QZAB

Kenmore-Town of Tonawanda UFSD

Board of Education

June 11, 2013

QualifiedZoneAcademyBonds

What Is a QZAB?

A Federal program that offers very low (possibly no) interest rate bonds or obligations for financing qualifying capital projects in qualifying school districts

Federal allocations are given to individual states for distribution

The New York State allocation is coordinated by the Office of Facilities Planning

District QZAB Allocation

From the 2011 NYS Allocation: $ 2,000,000From the 2012 NYS Allocation: $13,763,244From the 2013 NYS Allocation: $24,219,000Total Current Allocation: $39,982,244

Anticipated 2014 NYS Allocation: $ 9,017,756Anticipated Total Allocation: $49,000,000

(The District will use this to finance the current $58.6 million multi-year project)

QZAB RequirementsSchool District must have a free and reduced

lunch percentage ≥35%School District must have a private entity willing

to contribute 10% of the QZAB amount to the District in cash or in-kind services

School District must use the funds on a capital project for renovations (not new construction)

A bank must be willing to issue the obligations and take tax credits from the Federal Government in lieu of normal interest payments

Partners In Our QZAB

School District

Department of the Treasury

Financing BankPrivate Entity Match Partner

QZAB Process: Match Partner

A+ Educators will be our match partnerWill provide resources and training for the

implementation of the Common CoreServices provided over 9 yearsDeeply discounted prices to the DistrictThe difference between what we pay and the

fair market value becomes the 10% match

QZAB Process: Financing Bank

Bank of America will be our financing bank for this portion of the QZAB

Will provide $36 million of the financing at this time

Receives tax credits from the Federal government in lieu of the majority of interest

The District pays back the principal and 0.5% supplemental interest over 15 years

District Savings for Current Allocation

Interest on a traditional bond: $10,139,781 ($39,982,244, 15 years, 3.05%)

QZAB Costs:

Interest at supplemental rate: $ 1,568,008

($39,982,244, 15 years, 0.50%)

Payments to match partner: $ 877,800

Total Cost: $ 2,445,808

Net Savings over 15 years: $ 7,963,973

Average Savings Per Year: $ 512,932

Requested BOE Action

Approve the QZAB plan: “Recommended Deliverables Proposal” from A+ Educators

Approve Professional Services Agreement with A+ Educators

Approve financing resolution from our bond attorney