January 30, 2007 Mailing to District Administrators - QZAB Program

Date: January 30, 2007

To: School District Administrators

From: David Carlson, Director
School Financial Services Team

Re: Qualified Zone Academy Bond Program
        Revised Letter

The federal Qualified Zone Academy Bond (QZAB) program provides tax credits to financial institutions holding school district bonds issued to finance eligible projects. QZAB proceeds may be used to rehabilitate or repair school facilities, obtain equipment, develop curricula, and/or train teachers and other school personnel. QZAB proceeds may not be used on new construction. The federal government covers all of the interest on these bonds, resulting in savings of up to 50 percent of the cost of these renovation/improvement projects. The interest payment is actually a tax credit, in lieu of cash, provided to the financial institution that holds the bonds. Through QZABs, school districts with low-income populations can save on interest costs associated with financing school renovations.

Wisconsin has been allocated $5,676,000 in QZAB issuance authority for each of the calendar years 2006 and 2007. Both years will be aggregated for a total allocation of $11,352,000 and will be allocated to qualifying school districts by April 28, 2007 by our department.

To qualify, there must be a reasonable expectation that at least 35 percent of the school’s students or program participants will be eligible for free or reduced-cost lunches under the National School Lunch Act when the bonds are issued. The school district also must obtain commitments from private entities, such as local businesses or community organizations, for "qualified contributions," (equipment, technical assistance, or volunteer services) with a present value of not less than 10 percent of the proceeds of the bond issue. Please refer to U.S. Department of Education at http://www.ed.gov/programs/qualifiedzone/index.html for detailed information concerning the program.

If your district has an interest in the QZAB program, please provide us with a letter of interest by April 14, 2007. Your letter should identify the project, acknowledge that the 35 percent free and reduced-cost lunch requirement will be met, identify QZAB funding expectations, and explain how the private participation requirement will be achieved. We encourage you to work with local businesses and community organizations to create proposals that will qualify. Again, new construction is not an eligible QZAB use. The department will give priority consideration to eligible school districts that have not previously participated in the QZAB program.

The department’s role is to provide QZAB bond issuance authorizations to districts based on assurance that they meet federal criteria for the QZAB program. It is the requesting district’s responsibility to determine that it meets QZAB participation requirements as well as state statutory requirements for debt issuance.

If you have questions regarding the program, please contact Natalie Rew, School Financial Services, at (608) 267-9212 or natalie.rew@dpi.wi.gov. We look forward to working with you to ensure that Wisconsin schools continue to benefit from this federal program.

dgd

For questions about this information, contact dpifin@dpi.wi.gov (608) 267-9114

Last updated on 10/7/2008 9:25:50 AM