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Qualified Energy Conservation Bonds

Nebraska Allocation  $18,502,000

Qualified Energy Conservation Bonds (QECBs) were authorized by Congress in the 2008 Energy Improvement and Extension Act. The original legislation authorized just $800 million of QECBs nationwide.

In 2009, Congress increased to $3.2 billion the funding for states, territories, large local governments, and tribal governments to issue QECBs to finance renewable energy and energy efficiency projects. The total allocation was divided among the state and territorial issuers according to population.

As described above, the U.S. Congress allocated QECB volume to the states and indicated that the states “shall” suballocate a portion of these allocations to large local governments and municipalities (population of 100,000 or more).  These counties, municipalities or tribes may issue bonds up to the amount of their respective suballocations or waive their suballocations and return them to the states.

Qualified Projects

QECBs may only be issued for qualified conservation purposes as defined in section 54D of the U.S. Internal Revenue Code. “Qualified conservation purposes” include capital expenditures:

  1. To reduce energy consumption in publicly owned buildings by at least 20%.
  2. To implement green community programs (including the use of grants, loans, or other repayment mechanisms to implement such programs).
  3. For rural development (including the production of renewable energy).
  4. For certain renewable energy facilities (such as wind, solar, and biomass).
  5. For certain mass commuting projects.

Overview of Qualified Energy Conservation Bonds

More resources on Qualified Energy Conservation Bonds

Letter from Governor Heineman appointing the Nebraska Energy Office as the allocating agency, July 16, 2012

Status of Nebraska’s Allocation, February 24, 2014

Davis-Bacon Labor Standards

Pursuant to the American Recovery and Reinvestment Act, Division B, section 1601, Davis-Bacon labor standards must be applied to projects financed with the proceeds of any Qualified Energy Conservation Bond (as defined in section 54D of the Internal Revenue Code of 1986) issued after February 17, 2009.

The Department of Labor, Wage and Hour Division has issued guidance in All Agency Memorandum No. 208 concerning applicability of Davis-Bacon labor standards to construction financed with the proceeds of these tax-favored bonds under ARRA Division B, section 1601.

The Davis-Bacon contract clauses stated in 29 CFR 5.5(a)(1) through (10) must be incorporated into covered contracts for construction, alternation, or repair work. Additional information regarding the application of Davis-Bacon labor standards is available at the U.S. Department of Labor Wage and Hour Division website at www.dol.gov/whd/recovery/ .

For more information about utilizing Qualified Energy Conservation Bonds in Nebraska, contact Jack Osterman at john.osterman@nebraska.gov or 402.471.2817. 

Sequestration Cuts and Qualified Energy Conservation Bonds

The Internal Revenue Service has recently released clarification regarding the sequestration cuts on Qualified Energy Conservation Bonds. According to Internal Revenue Service, 7.2% sequestration reductions in payments will apply throughout fiscal year 2014 unless Congress acts otherwise. Internal Revenue Service Update: Effect of Sequestration on Certain State & Local Government Filers of Form 8038-CP notes:

“...refund payments processed on or after October 1, 2013 and on or before September 30, 2014 will be reduced by the fiscal year 2014 sequestration rate of 7.2 percent, irrespective of when the amounts claimed by an issuer on any Form 8038-CP was filed with the IRS. The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change”. See http://www.irs.gov/Tax-Exempt-Bonds/Update-Effect-of-Sequestration-on-Certain-State-&-Local-Government-Filers-of-Form-8038-CP.
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