With the approval last month of putting a $9.2 million bond issue on the April ballot, the Rolla School District is finding that sometimes a deal is too good to be true.
After discussing what was advertised as an interest-free Qualified School Construction Bonds, available through the Stimulus Act, since the summer, the district recently learned a small amount of interest will likely need to be paid.
“When the program was developed in February, the message to the general marketplace was the federal government was willing to pay bond investors a tax-credit,” said Gregory Bricker. Bricker, the executive vice president of George K. Baum & Co., is working with the district on its recently approved bond issue.
QSCBs originally were advertised as zero-interest bonds. How they work is, when bonds are sold investors are given tax-credits at a rate set by the federal government. The tax-credit rate is how investors make a profit, and it changes daily. Districts are only responsible for paying the bond’s principal.
For next year, Missouri has $140 million in QSCBs to distribute among districts that apply. To be eligible, schools must pass a bond issue before applying for the QSCBs.
