EddieTech, a private nonprofit organization based here, is working to put together the first national pooled offering of direct-pay qualified school construction and qualified zone academy bonds for districts across the country.
The group, formally known as the National Education Technology Funding Corp., was authorized by Congress in 1996 to help schools invest in technology and is currently marketing its services to districts, hoping to offer a $250 million transaction in the fall, according to executive director Brett Mandel.
If it is successful in putting together a pooled bond transaction and if demand for such deals remain adequate, EddieTech plans to go to market once every quarter with another pooled offering.
The group began marketing its services to schools this month.
It is currently targeting districts in states that have intercept provisions because they would simplify and “homogenize” the initial transaction, Mandel said.
Intercept provisions permit states to step in and make bond payments when school districts miss them.
EddieTech is offering its services to school districts in California, Texas, and Ohio, among other states that have intercept provisions in their regulations, he said.
The group was authorized under the Telecommunications Act of 1996 and its board of directors includes members of the National Education Association, the National School Boards Association, and the American Association of School Administrators.
As Congress created QZABs and QSCBs, EddieTech began focusing on trying to put together pooled deals in an effort to help smaller districts that have trouble accessing the market and might be paying higher interest rates.
The group points to wide discrepancies in pricing among similarly rated offerings as evidence that a pool will help districts ensure they are getting ideal rates.
“These days money is tight, savings are prized, and school districts are seeing that this could save them money,” Mandel said. “They understand that 20, 30, 50 basis points of savings on a deal like this could add up to millions of dollars. … We’re going to get the best possible rate on any given day.”
The group originally planned to make its initial foray into the market this spring by putting together a pooled transaction for QZABs and QSCBs as tax-credit bonds.
But those plans were delayed after Congress modified the two bond programs as part of the Hiring Incentives to Restore Employment Act that was enacted in March.
That bill allowed issuers of the two school bond programs to receive direct payments from the federal government equal to the lesser of the actual interest rate of the bonds or the tax-credit rate for muni tax-credit bonds, which the Treasury Department sets daily.
“We were delayed a bit while Congress played around with the bonds,” Mandel said. “The marketplace was in limbo.”
The American Recovery and Reinvestment Act created the QSCB program and authorized $22 billion of bond authority for the program, and also authorized an additional $2.8 billion of authority for QZABs, which have been around since 1998.
