$1 million interest-free loan pursued by La Grande School District

The La Grande School District is on the verge of obtaining an interest-free $1 million loan through a federal program.

The district will receive the loan via the federal Qualified Zone Academy Bond program. Final details involving the loan are expected to be worked out by early next week.

“We hope to sign the papers on Monday,’’ said Chris Panike, the La Grande School District’s budget director.

La Grande’s $1 million QZAB loan will replace a $966,000 loan the district received a year ago with 4.5 percent interest. The $966,000 loan was used to fund projects that will boost the district’s energy efficiency. New boilers were purchased for La Grande Middle School, maintenance work was done in buildings to improve energy efficient and much more.

The district was set to pay the old loan off in 15 years, during which time it would have paid $400,000 in interest.

The interest-free QZAB loan will be paid off in 15 years. The district will make annual payments of $66,667.

“The QZAB program is allowing us to refinance our old loan,’’ Panike said.

The La Grande School District is receiving its new loan from Sterling Savings Bank, a QZAB participant. Banks in the program receive a federal tax credit for making loans to school districts. The banks in turn charge little or no interest to school districts for the loans.

The La Grande School District worked with McLiney & Co. and local banking institutions to find a bank to provide its QZAB loan. McLiney & Co. also worked with the Oregon Department of Education to get permission for the La Grande School District to participate in the program.

A slight QZAB twist is that school districts in the program must establish a partnership with a private sector donor. The firm must provide 10 percent of the amount the district will receive through the loan program via an in-kind contribution.

La Grande’s private sector partner will be Learn.com, a firm whose U.S. headquarters are in Sunrise, Fla. The company is a provider of web-based curriculum and assessment items. Learn.com will donate $100,000 in computer software through the QZAB program. The La Grande School District will be provided with 116 licenses for use of Learn.com software, none of it which it will be charged for. The 116 licenses, good for one year, are worth $102,000.

The QZAB program has been in place since 1996. Funding for it must be reauthorized each year by Congress. Once a school district receives a QZAB loan it is secure even if Congress does not reauthorize funding for the program in future years.