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ADE Commissioner's Communication Memo Form


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Memo Number : FIN-07-056

Date Created : 04/06/2007

Attention:

Superintendents
Co-op Directors

Type of Memo: Informational
Response Required: No
   
Section:   Fiscal and Administrative Services - William J. Goff, Assistant Commissioner
Subject:
Qualified Zone Academy Bond Allocation for 2006-2007

Regulatory Authority:
Ark. Code Ann. §§ 6-11-105, 6-20-1201, 6-20-1202, and ADE Rules and Regulations Governing the Allocation of QZABs

Contact Person:
Cindy Hedrick

Phone Number:
501-682-4258

E-mail:
cindy.hedrick@arkansas.gov

In December of 2006, Congress adopted the President’s proposal to extend the Qualified Zone Academy Bond (QZAB) authority through 2007 as part of the Tax Relief and Health Care Act of 2006 (Public Law 109-432). This legislation continues the QZAB program at its prior annual bond allocation level of $400 million a year nationally, but includes new restrictions for issuers. Under the new law, issuers must reasonably expect to spend 95% of QZAB proceeds within five years of the sale of bonds and must expect, within six months, to enter into a binding commitment with a third party to spend at least 10% of the proceeds. Issuers must also comply with arbitrage rebate and information reporting requirements and redeem the unspent portion of QZABs within 90 days if the proceeds have not been spent within the five-year period.

The Arkansas QZAB allocation for calendar years 2006 and 2007 is $3.921 million per year. In accordance with the Arkansas Department of Education Rules and Regulations Governing the Allocation of Qualified Zone Academy Bonds (QZAB Rules) 7.04, the total allocation of $7,842,000 is available in the August 2007 allocation cycle. Applications for this allocation cycle will be accepted from today through the deadline of July 16, 2007. The approval of these applications will be considered at the Arkansas State Board of Education meeting on August 13, 2007. If the full amount of $7,842,000 is not allocated at the August 13, 2007, State Board meeting, the remaining allocation will be available for approval at the December 2007 State Board meeting.

The Treasury and Internal Revenue Service may issue guidance this spring, in the form of regulations, on the new and existing QZAB provisions. There have been no changes made to the November 2000 QZAB Rules. The Additional Information section of the QZAB application has been revised as a result of the federal law changes. The revised QZAB application is attached. The application and QZAB Rules are posted to the Arkansas Department of Education website: http://www.arkansased.org/.

Direct requests for information and questions to Cindy Hedrick at 501/682-4258. A fiscal agent or bond attorney may be able to provide additional information regarding the new federal regulations.

Attachments:

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