Green Bank of Kentucky Program
Qualified Energy Conservation Bond Summary
Background
QECB were first created in 2008 under P.L. 110-343 that established a national limit of $800 million that has been expanded by an additional $2.4 billion under P.L. 111-5 for a total available authority of $3.2 billion.
Allocations
QECB are allocated like Private Activity Volume Cap to states by formula based upon the state’s share of the total U.S. population as of 2008. It is expected that the Kentucky Private Activity Bond Allocation Committee will make such allocations at its June meeting.
Large local governments greater than 100,000 receive their proportionate share of the state allocation based upon the municipality or county governments share of the state population as of July 2007. Local governments may reallocate their proportionate share back to the state if desired.
Kentucky’s QECB allocation is $44,291,000
Kentucky’s 2008 population is 4,269,245
Louisville Metro’s 2007 population is 557,789
Lexington Fayette Urban County 2007 population is 279,044
The state portion is approximately $35.6 million
Louisville Metro share is approximately $5.8 million
Lexington Metro allocation is approximately $2.9 million
Eligible Capital Expenditures (private use limitations apply):
Reducing energy consumption in publicly owned buildings by at least 20%
Implementing green community programs
Rural development involving production of electricity from renewable resources or other defined qualified facility
Expenditures related to research facilities, and research grants, to support:
o Development of cellulosic ethanol
o Capture and sequestration of carbon dioxide from fossil fuels
o Increase existing non-fossil fuel technology
o Automobile battery technology
o Technology to reduce energy consumption in buildings
Mass Commuting facilities
Demonstration projects promoting commercialization of non-fossil fuel technology above
Public campaigns to reduce energy consumption
Tax Credit Bonds
QECB are tax credit bonds. Tax credit bonds provide the purchaser of the bond a quarterly tax credit against their federal tax liability. The amount of the credit and the final maturity date of the bonds’ are determined by formula calculated daily by the U.S. Treasury and published on the treasury direct web site. As of May 27, 2009 the tax credit rate for all classes of tax credit bonds was 7.77% with a maximum maturity of 15 years. QECB bonds and certain other classes of energy bonds are only allowed 70% of the total tax credit or in this case 5.439%. The remainder, 2.33%, is paid as current interest by the borrower. This is different than 100% school tax credit bonds where an investor may require a purchase price discount to compensate for more modest discrepancies in required net returns.