Congress made a tantalizing offer to local governments this year, with no-interest loans for school construction and renovation.
But nearly a year after the school construction bonds were approved as part of the federal stimulus package, few school districts in the state or across the country have found companies willing to buy them.
That's left the promise of new schools, additions and land purchases - and the thousands of jobs that were supposed to be created by the construction work - largely unfulfilled.
"I'm disappointed," said Steve Taynton, section chief for school planning at the state Department of Public Instruction. "It could do a lot of good if we could get the money out there."
A new kind of school construction bond created in the stimulus package would allow lenders to claim tax credits rather than earn interest. The plan was that borrowers were supposed to pay only the principal.
But officials said it has been tough to find banks interested in tax credits that won't do them much good when they're suffering losses.
North Carolina has a $275 million allotment of the school construction bonds this year.
Five big school districts, including Wake and Charlotte-Mecklenburg, had allocations within that pool earmarked for them. Wake was allowed to issue $17.3 million in construction bonds and CMS nearly $26 million.
Some counties, including Durham, didn't ask for a chance to issue bonds. Among those counties that did, only seven have gotten their borrowing approved by the Local Government Commission in the state treasurer's office. None of those is in the Triangle.
U.S. Rep. Bob Etheridge, a longtime champion of having the federal government help with school construction, recently supported an attempt to get around the problem of offering tax credits banks don't want. Under the change, state or local governments could choose to receive a direct payment from the federal government equal to the value of the tax credit. The payment would lower the local governments' borrowing costs. The provision was included in a bill the U.S. House passed this month. It awaits action in the Senate.
According to Etheridge's office, only $1.7 billion of the $11 billion in school construction bonds available nationwide has been used.
"Companies aren't making enough to use the credits," said Etheridge, a Lillington Democrat.
The law allows allocations local governments don't use this year to be returned to the states for redistribution, along with another $11 billion available next year.
With the change, local governments should be able to borrow nearly $22 billion for school construction and renovations next year, Etheridge said.
"We need to get them out and moving," he said of the bonds.
Because counties were having so much trouble finding buyers, the state education department decided to give extensions to local governments who were trying to issue bonds. So if a county failed to sell bonds this year, it could essentially roll over its bonding authority to next year.
That's what Mecklenburg and Wake plan to do.
Wake has asked DPI for an extension and plans to get the authority to issue nearly $35 million in bonds under the program next year, said Johnna Rogers, the county's deputy manager.
"For us, it's more efficient to do one big bond sale," Rogers said.
