1. Proposed Readoption of Qualified Zone Academy Bond Program Regulations N.J.A.C. 6A:25 July 9, 2014

2. Background  This chapter implements the Federal Qualified Zone Academy Bond program for New Jersey  Federal program established under the 1997 Tax Payer Relief Act  QZABs are bonds sold to support rehabilitation projects at schools that serve low-income families  Bondholders receive a tax credit (in lieu of interest payments)  Funds may not be used to construct new schools 2

3. History  Since the program’s inception, Congress has authorized an annual allocation of $400 million, except for 2008-2010 when the American Recovery and Reinvestment Act boosted this amount to $1.4 billion  The program is subject to reauthorization and has not yet been authorized beyond 2013 (2013 allocation may be issued up to December 31, 2015)  New Jersey has been allocated roughly $7.5 million annually (except roughly $25 million annually 2008-2010)  1998-2001 (federal fiscal year) $30 million (approx.) funded health and safety projects in SDA districts funded out of the original $8.6 billion bond authorization in EFCFA 3

4. History (cont.)  2002 Charter school law amended to allow charter schools to receive federal funds for construction projects  2007 Chapter 25 readopted with amendments allowing for the participation of charter schools  2009-2013 (federal fiscal year) $72 million (approx) of bond allocation assigned to charter schools 4

5. Chapter 25 Readoption with Amendments  Department is bringing to the State Board for consideration, the readoption of Chapter 25 (Qualified Zone Academy Bond Program) with minor amendments, in order to continue this Federal program Propose to define “issuer” to clarify that charter schools do not sell bonds, another entity is fiscally responsible for the sale and the repayment of principal on QZABs Propose to clarify the difference between RODs and charter schools to account for the fact that the Department, by law, cannot review charter school facilities projects and charter schools do not have long range facilities plans 5