Bills Would Make QZAB Program Permanent

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WASHINGTON — Rep. Charlie Rangel, D-N.Y. and Sen. Sherrod Brown, D-Ohio, have introduced identical bills that would make permanent and enhance the Qualified Zone Academy Bond program.

The legislation, the Rebuilding America's Schools Act, is designed to increase federal aid for school construction and renovation, according to a news release from Rangel's office.

"Funding infrastructure for schools is critical to ensuring students' safety and helping them achieve their goals in the classroom," Brown said. "Enhancing the Qualified Zone Academy Bonds program will help our nation make the necessary investments to rebuild and renovate our schools and ensure that all students - regardless of their zip code - have access to up-to-date facilities as part of their education."

Rangel said "that with state budgets still tight, it is as important as ever for us to work at the federal level to support state and local construction and renovation of elementary and secondary schools."

QZABs are tax-credit bonds that can be issued to finance renovations, equipment, teacher training, and course materials at certain public schools or academic programs. The schools and programs have to meet certain requirements, including that they are located in empowerment zones or enterprise communities, or that they are expected to have at least 35% of their students eligible for free or reduced-cost lunches.

The QZAB program was created in 1997 and is one of the tax provisions that expired at the end of last year known as "tax extenders." Congress has not yet authorized a national volume cap for QZABs for 2015, though states can carry over unused volume for up to two years.

The Rebuilding America's Schools Act would make several changes to the QZAB program.

The bills would make the program permanent and provide a national volume cap of $1.4 billion a year for each year starting with 2015. The national limitation was that amount for each of 2009 and 2010, but in each year from 2011 to 2014, the cap was $400 million.

Rangel and Brown's legislation would also allow QZABs to be issued as direct-pay bonds. A direct-pay option for QZABs was created in 2010 by the Hiring Incentives to Restore Employment Act, but subsequent bills said that QZABs issued with national limitations for 2011 and later cannot be issued as direct-pay bonds.

Under the Rebuilding America's Schools Act, QZABs could be used to finance school construction in addition to renovations.

The bills also would make the private contribution requirement easier to meet. Currently, issuers have to certify that private entities will contribute property or services to the school with a value of at least 10% of the QZAB proceeds, but the bill would lower that amount to 5%.

The bills in the House is H.R. 3046 and has been referred to the House Ways and Means Committee. The bills in the Senate is S. 1753 and has been referred to the Senate Finance Committee. Rangel and Brown are on the committees where their respective bills have been referred.

Rangel previously introduced bills on QZABs in 2013 and 2011. Brown was a co-sponsor of a bill on QZABs that was introduced in 2013 by now-retired Sen. Jay Rockefeller, D-W.Va.

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