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Abstract: 

The deferred maintenance and construction needs of America's public schools are quite large, but raising the funds necessary to build and renovate these schools is often difficult for school districts. Several obstacles face local governments attempting to finance school construction by issuing bonds. This article examines the use of public-private leasing arrangements as an alternative financing tool to meet school construction needs. It compares the use of public-private leasing arrangements both with and without the use of the New Markets Tax Credit (NMTC) to traditional government financing. The results indicate that the public-private leasing arrangement offers a school district savings that range from 14% to 21% when compared to the use of traditional financing methods. Further, the use of the NMTC combined with a public-private leasing arrangement offers the school district savings that range from 47% to 54% over traditional government financing.

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Affiliations:  1: University of Tennessee; 2: University of Tennessee.