n-09-30.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Qualified Zone Academy Bond Allocations for 2008 and 2009

Notice 2009-30

SECTION 1. PURPOSE
This Notice sets forth the maximum face amount of Qualified Zone Academy
Bonds (“QZABs”) that may be issued for each State for each of the calendar years 2008
and 2009 under § 54E(c)(2) of the Internal Revenue Code. Under § 54A(e)(3), the term
State includes the District of Columbia and any possession of the United States. This
Notice also provides certain interim guidance for QZABs issued after October 3, 2008.
SECTION 2. BACKGROUND
.01 INTRODUCTION
Section 313 of the Tax Extenders and Alternative Minimum Tax Relief Act of
2008, Div. C of Pub. L. No. 110-343, 122 Stat. 3765 (2008) (“Act”) added new § 54E,
which provides revised program provisions for QZABs in lieu of the existing provisions
under §1397E, effective for obligations issued after October 3, 2008. The Act amended

2

n
ts of
purpose” for a QZAB means a purpose specified in
§ 54E(
2009. In
r
n
years 2009 and 2010.
. 2 QU
r
in
nts
lan
§ 54A(d)(1) to provide that the term qualified tax credit bond (“QTCB”) means, in part, a
qualified zone academy bond which is part of an issue that meets the requirements of
§§ 54A(d)(2), (3), (4), (5), and (6) regarding expenditures of bond proceeds, informatio
reporting, arbitrage, maturity limitations, and prohibitions against financial conflic
interest. The Act also amended § 54A(d)(2)(C) to provide that, for purposes of
§ 54A(d)(2), the term “qualified
a)(1), described below.
The Act added § 54E(c)(1) to provide a national zone academy bond limitation
authorization for QZABs of $400 million for each of calendar years 2008 and
addition, section 1522 of Title I of Division B of the American Recovery and
Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (2009) (“2009 Act”) furthe
amended § 54E(c)(1) to provide an increased national zone academy bond limitatio
authorization for QZABs of $1.4 billion for each of calendar
0ALIFIED ZONE ACADEMY BOND UNDER § 54E
Section 54E(d) defines “qualified zone academy” as any public school (or
academic program within a public school) which is established by and operated unde
the supervision of an eligible local education agency to provide education or training
below the postsecondary level provided: (A) the public school or program is designed
cooperation with business to enhance the academic curriculum, increase graduation
and employment rates and prepare students for college and the workforce; (B) stude
will be subject to the same academic standards and assessments as other students
educated by the eligible local education agency; (C) the comprehensive education p

3
t
es under the school lunch program established under the National School Lunch
Act.
eds

4E(b)
written approval of the eligible local
educat
hool
ten

is approved by the eligible local education agency; and (D)(i) such public school is
located in an empowerment zone or enterprise community including such designated
after October 3, 2008; or (ii) there is a reasonable expectation (as of the date of bond
issuance) that at least 35 percent of the students will be eligible for free or reduced cos
lunch
Section 54E(a) provides that a “qualified zone academy bond” or QZAB means
any bond issued as part of an issue if: (1) 100 percent of the available project proce
of such issue are to be used for a qualified purpose with respect to a qualified zone
academy established by an eligible local education agency; (2) the bond is issued by a
State or local government within the jurisdiction of which such academy is located, and
(3) the issuer: (A) designates such bond for purposes of this section; (B) certifies that it
has written assurances that the private business contribution requirement of § 5
will be met; and, (C) certifies that it has the
ion agency for such bond issuance.
Section 54E(d)(3) provides that a qualified purpose with respect to each
academy means: (A) rehabilitating or repairing the public school facility; (B) providing
equipment; (C) developing course materials; and, (D) training teachers and other sc
personnel. The private business contribution requirement of § 54E(b) is met if the
eligible local education agency that established the qualified zone academy has writ
commitments from private entities to make qualified contributions having a present
value (as of the date of issuance of the issue) of not of less than 10 percent of the

4
ncy) of:

ips,

ency as defined in § 9101 of the
Eleme
r respective
ocated by the State education agency to qualified zone
academ
ng
for
ar

proceeds of the issue. Section 54E(d)(4) defines “qualified contributions” as any
contribution (of a type and quality acceptable to the eligible local education age
(A) equipment for use in the qualified zone academy (including state-of-the-art
technology and vocational equipment); (B) technical assistance in developing
curriculum or in training teachers to promote appropriate market driven technology in
the classroom; (C) employees’ services as volunteer mentors; (D) internships, field tr
or other educational opportunities outside the academy; or (E) any other property or
service specified by the eligible education agency. Section 54E(d)(2) defines “eligible
local education agency” as any local educational ag
ntary and Secondary Education Act of 1965.
Section 54E(c)(2) provides that the Department of the Treasury shall allocate the
national zone academy bond limitation among the States on the basis of thei
populations of individuals below the poverty line (as defined by the Office of
Management and Budget). The limitation amount allocated to a State under the
preceding sentence shall be all
ies within such State.

Under § 54E(c)(3), the maximum aggregate face amount of bonds issued duri
any calendar year which may be designated as QZABs with respect to any qualified
zone academy shall not exceed the limitation amount allocated to such academy
such calendar year. However, under § 54E(c)(4)(A), if for any calendar year the
limitation amount for any State exceeds the amount of bonds issued during such ye
which are designated QZABs with respect to qualified zone academies within such

5
e
e
purposes, the limitation amount shall be treated as
used o

ted as though it were a carryforward that initially arose under § 54E

ions
under §§ 54A and 54E.
RIM GUIDANCE AND RELIANCE
.01 GE
to the
provisions of §§ 54A and 54E, the
sued under § 1397E.
.02. C
State, the limitation amount for such State for the following calendar year shall b
increased by the amount of such excess. Under § 54E(c)(4)(B), however, any
carryforward of a limitation amount may be carried only to the first 2 years following th
unused limitation year. For these
n a first-in first-out basis.
Section 54E(c)(4)(C) applies the rules under §§ 54E(c)(4)(A) and (B) to QZABs
issued after October 3, 2008, under a carryforward of an unused limitation to calendar
years 2008 or 2009 that initially arose in a prior year under § 1397E(e)(4). Any such
carryforward is trea
in that prior year.
Sections 1.1397-1 (the “Final Regulations”) and 1.1397-1T (the “Temporary
Regulations”) set forth regulations that were issued under § 1397E. Except as provided
in this Notice, or to the extent inconsistent with §§ 54A and 54E, the Final Regulat
and the Temporary Regulations apply to QZABs issued
SECTION 3. INTE
NERALLY
Pending the promulgation and effective date of future administrative or regulatory
guidance, taxpayers may rely on the interim guidance provided in this Notice and,
extent not inconsistent with this Notice and the
existing regulations is
REDIT RATE
For QZABs issued under §§ 54A and 54E, the maximum maturity and the credit

6
re
d
rate are determined as of the date that there is a binding, written contract for the sale or
exchange of the bond. The applicable maximum maturity and the QZAB credit rate a
published for that date by the Bureau of Public Debt on its Internet site for State an
Local Government Series securities at: http://www.treasurydirect.gov
. For further
information regarding the methodology and procedures that the Treasury Department
uses to determine these credit rates, see Notice 2009-15, 2009-6 I.R.B. 449 (February
.03 S

d to repay

discount rate determined under § 54A(d)(5)(B) (the
“permi
a

for State and Local
9, 2009).
INKING FUND YIELD
Section 54A(d)(4)(C) provides that an issue shall not be treated as failing to meet
the requirements of § 148 by reason of any fund which is expected to be use
the issue if: (i) the fund is funded at a rate not more rapid than equal annual
installments; (ii) the fund is funded in a manner reasonably expected to result in an
amount not greater than an amount necessary to repay the issue; and (iii) the yield on
such fund is not greater than the
tted sinking fund yield”).
The permitted sinking fund yield is determined under § 54A(d)(5)(B) by using
rate equal to 110 percent of the long-term adjusted, applicable federal rate (“AFR”),
compounded semiannually, for the month in which the bond is sold. The IRS publishes
the long-term adjusted AFR, compounded semiannually, each month in a revenue ruling
that is published in the Internal Revenue Bulletin. The Bureau of Public Debt publishes
the permitted sinking fund yield for each month on its Internet site
Government Series securities at https://www.treasurydirect.gov
.

7
SECTI
dar year 2008 is
$400 mill
Qu Bond Allocatio

State or Territory
ON 4. NATIONAL ZONE ACADEMY BOND LIMITATION FOR 2008
The national limitation for QZABs issued under § 54E for calen
ion. This amount is allocated among the States as follows:
alified Zone Academyns by State or Territory, 2008
QZAB Allocations (in dollars)

4
5,
2,
e
Columbia
2
a 1
1
ky
etts
1

i

Alabama7,606,000
Alaska 600,000
Arizona 8,817,000
Arkansas 4,924,000
California 4,364,000
Colorado 694,000
Connecticut 692,000
Delawar881,000
District of921,000
Florida 1,607,000
Georgi3,250,000
Hawaii 1,001,000
Idaho 1,781,000
Illinois4,972,000
Indiana 7,586,000
Iowa 3,182,000
Kansas 3,002,000
Kentuc7,145,000
Louisiana 7,756,000
Maine 1,541,000
Maryland 4,543,000
Massachus6,215,000
Michigan 3,781,000
Minnesota4,824,000
Mississipp5,824,000
Missouri 7,426,000
Montana1,321,000

8
1,
ire

25,
Carolina
ta
1
1
na
akota
ssee
37,

ia 2,
5,
g
lands
.S. Virgin Islands 363,000
0,000,000
SECTI
ndar year 2009 is
$1.4 billio
Nebraska 931,000
Nevada 2,702,000
New Hampsh901,000
New Jersey7,296,000
New Mexico 3,493,000
New York 720,000
North 12,600,000
North Dako741,000
Ohio 4,651,000
Oklahoma 5,574,000
Oregon 4,744,000
Pennsylvania 3,941,000
Rhode Island 1,221,000
South Caroli6,425,000
South D1,011,000
Tenne9,547,000
Texas 939,000
Utah 2,512,000
Vermont 610,000
Virginia 7,436,000
Washington7,256,000
West Virgin982,000
Wisconsin 885,000
Wyomin440,000
American Samoa 391,000
Guam 399,000
Northern Mariana Is389,000
Puerto Rico 17,644,000
U
Total Allocation 40

ON 5. NATIONAL ZONE ACADEMY BOND LIMITATION FOR 2009
The national limitation for QZABs issued under § 54E for cale
n. This amount is allocated among the States as follows:

9
Qualified Zone Academy Bond Allocations by State or Territory, 2009

State or Territory QZAB Allocation (in dollars)

a 2
1
1
t
ware
4

a
na 2
setts
i
2

ire
o
4
Dakota
a
4

Alabam6,621,000
Alaska 2,102,000
Arizona 30,859,000
Arkansas 17,233,000
California 55,275,000
Colorado 9,930,000
Connecticu9,422,000
Dela3,082,000
DC 3,222,000
Florida 75,623,000
Georgia6,376,000
Hawaii3,503,000
Idaho 6,235,000
Illinois 52,401,000
Indian26,551,000
Iowa 11,139,000
Kansas 10,508,000
Kentucky 25,009,000
Louisia7,146,000
Maine 5,394,000
Maryland 15,902,000
Massachu21,752,000
Michigan 48,232,000
Minnesota 16,883,000
Mississipp20,386,000
Missouri 5,990,000
Montana 4,624,000
Nebraska6,760,000
Nevada 9,457,000
New Hampsh3,152,000
New Jersey 25,535,000
New Mexic12,224,000
New York 90,020,000
North Carolina4,099,000
North 2,592,000
Ohio 51,280,000
Oklahom19,510,000
Oregon 16,603,000
Pennsylvania 8,793,000

10
2

see.
13

ia
2
yoming 1,541,000

n Samoa
iana Islands
6
irgin Islands 1,269,000
Total Allocation 1,400,000,000
SECTION 6. EFFECTIVE DATE OF NATIONAL ZONE ACADEMY BOND
LIMITATIONS
The national limitation allocated in section 4 is effective for QZABs issued after
October 3, 2008, and the national limitation allocated in section 5 is effective for QZABs
issued on or after January 1, 2009.
SECTION 7. DRAFTING INFORMATION
The principal authors of this Notice are Timothy Jones and Sandra H. Westin of
the Office of Associate Chief Counsel (Financial Institutions and Products). For further
information regarding this Notice contact Sandra H. Westin or Timothy L. Jones at (202)
622-3980 (not a toll-free call).

Rhode Island 4,273,000
South Carolina2,487,000
South Dakota3,538,000
Tennes33,416,000
Texas2,788,000
Utah 8,792,000
Vermont2,137,000
Virginia 26,025,000
Washington 25,395,000
West Virgin10,438,000
Wisconsin0,596,000
W

America1,368,000
Guam 1,397,000
Northern Mar1,362,000
Puerto Rico 1,753,000
V