Qualified Zone Academy Bond Program

School districts and charter schools can use Qualified Zone Academy Bonds (QZABs) to save money on bonds issued to finance school rehabilitation or repair projects. The QZAB program is a federal program that provides bond holders with tax credits that are approximately equal to the interest that states and communities would ordinarily pay the holders of taxable bonds.

The program does not grant funding. No monetary payments or awards are issued from the state to the school district or charter school. This program allows the state to grant program authorization to a limited number of qualifying school districts and charter schools. This authorization allows those school districts and charter schools to issue QZABs that benefit qualifying projects.

A QZAB is any bond issued after December 31,1997, and before January 1, 2018, by a state or local government as a qualified zone academy bond and 100% of the available project proceeds are used to improve certain eligible public schools (for QZABs issued before October 4, 2008, 95% or more of the proceeds are used to improve certain eligible public schools).

Applications are not being accepted at this time. Previously for a school district or charter school to gain QZAB program authorization, it must have submitted a program application that satisfied all requirements of the application process. A school district or charter school must have filed an application and received authorization before it could issue its QZAB debt. Additional requirements would then have to be met after receipt of an authorization to comply with federal tax law regarding this authorization. For more information on those possible additional requirements, consult a bond counsel. 

Sequestration affected the subsidy received for interest payments from March 1, 2013, through September 30, 2013, for the school districts and charter schools that held Direct Pay Subsidy Bonds. Payments were reduced by 8.7 percent under Section 6431 of the Internal Revenue Code (which allows the issuer of certain qualified bonds to receive the interest payments directly for Build America Bonds, Qualified School Construction Bonds, Qualified Zone Academy Bonds, New Clean Renewable Energy Bonds, and Qualified Energy Conservation Bonds).

Law

• Qualified Tax Credit Bonds - Section 54A
• Qualified Zone Academy Bonds - Section 54E
• Qualified Zone Academy Bonds Guidance - IRS Notice 2009-30
• Qualified Zone Academy Bond Allocations for 2010 - IRS Notice 2010-22
• Qualified Zone Academy Bond Allocations for 2011 - IRS Bulletin 2011-6 
• Qualified Zone Academy Bond Allocations for 2012 and 2013 - IRS Bulletin 2013-3

QZAB Documents

• QZAB Program Application Process and Requirements (Word Version, 26 KB) (Required Reading)
• QZAB Program Application (Word Version, 115 KB) (PDF Version, 76 KB)