WASHINGTON — The Internal Revenue Service has announced how many qualified zone academy bonds can be issued in each state, the District of Columbia and U.S. territories for 2014.
The announcement was made in Notice 2015-11, issued Tuesday in the wake of legislation enacted by Congress late last year that, among other things, extended the $400 million total issuance amount for QZABs retroactively for all of 2014. Unused allocations of QZABs can be carried forward for two years.
The highest allocation is $50.069 million for California, followed by $35.854 million for Texas, $25.858 million for Florida, $24.276 million for New York, and $14.637 million for Georgia.
Puerto Rico ranks 11th with an allocation of $12.872 million.
The smallest allocation is $183,000 for the U.S. Virgin Islands, preceded by $211,000 for the Northern Mariana Islands, $247,000 for American Samoa and $287,000 for Guam.
Among the states, Wyoming has the lowest allocation, at $491,000.
QZABs are traditional taxable, tax credit bonds for which institutional or individual bondholders receive tax credits. They must be issued by state or local to finance the rehabilitation or repair of public school or program facilities, equipment purchases, course material development and teacher training in a "qualified zone academy."
The public school or program must be established and run by an eligible local education agency and must meet certain requirements. It must provide education and training below the college level. It must also be located in an empowerment zone or enterprise community or where there is a reasonable expectation that at least 35% of students will be eligible for free or reduced-cost lunches.
The IRS requires that a QZAB issuer, within six months of issuance, contract with a private entity in writing to spend an amount equal to at least 10% of the bond proceeds. The rest of the proceeds must be spent within three years.
QZABs have been available to local school districts since January 1998. In recent years, Congress has provided authority for roughly $400 million of QZABs to be issued each year. However, during 2008, 2009, and 2010, the American Recovery and Reinvestment Act increased these amounts of $1.4 billion. The 2011 allocation was returned to the $400 million level.
