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TSSBA Bond Programs

The Higher Education Facilities Program was created to finance a variety of projects for the higher education institutions including dormitories, athletic facilities, parking facilities and major equipment purchases.

In May 1967, the General Higher Educational Facilities Bond Resolution was adopted and bonds were issued to provide funds to make loans to the institutions of higher education. In April 1998, the Authority adopted the Higher Educational Facilities Second Program General Bond Resolution (“1998 Resolution”) with the same purpose and closed the 1967 Resolution. All higher education bonds are now issued pursuant to the 1998 Resolution.

The Authority entered into a Revolving Credit Agreement (“RCA”) with U.S. Bank, National Association and Wells Fargo Bank, National Association. The RCA will terminate at the close of business on March 18, 2021, unless terminated prior to such date in accordance with its terms. The loan proceeds are used to fund the construction phase of certain projects for higher education facilities. When a When a project is completed or near completion, long-term, fixed-rate debt may be issued to finance the project over its useful life repayment period and the proceeds from the issuance of debt are used to repay the RCA.

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.

In 2009, the General Assembly authorized the Authority to issue Qualified School Construction Bonds (“QSCB”) pursuant to program requirements approved by the Congress of the United States in Section 1521 of the American Recovery and Reinvestment Act of 2009. The QSCB program is a part of a federal government program designed to allow schools to borrow funds at minimal interest cost to the borrower. Under the 2009 program, bondholders receive a federal income tax credit along with a supplemental interest payment. Under the 2010 program, the federal government will subsidize the interest on the bonds. The bonds were issued under the provision of the Authority’s Qualified School Construction Bonds General Bond Resolution. The bonds are not supported by either the 1967 Resolution or the 1998 Resolution for Higher Education Facilities. The Authority was authorized to issue QSCBs pursuant to the Tennessee State School Bond Authority Act, Title 49, Chapter 3, Part 12. Tennessee Code Annotated, as amended.

The QSCB program provides loans to local governments to fund new construction, renovation and rehabilitation of schools, as well as the purchase of land and equipment for use in a qualified project. Funding for the QSCB program is limited to the amount allocated by the federal government.

Under the QSCB 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.