About the Qualified Zone Academy Bond Program
In 1999, the General Assembly authorized the Authority to issue Qualified Zone Academy Bonds (“QZAB”) pursuant to program requirements approved by the Congress of the United States in Section 226 of the Taxpayer’s Relief Act of 1997. These bonds are a part of a federal government program in which a federal income tax credit is given to investors in lieu of interest payments on the bonds. The Authority was authorized to issue QZABs pursuant to the Tennessee State School Bond Authority Act, Title 49, Chapter 3, Part 12. Tennessee Code Annotated, as amended.
The QZAB program provides loans to local education agencies to fund the renovation of classroom buildings and to purchase equipment to enhance learning opportunities in connection with the establishment of special academic programs from kindergarten through secondary school. Funding for this program is limited to the amount allocated by the federal government.
Under the QZAB program, loans with local governments are direct general obligations of the local government for payment of principal and interest to which the local government has pledged its full faith and credit. As additional security for the loans, there is also pledged the borrower’s unobligated portions of State taxes that are by statute to be shared with the local governments.