Tennessee Using $177 Million to Build, Upgrade Schools Statewide
MARYVILLE, TENN. – As part of an effort to mark the one year anniversary of the American Recovery and Reinvestment Act (Recovery Act) and highlight the local impact of Recovery Act programs, Treasury Assistant Secretary for Management and CFO Dan Tangherlini joined Tennessee Secretary of State Tre Hargett and other local and school officials today in Maryville, Tenn. to break ground on the construction of a new school funded with nearly $19 million in Qualified School Construction Bonds.
Created by the Recovery Act, these school bonds help state and local governments obtain low-cost financing for much needed public school improvements and construction. Tennessee was allocated more than $184 million in school construction bonds for 2009, and to date the Tennessee State School Bond Authority has approved $177 million in bond issuances for 25 projects across the state.
"The road to economic recovery runs right through our state and local communities," said Treasury Assistant Secretary Tangherlini. "Recovery Act qualified school construction bonds provide communities access to the funds they need to build and upgrade schools. And by helping build schools, we're creating jobs today and preparing our kids to compete in the global economy in the future."
"This opportunity for Maryville is a credit to the state legislature recognizing and seizing upon an opportunity to create low-cost funding for this much needed project," said Secretary Hargett, who serves on the Tennessee State School Bond Authority. "It took less than a year to go from the state legislature's authorization to today's groundbreaking celebration. It is refreshing to see government at all levels come together working for the most affordable option, and we owe taxpayers nothing less."
The Recovery Act included $22.4 billion for Qualified School Construction Bonds nationwide for 2009 and 2010. Investors who buy these bonds receive federal income tax credits in lieu of interest, allowing state and local governments to obtain financing without incurring interest expense. States and localities may directly issue the bonds on behalf of eligible schools or provide school districts with the authority to issue the bonds within the state.
Tangherlini and Hargett visited the site of the future Coulter Grove Intermediate School, which, when completed, will educate students in grades four through six in a modern 155,000 square foot school. Maryville City Schools purchased property and made plans to begin construction on the new school in the fall of 2008. However, the project was put on hold when economic conditions made the bond market unfavorable, and the school district was unable to secure financing for the new school. Using $18,760,000 in Qualified School Construction Bonds, the construction of the new Coulter Grove Intermediate School will now be completed.
Since being signed into law a year ago this week, the Recovery Act has already made millions of dollars available to Tennessee – providing tax relief, filling gaps in Medicaid funding, incentivizing small business lending, and jump-starting highway construction projects.
In addition to the $177 million in Qualified School Construction Bonds already at work under the Recovery Act, Tennessee also has raised $309 million for infrastructure projects statewide via the Build America Bonds program authorized by the ARRA– a program under which Treasury makes a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the bond. The Recovery Act has also allocated more than $578 million of Recovery Zone Bonds to Tennessee. Blount County alone, which encompasses the city of Maryville, has access to more than $11 million in Recovery Zone Bonds, which are targeted to areas particularly affected by job loss and will help local governments obtain financing for much needed economic development projects, such as public infrastructure development. Treasury provides a larger subsidy for Recovery Zone Bonds, equal to 45 percent of the interest.