An LEA is eligible to apply for a modernization grant under the third priority of section 8007(b) of the Act if it—

1. (a) Is eligible to receive funds for the fiscal year under section 8002 or 8003(b) of the Act;

2. (b)

   1. (1) Has no practical capacity to issue bonds;
   2. (2) Has minimal capacity to issue bonds and has used at least 75 percent of its bond limit; or
   3. (3) Is eligible to receive funds for the fiscal year for heavily impacted districts under section 8003(b)(2) of the Act; and

3. (c) Has facility needs resulting from the presence of the Federal Government, such as the enrollment of federally connected children, the presence of Federal property, or an increase in enrollment due to expanded Federal activities, housing privatization, or the acquisition of Federal property.

   (Authority: 20 U.S.C. 7707(b))