Q: What schools qualify?

A: School districts that reasonably expect at least 35% of their student body will qualify for the free and reduced lunch program can qualify for QZAB financing. Also, individual schools can qualify – even if their district does not. Contact us today to see if you're eligible. There may be some exceptions that allow you to qualify.

Q: How can the funds be used?

A: In general, most renovation and rehabilitation projects qualify. In addition, most equipment purchases (including computers) will also qualify. QZABs can NOT be used for new building construction.

Q: What do schools have to do to participate?

A: Schools must establish a partnership with the private sector. The partnership must create a program to enhance the curriculum, increase graduation, improve employment opportunities, and better prepare students for the workplace or college. Schools must have “substantial business support.”

Q: What is “substantial business support?”

A: The law requires that the schools must have written commitments (matching funds) of not less than 10% of the proposed project from their private sector partner.

Q: What are the basic conditions associated with a QZAB? 

A:

• All state and local laws applicable to bonds also apply to QZABs
• The local school board must approve
• The issuer must have a certified public/private partnership and a qualified 10% or greater contribution
• The length of the bond cannot exceed, as estimated by the secretary of the Treasury, a present value of 50% of the principal amount borrowed (12-16 yrs)
• A state or local government within the school’s jurisdiction must issue the bonds
• At least 95% of the bond’s proceeds must be used for qualified purposes within 5 years of issuance, of which 10% must be used within the first 6 months.
• A qualified lender as defined by the law must purchase bonds
  

Q: Who is a qualified lender and how are they compensated?

A: Qualified lenders can be insurance companies, some banks or other corporations actively engaged in lending practices (each qualifying entity is determined by the Internal Revenue Code governing each). The lender receives a tax credit in lieu of interest payment by the school. The IRS determines the amount of this tax credit. The tax credit changes daily.

There are only a handful of firms that have the expertise to handle QZABs. To date, the only national firm with this expertise is McLiney and Company.