
The Governor of Arizona issued Executive Order 2009-12, giving the ACA authority to administer the QECB program on behalf of the State.
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.
At this time the ACA does not have any QECB volume cap available. Note: this amount may change if any jurisdiction releases any portion of their allocation to ACA. If volume cap becomes available ACA will issue QECB allocation to eligible projects through a competitive process on a first-come, first-served basis. For additional allocation information and application materials download the Program Guidelines.
Questions regarding QECBs can be directed to the Program Manager