Moffat County school board to consider a $5 million Qualified Zone Academy Bond
October 31, 2017
CRAIG — With about $17 million in capitol improvement needs and ambitions to reinvest in a vocational/agriculture, or VoAg program at the high school, Moffat County School District has begun a process that could ultimately secure a $5 million bond, without having to ask voters for support.
Qualified Zone Academy Bonds are specialized municipal bonds authorized by a federal program first funded in 1998.
"It doesn't require a vote of the people, because it is not a general issuance loan," said Joey McLiney, president of McLiney and Company.
His company has figured out how to make QZAB bonds work for several school districts throughout Colorado.
According to the Colorado Department of Education, "The QZAB program is a way for school districts to obtain interest-free financing for renovation, repair projects and other needs. QZABs cannot be used for new construction."
Qualifying school districts obtain low-interest or interest-free financing, securing the bond with property. Bond purchasers receive tax credits instead of interest payments.
According to the CDE, school districts must meet the following requirements to qualify.
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- 35 percent or more of the school’s students must qualify for free and reduced lunch.
- Programs established with QZAB must have the goal of enhancing the academic curriculum, increasing graduation and employment rates or better preparing students for college and the workforce.
- Each school must enter a partnership with a private entity or entities. The partner must contribute at least 10 percent of the net present value of the amount of money borrowed.
- At least 10 percent of the financing must be contracted within six months after issuance, and 100 percent of the QZAB must be spent within three years of date of issuance.
When another district decided not to move forward, CDE suggested that McLiney contact Superintendent Dave Ulrich to bring the proposal to Moffat County.
McLiney made a presentation to the school board during its monthly work session Oct. 26.
Under one financing scenario, after fees are paid to McLiney and Company, the district would see about $4.75 million. It would need to pay about $250,000 per year out of the general fund to meet the bond obligation and would secure the bond with property, such as a school.
"Five percent pays for everything. It only gets paid if it works," McLiney said.
He told the school board that he has a contributor willing to finance 10 percent of the bond, adding that the state application is in place.
He asked that, if the board wished to consider the bond, it would need to start by passing a resolution establishing a "Zone Academy."
The funds borrowed must be used at an "academy," according to the CDE.
The school board passed a resolution establishing a "Zone Academy," opening the way for further consideration of the QZAB.
The decision does not obligate the district to accept the bond, and in November, newly elected school board members will work with administration to learn more about the program.
"This might allow us to address some issues and delay going to voters with a bond issue," Ulrich said.
Contact Sasha Nelson at 970-875-1794 or snelson@CraigDailyPress.com