0704brca2

THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

TO:	The Honorable the Members of the Board of Regents
FROM:	James A. Kadamus
COMMITTEE:	Full Board
TITLE OF ITEM:	Proposed Amendment to the Regulations of the Commissioner of Education Relating to Qualified Public Educational Facility Bonds
DATE OF SUBMISSION:	June 25, 2004
PROPOSED HANDLING:	Approval (Consent Agenda)
RATIONALE FOR ITEM:	Implementation of federal legislation
STRATEGIC GOAL:	Goal 2
AUTHORIZATION(S):

SUMMARY:

Attached is a proposed amendment of the Regulations of the Commissioner of Education to add a new section 155.26 relating to Qualified Public Educational Facility Bonds. Supporting materials for the proposed amendment are available upon request from the Secretary to the Board of Regents. The proposed amendment was discussed at the May meeting of the Regents EMSC-VESID Committee.

The purpose of the proposed amendment is to establish the process by which eligible local educational agencies gain access to federal tax-exempt financing, entitled Qualified Public Educational Facility Bonds, for the construction, rehabilitation or equipping of qualified public educational facilities. A qualified public educational facility means any school facility which is: (a) part of a public elementary school or secondary school, and (b) owned by a private, for-profit corporation pursuant to a public-private partnership agreement with a State or local educational agency. Under this program, a local educational agency and private for-profit corporation enter into a public-private partnership agreement under which the corporation agrees to construct, rehabilitate, refurbish, or equip a school facility and, at the end of the term of the agreement, to transfer the school facility to the local educational agency for no additional consideration. The construction is financed through tax-exempt private activity bonds.

A Notice of Proposed Rule Making was published in the State Register on May 5, 2004.

VOTED: That section 155.26 of the Regulations of the Commissioner of Education be added, as submitted, effective August 12, 2004.

Attachment

AMENDMENT TO THE REGULATIONS OF THE COMMISSIONER OF EDUCATION

Pursuant to Education Law sections 101, 207 and 305 and 26 USC section 142.

Section 155.26 of the Regulations of the Commissioner of Education is added, effective August 12, 2004, as follows:

155.26 Qualified Public Educational Facility Bonds.

(a) Purpose. The purpose of this section is to establish procedures, consistent with State and federal law, for the allocation of the State's qualified public educational facility bond limitation pursuant to 26 USC section 142(k) (Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law section 107-16, section 422, 115 STAT. 65-66; Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402-0001; 2001 - available at the Office of Facilities Planning, State Education Building Annex, Room 1060, Albany, New York 12234).

(b) Definitions. As used in this section:

(1) Qualified Public Educational Facility bond (or "QPEF bond") means a bond issued pursuant to the requirements of 26 USC section 142, the proceeds of which are to be used to provide qualified public educational facilities.

(2) Qualified public educational facility means a school facility as defined in 26 USC section 142(k).

(3) Eligible local educational agency means a local educational agency, as defined in 20 USC section 7801(26), which meets the requirements of subdivision (d) of this section (Public Law section 107-110, section 9101[26], 115 STAT 1961-1962, U.S. Government Printing Office, Washington, D.C. 20402-9328; 2002- available at the Office of Facilities Planning, State Education Building Annex, Room 1060, Albany, New York 12234).

(4) Annual aggregate face amount of tax-exempt financing means the amount of the QPEF bond limitation allocated to the State pursuant to 26 USC section 142(k)(5).

(c) Allocation. The Commissioner shall determine annually the respective amounts of the annual aggregate face amount of tax-exempt financing to be allocated to eligible local educational agencies for approved qualified public educational facilities pursuant to 26 USC section 142(k).

(1) Allocation percentages. Except as provided in subparagraph (iii) of paragraph (2) of this subdivision:

(i) Eighty percent (80%) of the annual aggregate face amount of tax-exempt financing shall be allocated to the following eligible local educational agencies: The City School District of the City of New York, the Buffalo City School District, the Syracuse City School District, the Rochester City School District and the Yonkers City School District, in accordance with the procedures specified in paragraph (2) of this subdivision; provided that no more than ten percent (10%) of any amount so allocated to an eligible local educational agency shall be used to finance the equipping of qualified public educational facilities.

(ii) Fifteen percent (15%) of the annual aggregate face amount of tax-exempt financing shall be allocated to the remaining eligible local educational agencies in the State, other than charter schools, in accordance with the procedures specified in paragraph (2) of this subdivision; provided that no more than ten percent (10%) of any amount so allocated to an eligible local educational agency shall be used to finance the equipping of qualified public educational facilities.

(iii) The remaining five percent (5%) of the annual aggregate face amount of tax-exempt financing shall be allocated to eligible local educational agencies which are charter schools, in accordance with the procedures specified in paragraph (2) of this subdivision; provided that no more than ten percent (10%) of any amount so allocated to an eligible local educational agency shall be used to finance the equipping of qualified public educational facilities.

(2) Allocation procedures.

(i) All applications received from eligible local educational agencies by the date prescribed pursuant to subdivision (d) of this section shall be ranked in order of highest to lowest number of students enrolled in each such local educational agency.

(ii) Subject to the allocation percentages set forth in paragraph (1) of this subdivision, the annual aggregate face amount of tax-exempt financing shall be allocated to eligible local educational agencies in the order of their ranking, from highest to lowest, as established in subparagraph (i) of this paragraph, until such allocation is exhausted.

(iii) Notwithstanding any other provision of this subdivision to the contrary, in the event the Commissioner determines that the annual aggregate face amount of tax-exempt financing for any year will not be exhausted because of the failure of an eligible local educational agency receiving an allocation to use all or a part of its allocation, the Commissioner may:

(a) reallocate such unused allocation, adjusting the percentages specified in paragraph (1) of this subdivision as necessary, to assure that such annual aggregate face amount of tax-exempt financing is exhausted, provided that eligible local educational agencies whose allocation for the prior year was reallocated pursuant to this clause shall be given priority in the order in which they are ranked pursuant to subparagraph (i) of this paragraph in the allocation of any allocated but unused limitation; or

(b) elect to carry forward such unused allocation for any calendar year for three calendar years following the calendar year in which the unused allocation arose, pursuant to 26 USC section 142(k)(5)B)(i).

(d) Local educational agency responsibilities.

(1) A local educational agency may apply, in a form prescribed by and a date established by the Commissioner, for approval to receive an allocation for QPEF bonds from the annual aggregate face amount of tax-exempt financing. Such application shall include, but is not limited to:

(i) a description of the project(s) and the amount(s) to be financed through the issuance of QPEF bonds;

(ii) a certification by the local educational agency that a public-private partnership agreement has been executed pursuant to 26 USC section 142(k)(2);

(iii) a certification by the local educational agency within which the qualified public educational facility or facilities are located, that each such facility meets the requirements for a qualified public educational facility pursuant to 26 USC section 142(k)(3) and (4);

(iv) the written approval of the superintendent of schools and the Board of Education, or in the case of a charter school - the chief executive officer and the board of trustees of the charter school, for such bond issuance; and

(v) an assurance that each such qualified public educational facility will be in compliance with the Education Law and this section.

(2) In cities with a population of less than 1,000,000, any capital construction project to be financed through the issuance of QPEF bonds shall be submitted to the Office of Facilities Planning in the State Education Department. In cities with a population of 1,000,000 or more, any capital construction project to be financed through the issuance of QPEF bonds shall be submitted to the appropriate authority having jurisdiction for review and issuance of a building permit.

(3) Nothing in this section shall prevent the use of QPEF bonds for projects that are not capital construction projects, provided that such projects meet all the other requirements of this section.

The Honorable the Members of the Board of Regents