Reference Title: sales tax; lake facility contracts

AN ACT
AMENDING SECTIONS 35-706, 35-902, 35-904, 35-905 AND 35-906, ARIZONA REVISED STATUTES; AMENDING TITLE 35, CHAPTER 7, ARTICLE 1, ARIZONA REVISED STATUTES, BY ADDING SECTION 35-913; RELATING TO INDUSTRIAL DEVELOPMENT AUTHORITIES.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 35-706, Arizona Revised Statutes, is amended to read:

35-706 . Corporate powers

A. In addition to the powers granted to an industrial development authority by law, the authority shall have the following powers, together with all powers incidental or necessary for the performance of the following:

1. To acquire, whether by purchase, exchange, gift, lease or otherwise establish, construct, improve, maintain, equip and furnish one or more projects.

2. To lease to others any or all of its projects, to charge and collect rent and to terminate any lease upon the failure of the lessee to comply with any of the obligations of the lease.

3. To sell, exchange, donate and convey to others any or all of its projects or properties upon terms and conditions as its board of directors may deem advisable, including the power to receive for any sale the note or notes of the purchaser of the project or property, whenever its board of directors finds the action to further advance the interest of the corporation.

4. To issue its bonds for the purpose of carrying out any of its powers.

5. To mortgage and pledge any or all of its projects and properties, whether owned or acquired, and to pledge the revenues, proceeds and receipts or any portion of the revenues, proceeds and receipts from a project as security for the payment of the principal of and interest on any bonds so issued and any agreements made in connection therewith.

6. To contract with and employ others to provide and to pay compensation for professional services and other services as the board of directors deems necessary for the financing of projects and for the business of the corporation.

7. To refund outstanding obligations incurred by an enterprise to finance the cost of a project when the board of directors finds that the refinancing is in the public interest.

8. To invest and reinvest funds under the control of the corporation and bond proceeds pending application thereof to the purposes for which the bonds were issued, subject only to the provisions of any bond resolution, lease or other agreement entered into by the board of directors.

9. To make secured or unsecured loans for the purpose of financing or refinancing the acquisition, construction, improvement, equipping or operating of a project and to charge and collect interest on the loans and pledge the proceeds of loan agreements as security for the payment of the principal and interest of any bonds, or designated issues of bonds, issued by the corporation, and any agreements made in connection with the loan, whenever the board of directors finds the loans to further advance the interest of the corporation or the public.

10. To acquire and hold obligations of any kind to carry out any of its purposes.

11. Subject to the provisions of this section to make loans to any bank, savings and loan institution, credit union or other mortgage lender, whether organized or existing under the laws of this state, another state or the United States, which is qualified to do business in this state, for the purpose of enabling the institutions to make loans to finance the acquisition, construction, improvement or equipping of projects which are owner-occupied single family dwelling units to be occupied by persons of low and moderate income, as determined by the corporation. The loans shall be fully secured in the same manner as deposits of public funds or by loans secured by mortgages, deeds of trust or other security instruments guaranteed or insured by the United States, or any instrumentality thereof, or by any private mortgage insurance or surety company which is approved by the federal home loan mortgage corporation or the federal national mortgage association and which is licensed to do business in this state, if the private mortgage insurance shall be in a dollar amount sufficient to satisfy the mortgage insurance requirements for loans eligible to be purchased by the federal home loan mortgage corporation or the federal national mortgage association or any other agency or department of the United States. The security shall not be necessary if the bonds issued to make the loans are guaranteed or insured by an agency, department or instrumentality of the United States. Any bonds issued to make loans shall be ratable as "A" or better by a nationally recognized bond rating agency.

12. Subject to the provisions of this section to purchase or enter into advance commitments to purchase loans or any loan interests secured by mortgages, deeds of trust or other security instruments relating to projects which are owner-occupied single family dwelling units from or with any bank, savings and loan institution, credit union or other mortgage lender, whether organized or existing under the laws of this state, another state or the United States, which is qualified to do business in this state, on terms and conditions as may be determined by the corporation. The purpose of the purchases shall be to finance directly or indirectly the acquisition, construction, improvement or equipping of projects which are owner-occupied single family dwelling units to be occupied by persons of low and moderate income. If the bonds issued to make purchases are not guaranteed or insured by an agency, department or instrumentality of the United States or secured by a letter of credit, insurance policy, surety bond or other credit facility from a financial institution or a combination of such instruments, the purchased loans shall be guaranteed or insured by the United States or any agency, department, or instrumentality thereof, or by any private mortgage insurance or surety company which is approved by the federal home loan mortgage corporation or the federal national mortgage association or secured by a letter of credit, insurance policy, surety bond or other credit facility from a financial institution or a combination of such instruments. In the case of private mortgage insurance, the insurance shall be in a dollar amount sufficient to satisfy the mortgage insurance requirements for loans eligible to be purchased by the federal home loan mortgage corporation or the federal national mortgage association or any other agency or department of the United States. Any bonds issued to purchase loans shall be ratable as "A" or better by a nationally recognized bond rating agency. If the purchased loans have not been originated on behalf of the corporation to directly finance projects, the corporation shall require that the institution receiving proceeds from the sale of the loans use the proceeds to make loans to finance or refinance the acquisition, construction, improvement or equipping of projects which are owner-occupied single family dwelling units to be occupied by persons of low and moderate income, as determined by the corporation.

13. To elect not to issue an amount of qualified mortgage revenue bonds which it may otherwise issue during any calendar year and to issue instead mortgage credit certificates pursuant to a qualified mortgage credit certificate program as defined in section 35-901.

14. To make loans to any person or entity owning residential property or to make loans to any bank, savings and loan association, credit union or other mortgage lender, or to purchase or enter into advance commitments to purchase funding for the repair or improvement of property related to residential or neighborhood improvement projects. An authority may issue its bonds or incur other obligations to fund loans or purchases. An authority shall establish the provisions relating to bonds or other obligations, including the security for the loans, and shall establish the guidelines for the approval, funding, purchasing and security of the loans.

15. To enter into contracts and execute any agreements or instrument and do any other act necessary or appropriate to carry out its purposes.

B. The corporation shall not have the power to operate any project as a business other than as lessor or seller nor shall any corporation make any loans pursuant to subsection A, paragraph 9 of this section for projects which are owner-occupied single family dwelling units except by utilizing as its contract agent a mortgage lender, whether organized or existing under the laws of this state, another state or the United States, which is qualified to do business in this state. Any project established pursuant to subsection A, paragraph 14 of this section is not required to use a mortgage lender as its contract agent. The corporation shall not permit any funds derived from the sale of its bonds to be used, loaned or provided for the acquisition of any facilities of a public utility or public service corporation, except as provided in section 35-701. The corporation shall comply with the provisions of title 38, chapter 3, article 3.1.

C. A person's or family's eligibility for an owner-occupied single family dwelling unit financed pursuant to subsection A, paragraph 11, 12 or 13 of this section shall be determined by considering the person's or family's income. Owner-occupied single family dwelling units shall only be financed as provided in subsection A, paragraphs 11, 12 and 13 of this section unless the owner-occupied single family dwelling units are located in an area designated pursuant to section 36-1479 as a redevelopment area as defined in section 36-1471 by a municipality having a population of more than two hundred fifty thousand persons according to the most recent United States decennial census or a special census conducted in accordance with section 42-5033.

D. In the exercise of its powers authorized in this section with respect to projects which are owner-occupied single family dwelling units to be occupied by persons of low and moderate income and financed pursuant to subsection A, paragraphs 11 and 12 of this section, the corporation shall establish, subject to approval by the governing body of the authorizing county or municipality, standards and requirements applicable to the purchase of loans or the making of loans to mortgage lenders, including:

1. The eligibility of mortgage lenders, including the requirement that all mortgage lenders be approved as mortgagees by the federal housing administration and the veterans administration and be approved as sellers and servicers of mortgage loans by the federal national mortgage association or federal home loan mortgage corporation.

2. The time within which mortgage lenders must make commitments and disbursements for mortgage loans.

3. The character of residences to be financed by mortgage loans.

4. The eligibility of persons of low and moderate income, including the requirement that no person of low and moderate income may receive, more than once in a three year period, a mortgage loan financed directly or indirectly from the proceeds of bonds issued by the corporation.

5. The terms and conditions of mortgage loans to be acquired.

6. The amounts and types of insurance coverage required on residences, mortgages and bonds.

7. The representations and warranties of mortgage lenders confirming compliance with the standards and requirements.

8. Restrictions as to interest rate and other terms of mortgage loans and the return realized on mortgage loans by mortgage lenders.

9. The type and amount of collateral security to be provided to assure repayment of any loans from the corporation and to assure repayment of bonds.

10. Assignment of the mortgage loans to a trustee acting on behalf of the corporation which shall be either a bank or trust company doing business in this state, having an officially reported combined capital surplus, undivided profits and reserves of not less than fifteen million dollars. Trustees must be approved to sell mortgages to and service mortgages for the federal national mortgage association and the federal home loan mortgage corporation.

11. Any other matters related to the purchase of mortgage loans or the making of loans to mortgage lenders deemed relevant by the corporation in establishing standards and requirements, the corporation shall be guided by the following standards:

(a) The amount of mortgage monies proposed to be made available in the area is to be reasonably related to the demand for mortgage monies.

(b) For projects of owner-occupied single family dwelling units to be occupied by persons of low and moderate income and financed pursuant to subsection A, paragraphs 11 and 12, at least ten per cent of all mortgage monies proposed to be made available by the corporations other than mortgage monies reserved for any period to finance mortgage loans on residences located within an area designated as a redevelopment area as defined in section 36-1471 shall be reserved for at least a three month period for the financing of mortgage loans on manufactured housing unless the department of commerce makes a determination that any bonds issued to make loans will not be ratable as "A" or better by a nationally recognized bond rating agency, in which case no such reservation is required. If all the mortgage monies reserved for manufactured housing are not committed or used to make mortgage loans during this three month period, the mortgage lender may allocate the remaining monies to finance mortgage loans on any single family dwelling unit.

(c) Any departure from the level of commitment fees, origination fees or servicing fees normally charged by a mortgage lender is to be justified in the context of the transaction.

(d) The costs, fees and expenditures associated with the issuance of bonds are to be reasonably related to the services provided.

E. After the issuance of bonds to provide funds for mortgage loans pursuant to the powers granted by subsection A, paragraph 11 or 12 of this section, proceeds of additional bonds may not be applied to provide funds for mortgage loans pursuant to the powers granted by subsection A, paragraph 11, 12 or 13 of this section, with respect to single family dwelling units located within an area to which funds from prior sales of bonds may be applied until eighty per cent of the funds available to mortgage lenders from prior sales of bonds have been used for the purpose of financing the acquisition, construction, improvement or equipping of owner-occupied single family dwellings or have been certified by mortgage lenders as reserved or committed for loans. The provisions of this subsection do not apply with respect to loans for home improvement or rehabilitation or a qualified mortgage credit certificate program.

F. E. Only corporations, the formations of which have been approved by the governing body of a county, HAVING A POPULATION OF MORE THAN NINE PER CENT OF THE TOTAL STATE POPULATION COMPUTED ACCORDING TO THE MOST RECENT UNITED STATES DECENNIAL CENSUS or by the governing body of a municipality having a population of more than two hundred fifty thousand persons NINE PER CENT OF THE TOTAL STATE POPULATION COMPUTED , according to the most recent 1990 United States decennial census or a special census conducted in accordance with section 42-5033 , shall have the powers granted in subsection A, paragraphs 11, 12 and 13 of this section. EXCEPT AS PROVIDED IN SECTION 35-913, SUBSECTIONS E AND F, A CORPORATION SHALL NOT EXERCISE THE POWERS GRANTED IN SUBSECTION A, PARAGRAPHS 11, 12 AND 13 OF THIS SECTION OUTSIDE OF ITS JURISDICTION. FOR THE PURPOSES OF A REFUNDING OF ANY MORTGAGE REVENUE BOND ISSUED BEFORE JANUARY 1, 2000, THE PROCEEDS FROM THE REFUNDING MAY BE USED OUTSIDE THE JURISDICTION OF THE CORPORATION ISSUING THE REFUNDING BONDS EXCEPT THE CORPORATION ISSUING THE REFUNDING BONDS SHALL OBTAIN THE CONSENT FROM ANOTHER CORPORATION WITH POWERS GRANTED IN SUBSECTION A, PARAGRAPHS 11, 12 AND 13 OF THIS SECTION IF THE PROCEEDS OF THE REFUNDING ARE TO BE USED WITHIN THE JURISDICTION OF THAT CORPORATION. FOR THE PURPOSES OF EXERCISING THE POWERS GRANTED IN SUBSECTION A, PARAGRAPHS 11, 12 AND 13 OF THIS SECTION, THE JURISDICTION OF A CORPORATION FORMED ON BEHALF OF A COUNTY INCLUDES ALL INCORPORATED AND UNINCORPORATED TERRITORY IN THE COUNTY.

F. A corporation may not permit proceeds of bonds or a qualified mortgage credit certificate program to be used to finance projects which are owner-occupied single family dwelling units within the corporate limits of an incorporated city or town unless the governing body of the city or town has approved the general location and character of the residences to be financed. The corporation shall, prior to the issuance of bonds or mortgage credit certificates for that purpose, give written notice to the governing body of each city or town in which it intends to permit proceeds of an issue of bonds or mortgage credit certificates to be used to finance projects which are owner-occupied single family dwelling units and of the general location and character of the residences which may be financed. The governing body of the city or town shall be deemed to have given its approval unless it has denied approval by formal action of the governing body within twenty-one days after receiving the written notice from the corporation. Approvals given or deemed to have been given with respect to use of proceeds of an issue of bonds or mortgage credit certificates under this subsection may not be withdrawn. DENIALS MAY BE WITHDRAWN BY THE GOVERNING BODY OF A CITY OR TOWN AND APPROVAL MAY BE GIVEN THEREAFTER IF THE CORPORATION ISSUING THE BONDS OR MORTGAGE CREDIT CERTIFICATES APPROVES THE WITHDRAWAL OF THE DENIAL.

G. The governing bodies of Two or more counties, or of two or more cities having populations of more than two hundred fifty thousand persons according to the most recent United States census, or any combination of counties or cities by execution of a cooperative agreement as provided in section 35-761, CORPORATIONS WITH THE POWERS GRANTED BY SUBSECTION E OF THIS SECTION may provide:

1. That a corporation, the formation of which was approved by the governing body of a county or city, may exercise the powers granted in subsection A, paragraphs 11, 12 and 13 of this section, with respect to owner-occupied single family dwelling units located in all counties and cities which are parties to a cooperative agreement.

2. For the joint exercise by two or more corporations, each formed with the approval of a governing body executing the cooperative agreement, of the powers granted in subsection A, paragraphs 11, 12 and 13 of this section, with respect to owner-occupied single family dwelling units located in all counties and cities which are parties to the cooperative agreement. The agreement shall specify the calendar year or years for which it is effective, the means by which the agreement may be terminated prior to the expiration of the calendar year or years and the aggregate principal amount of bonds which may be issued by the designated corporation or corporations to exercise the powers pursuant to the agreement. The corporation or corporations designated in the agreement to exercise the powers in the counties and cities which are parties to the agreement are the only corporation or corporations authorized and having jurisdiction to exercise the powers and to issue bonds to carry out the powers in the counties and cities while the agreement is in effect. The combined jurisdictions of all the counties and cities which are parties to the cooperative agreement are the jurisdictions of the corporation or corporations designated to exercise the powers granted in subsection A, paragraphs 11, 12 and 13 of this section within the meaning of the mortgage subsidy bond tax act of 1980 (26 United States Code section 103A).

H. It shall not be a conflict of interest under title 38, chapter 3, article 8, and this chapter, for any trustee or any mortgage lender to enter into loan agreements with, or to sell mortgage loans to, the corporation as contemplated in subsection A, paragraphs 11, 12 and 13 of this section, act for or under contract with the corporation as a mortgage originator, servicer, paying agent or depository, act as holder or dealer of bonds of the corporation, have as a director, officer or employee any member of the board of directors of the corporation or any combination.

I. The department of economic security shall once in each calendar year on or before March 1 determine the median family income of this state for the purposes of this chapter.

J. All areas in this state which are either designated pursuant to section 36-1479 as redevelopment areas as defined in section 36-1471 or designated as pockets of poverty by the United States department of housing and urban development are designated as areas of chronic economic distress within the meaning of the mortgage subsidy bond tax act of 1980 (26 United States Code section 103A).

K. Any corporation that is described in subsection F E of this section and that desires to exercise the powers granted in subsection A, paragraphs 11, 12 and 13 of this section, with respect to owner-occupied single family dwelling units located in two or more counties, may do so if the corporation, before issuing bonds or mortgage credit certificates for that purpose, gives written notice to the governing bodies of the other counties and their respective corporations, if any, of its intent to permit the proceeds of an issue of bonds or mortgage credit certificates to finance projects within its jurisdiction which are owner-occupied single family dwelling units. The governing body of a county and its respective corporation, if any, which have been given notice are deemed to have approved the use of the proceeds or mortgage credit certificates for owner-occupied single family dwelling units within their jurisdiction and approved the use of any state ceiling, as defined in section 35-901, unless approval is denied by formal action of the governing body or the board of directors of the corporation, if any, within twenty-one days after receiving written notice from the corporation. Absent a denial of approval as stated in this subsection, a cooperative agreement providing for the exercise of the powers granted in subsection A, paragraphs 11, 12 and 13 of this section is deemed to exist among the applicable counties or corporations. Approvals given or deemed to have been given with respect to the matters stated in this subsection may not be withdrawn. DENIALS BY THE GOVERNING BODY OF A COUNTY APPLY ONLY TO THE UNINCORPORATED AREAS OF THE COUNTY. DENIALS MAY BE WITHDRAWN BY THE GOVERNING BODY OF A COUNTY AND APPROVAL MAY BE GIVEN THEREAFTER IF THE CORPORATION ISSUING THE BONDS OR MORTGAGE CREDIT CERTIFICATES APPROVES THE WITHDRAWAL OF THE DENIAL. Mortgage credit certificates and bond proceeds issued pursuant to this subsection shall be available on an equitable basis within each of the participating counties.

Sec. 2. Section 35-902, Arizona Revised Statutes, is amended to read:

35-902 . Allocation

A. Subject to the provisions of this chapter, the total amount of the state ceiling is allocated among projects pursuant to this section. The director shall issue confirmations on a first come, first served basis, within any particular category of projects as described in subsection C, D, E or F of this section.

B. Fifteen per cent of the state ceiling is allocated to projects that are designated at the sole discretion of the director.

C. Thirty-five per cent of the state ceiling is allocated to qualified mortgage revenue bonds and qualified mortgage credit certificate programs, excluding any such bonds and certificate programs for home improvement and rehabilitation.

D. Twenty per cent of the state ceiling is allocated to qualified student loan projects.

E. Fifteen per cent of the state ceiling is allocated to manufacturing projects.

F. Fifteen per cent of the state ceiling is allocated to all projects financable through issuance of bonds that require an allocation of state ceiling and that are not described and provided for in subsections C, D and E of this section. Such projects include, but are not limited to, qualified mortgage revenue bonds and qualified mortgage credit certificate programs for home improvement and rehabilitation.

G. A request shall not be filed and a confirmation shall not be issued to a project unless the project is subject to section 146 of the code. No project is deemed to have been allocated any portion of the state ceiling unless, in connection with the project, the provisions of this chapter have been substantially complied with.

H. Any request on file with the department for which a confirmation has not been issued by 5:00 p.m. on July 31 JUNE 30 , other than a request for an allocation pursuant to subsection B of this section, is deemed to have expired at 5:00 p.m. on July 31 JUNE 30 . All or any part of any confirmation for which bonds have not been issued or for which a qualified mortgage credit certificate program has not been established by 5:00 p.m. on July 31 JUNE 30 , evidenced by the filing of a certificate of closing with the department, or for which confirmations have not been extended pursuant to section 35-910, is deemed to have expired.

I. At any given time, an issuer, or an issuer together with one or more other issuers, may not file with the department more than one request for each project. Nothing in this subsection prohibits an issuer from refiling a request for a given project if a prior request has expired or filing a request for each separate and distinct project.

J. An issuer may not transfer or assign its rights to an allocation of state ceiling from one project to another project or from itself to another issuer.

Sec. 3. Section 35-904, Arizona Revised Statutes, is amended to read:

35-904 . Obtaining and issuing confirmations

A. Subject to section 35-905, a confirmation allocating a portion of the state ceiling to a project must be obtained before the sale or issuance of bonds or mortgage credit certificates by the issuer. A confirmation may be obtained by filing with the department a request and filing with the department evidence of an inducement resolution or other official action taken by the issuer in connection with the project. Requests filed by mail are deemed to be filed with the department at 5:00 p.m. on the day the request is actually received at the department. All requests received on the same date and at the same time shall be dated and numbered by lot and confirmations to those requests shall be issued in the order determined by lot.

B. On and after the first business day of each year, a request may be prepared and filed by the issuer or on behalf of the issuer by bond counsel or any other interested person.

C. Except as provided in section 35-902, subsection H, section 35-909 and subsection D of this section, a confirmation issued before 5:00 p.m. on July 31 JUNE 30 expires and no allocation is deemed to be made unless the applicable bonds have been issued or a qualified mortgage credit certificate program has been established and a certificate of closing has been actually filed, not merely postmarked, with the department no later than sixty days after the date of the confirmation or the first business day after the sixtieth day if the sixtieth day is not a business day. The confirmation may be extended as provided in section 35-910 beyond such sixty day period or 5:00 p.m. on July 31 JUNE 30 .

D. Notwithstanding subsection C of this section, a confirmation issued for a project to be funded in part with an urban development action grant to be made under section 119 of the housing and community development act of 1974 (P.L. 93-383; 88 Stat. 633) or a housing development grant to be made under section 301 of the housing and urban-renewal recovery act of 1983 (P.L. 98-181, title III, section 301, 97 Stat. 1196 and amended October 17, 1984, P.L. 98-479, title III, section 103, 98 Stat. 2223) expires and no allocation is deemed to be made unless the applicable bonds have been issued and a certificate of closing and evidence satisfactory to the director of the commitment to make an urban development action grant or a housing development grant with respect to such project have been actually filed, not merely postmarked, with the department no later than 5:00 p.m. on December 26.

E. Subject to the provisions of this section and section 35-909, the confirmation shall assure allocation in the manner prescribed by the code for a dollar amount of bonds or a qualified mortgage credit certificate program not in excess of the amount set forth in the confirmation.

F. The director shall decline to issue confirmations at such time as the aggregate amount of bonds or mortgage credit certificates allocated under all confirmations previously issued and not expired, together with the proposed issue of bonds or mortgage credit certificates as to which a request has been received, would, through 5:00 p.m. on July 31 JUNE 30 , exceed the respective aggregate amount allocated under section 35-902, subsection C, D, E or F for such purpose, and from August JULY 1, exceed the aggregate amount of the state ceiling that is not allocated under an unexpired confirmation nor within the discretion of the director pursuant to section 35-902, subsection B. On expiration of a confirmation or release of an allocation, the director shall issue a confirmation to the next numbered request which is equal to or less than the then available portion of the state ceiling or to the next numbered request if the principal amount of such request is reduced to an amount equal to or less than the then available portion of the state ceiling available for such purpose. The director may only issue a single confirmation for each request.

G. A confirmation made pursuant to the director's discretion may be accompanied by a certificate executed by the director. The director, on request, shall execute a certificate stating that the confirmation was not made in consideration of any bribe, gift, gratuity or direct or indirect contribution to any political campaign. The director may require such oaths or affirmations as the director deems necessary to verify the accuracy of the certificate.

H. The director shall attempt to issue confirmations within three business days of receipt and shall issue confirmations in the order of receipt of fully and properly completed requests within the limitations of subsection F of this section. The department shall notify the issuer or other contact person listed in the request in writing, by telefacsimile or by telephone of the issuance of a confirmation. The department is not responsible for returning confirmations to the filing party. A confirmation shall be available for pickup at the department after issuance of the confirmation.

Sec. 4. Section 35-905, Arizona Revised Statutes, is amended to read:

35-905 . Restrictions on confirmations

A. Before April 1 of each year, seventy per cent of the allocation to manufacturing projects described in section 35-902, subsection E is reserved for manufacturing projects located in nonurban areas, and the remaining thirty per cent of the allocation to manufacturing projects described in section 35-902, subsection E shall be reserved for urban areas. Before August JULY 1 of each year, seventy per cent of the allocation available for confirmation pursuant to the director's discretion as described in section 35-902, subsection B is reserved for projects located in nonurban areas, and the remaining thirty per cent of the allocation to the director's discretion as described in section 35-902, subsection B, shall be reserved for urban areas.

B. Before December 17, a confirmation shall not be allocated to a project in an amount greater than twenty million dollars, except that this subsection does not apply to any project that is eligible to receive an allocation pursuant to section 35-902, subsection B, C or D. For purposes of this subsection, the amount of allocation to a project shall also include any other state ceiling allocation received by any related person to the project. For purposes of this subsection "related person" has the same meaning as provided in section 147(a)(2) of the code, except that all references to fifty per cent shall be changed to twenty-five per cent.

C. Before August 1, a confirmation for a qualified mortgage revenue bond project or a qualified mortgage credit certificate program shall not be issued unless the qualified mortgage revenue bond projects and qualified mortgage credit certificate programs benefit the residents of all counties, cities and towns of this state. Denial of approval pursuant to section 35-706 of the use of qualified mortgage revenue bond proceeds or qualified mortgage credit certificates within a county, city or town does not affect the validity of a confirmation, but such a denial of approval with respect to a county, city or town whose issuer has statutory authority to issue qualified mortgage revenue bonds or mortgage credit certificates reduces the amount of the confirmation for the qualified mortgage revenue bond project or the qualified mortgage credit certificate program which was to include that county, city or town in the proportion the population of that county, city or town bears to the population of all jurisdictions, without duplication, that received notice pursuant to section 35-706, according to the most recent United States decennial or special census. The validity of a confirmation for qualified mortgage revenue bonds or a qualified mortgage credit certificate program to benefit residents of part of the state shall not be affected by reason of qualified mortgage revenue bonds or a qualified mortgage credit certificate program receiving a confirmation to benefit residents of another part of the state not being issued.

D. Before August 1, twelve million dollars of the state ceiling shall be reserved for qualified mortgage credit certificate programs.

Sec. 5. Section 35-906, Arizona Revised Statutes, is amended to read:

35-906 . Allocations obtained after June 30 through 5:00 p.m. December 16

A. Any portions of the state ceiling, including any portions of the state ceiling subject to a confirmation for which bonds have not been issued or for which a qualified mortgage credit certificate program has not been established by 5:00 p.m. on July 31 JUNE 30 , other than confirmations extended pursuant to section 35-910 and the state ceiling allocated to the discretion of the director pursuant to section 35-902, subsection B, shall be pooled and are subject to allocation among requests on a first come, first served basis.

B. Obtaining and issuing confirmations on or after August JULY 1 through 5:00 p.m. December 16 shall occur as provided in section 35-904, subject to the following restrictions and changes:

1. Requests may be filed on or after August JULY 1 of each year.

2. A confirmation issued on or after August JULY 1 through 5:00 p.m. December 16 expires and no issuer is deemed to have been allocated any portion of the state ceiling unless the issuer's bonds have been issued or a qualified mortgage credit certificate program has been established and a certificate of closing has been actually filed, and not merely postmarked, with the department no later than sixty days after the date of the confirmation or the first business day after the sixtieth day if the sixtieth day is not a business day, or before 5:00 p.m. December 16, whichever occurs first. The confirmation may be extended as provided in section 35-910.

3. Before the director issues the confirmation, the department must receive a security deposit in the amount of one per cent of the principal amount stated in the request. The security deposit is forfeited to the department if the bonds are not issued before the expiration of the confirmation or any extension. The security deposit shall not be required pursuant to this paragraph if the direct beneficiary of the bond proceeds is this state or a county, city, town or nonprofit entity, the issuer is a student loan corporation or the project will include urban development action grant or housing development grant financing, is a qualified mortgage revenue bond or is a qualified mortgage credit certificate program.

4. Notwithstanding the first come first served basis for allocation, any issuer that did not participate in any other qualified mortgage revenue bond or qualified mortgage credit certificate program during the year because of denial of approval pursuant to section 35-706 and that did not receive a confirmation for such bonds or program during the year has priority for a confirmation of a qualified mortgage revenue bond or a qualified mortgage credit certificate program, if such new project or projects, together with qualified mortgage revenue bonds and the qualified mortgage credit certificate programs issued before August 1 or for which confirmations issued August 1 continue to be in effect, are to benefit the residents of all counties, cities, and towns of this state. Denial of approval pursuant to section 35-706 of the use of qualified mortgage revenue bond proceeds or the establishment of a qualified mortgage credit certificate program within a county, city or town does not affect the validity of a confirmation. The validity of a confirmation for qualified mortgage revenue bonds or a qualified mortgage credit certificate program to benefit residents of part of the state shall not be affected by reason of qualified mortgage revenue bonds or mortgage credit certificates receiving a confirmation to benefit residents of another part of the state not being issued. Confirmations for all qualified mortgage revenue bonds and qualified mortgage credit certificate programs shall not in the aggregate exceed seventy-five per cent of the state ceiling.

5. Confirmations for all qualified student loan projects shall not in the aggregate exceed seventy-five per cent of the state ceiling.

6. Before the director issues one or more confirmations for qualified mortgage revenue bonds or a qualified mortgage credit certificate program, the allocation requests shall be evaluated on the basis of:

(a) The aggregate amount of monies made available from qualified mortgage revenue bonds issued for the jurisdictions of the qualified issuers requesting the allocation in previous years.

(b) The proportionate distribution of qualified mortgage revenue bonds that have benefited the residents of all counties of the state.

(c) The proportion which the population of the requesting jurisdiction or jurisdictions bears to the population of the state as a whole according to the most recent United States decennial or special census.

(d) Such other factors as the director deems necessary to provide an equitable distribution for all areas throughout the state.

4. EXCEPT AS PROVIDED IN SECTION 35-910, AFTER JUNE 30 OF EACH YEAR, THE DIRECTOR SHALL NOT ISSUE CONFIRMATIONS FOR ANY REQUEST FOR ALLOCATIONS SUBMITTED DIRECTLY OR INDIRECTLY IN CONNECTION WITH A QUALIFIED MORTGAGE CERTIFICATE PROGRAM, QUALIFIED MORTGAGE REVENUE BOND PROGRAM OR QUALIFIED STUDENT LOAN PROJECT.

Sec. 6. Title 35, chapter 7, article 1, Arizona Revised Statutes, is amended by adding section 35-913, to read:

35-913 . Special allocations for mortgage revenue bonds and mortgage credit certificates; definitions

A. THIS SECTION GOVERNS ALLOCATIONS OF THE STATE CEILING MADE BY THE DIRECTOR PURSUANT TO SECTION 35-902, SUBSECTION C.

B. IF THE PORTION OF A CORPORATION'S ALLOCATION COMPUTED PURSUANT TO SUBSECTION C OF THIS SECTION IS LESS THAN TEN MILLION DOLLARS, THE DIRECTOR SHALL FIRST AWARD TEN MILLION DOLLARS OF THE STATE ALLOCATION TO THAT CORPORATION. THEREAFTER, THE DIRECTOR SHALL AWARD THE REMAINING STATE ALLOCATION IN THE SAME PROPORTION THAT THE POPULATION OF EACH OF THE REMAINING CORPORATIONS' JURISDICTIONS BEARS TO THE POPULATION OF THIS STATE ACCORDING TO THE CENSUS, MINUS THE POPULATION OF THE CORPORATIONS RECEIVING A TEN MILLION DOLLAR ALLOCATION PURSUANT TO THIS SUBSECTION.

C. EACH CORPORATION THAT IS DESCRIBED IN SECTION 35-706, SUBSECTION E AND THAT SUBMITS A REQUEST FOR ALLOCATION PURSUANT TO SECTION 35-902, SUBSECTION C SHALL RECEIVE A PORTION OF THE ALLOCATION MADE BY THE DIRECTOR IN THE SAME PROPORTION THAT THE POPULATION OF THAT CORPORATION'S JURISDICTION BEARS TO THE POPULATION OF THIS STATE, ACCORDING TO THE CENSUS BUT IN NO EVENT LESS THAN TEN MILLION DOLLARS.

D. AT ANY TIME BEFORE SUBMITTING A FORMAL REQUEST FOR ALLOCATION, BUT NO LATER THAN JANUARY 31, A CORPORATION DESCRIBED IN SECTION 35-706, SUBSECTION E MAY SUBMIT TO THE DIRECTOR AN ALLOCATION RESERVATION FOR AN AMOUNT NOT TO EXCEED THAT PORTION OF THE ALLOCATION TO WHICH THE CORPORATION IS ENTITLED PURSUANT TO THIS SUBSECTION. THE ALLOCATION RESERVATION MAY INCLUDE AN OFFER TO USE ADDITIONAL ALLOCATION AMOUNTS DESCRIBED IN SUBSECTION E OF THIS SECTION FOR ALL COUNTIES, CITIES AND TOWNS IN THIS STATE THAT ARE NOT WITHIN THE JURISDICTION OF ANY CORPORATION THAT SUBMITTED AN ALLOCATION RESERVATION PURSUANT TO THIS SECTION. THE ALLOCATION RESERVATION DOES NOT CONSTITUTE A FORMAL REQUEST FOR ALLOCATION AND DOES NOT OBLIGATE A CORPORATION TO SUBMIT A REQUEST FOR ALLOCATION.

E. THE DIRECTOR SHALL REQUIRE THAT ONE OR MORE QUALIFIED MORTGAGE REVENUE BOND OR QUALIFIED MORTGAGE CREDIT CERTIFICATE PROGRAMS BENEFIT THE RESIDENTS OF ALL COUNTIES, CITIES AND TOWNS OF THIS STATE THAT ARE NOT WITHIN THE JURISDICTION OF THE CORPORATIONS THAT RESERVE AN ALLOCATION PURSUANT TO SUBSECTION C OF THIS SECTION. BETWEEN FEBRUARY 1 AND FEBRUARY 15, AN ALLOCATION OF THE UNRESERVED PORTION OF THE STATE CEILING UNDER SECTION 35-902, SUBSECTION C SHALL BE MADE BY THE DIRECTOR FOR THIS PURPOSE. THE RECIPIENT OF THIS ADDITIONAL ALLOCATION SHALL BE ONE CORPORATION OR TWO OR MORE CORPORATIONS THAT HAVE EXECUTED A COOPERATIVE AGREEMENT AND THAT HAVE JOINTLY SUBMITTED AN ALLOCATION RESERVATION PURSUANT TO SUBSECTION C OF THIS SECTION. THE DIRECTOR SHALL DETERMINE THE RECIPIENT OF THE ADDITIONAL ALLOCATION BY FEBRUARY 15 FROM THOSE CORPORATIONS THAT HAVE OFFERED TO USE AN ADDITIONAL ALLOCATION IN AN ALLOCATION RESERVATION SUBMITTED BEFORE FEBRUARY 1. IF NO CORPORATION OFFERS AN ALLOCATION RESERVATION TO USE THE ADDITIONAL ALLOCATION BEFORE FEBRUARY 1 THE DIRECTOR SHALL SELECT A CORPORATION FOR THAT PURPOSE.

F. THE CORPORATION SELECTED BY THE DIRECTOR TO SERVE AREAS OUTSIDE ITS JURISDICTION SHALL RECEIVE AN ADDITIONAL CONFIRMATION OF STATE CEILING, AS DESCRIBED IN SUBSECTION E OF THIS SECTION, AT THE TIME IT RECEIVES A CONFIRMATION PURSUANT TO SUBSECTION C OF THIS SECTION. MORTGAGE CREDIT CERTIFICATES OR THE PROCEEDS OF QUALIFIED MORTGAGE REVENUE BONDS MADE AVAILABLE THROUGH THE PORTION OF THE STATE CEILING ALLOCATED PURSUANT TO SUBSECTION E OF THIS SECTION SHALL BE RESERVED FOR AT LEAST A ONE HUNDRED EIGHTY DAY PERIOD EXCLUSIVELY FOR THE FINANCING OF SINGLE FAMILY DWELLING UNITS IN AREAS THAT ARE NOT WITHIN THE JURISDICTION OF ANY CORPORATION DESCRIBED IN SECTION 35-706, SUBSECTION E. THE DIRECTOR MAY EXTEND THE ONE HUNDRED EIGHTY DAY PERIOD AT THE TIME OF ALLOCATION OR A LATER TIME BASED ON MARKET CONDITIONS. THE DIRECTOR AT ANY TIME MAY MODIFY ANY EXTENSION BASED ON MARKET CONDITIONS AT THE TIME. AFTER THE ONE HUNDRED EIGHTY DAY PERIOD OR ANY EXTENSION, WHICHEVER IS LATER, THE DIRECTOR MAY ALLOCATE ANY RESERVATION THAT HAS NOT BEEN USED FOR USE WITHIN THE JURISDICTION OF THE ISSUING CORPORATION AND WITHIN THE JURISDICTION OF ANY OTHER CORPORATION DESCRIBED IN SECTION 35-706, SUBSECTION E THAT GIVES ITS CONSENT.

G. THE VALIDITY OF A CONFIRMATION FOR QUALIFIED MORTGAGE REVENUE BONDS OR A QUALIFIED MORTGAGE CREDIT CERTIFICATE PROGRAM TO BENEFIT RESIDENTS OF PART OF THE STATE SHALL NOT BE AFFECTED BY REASON OF QUALIFIED MORTGAGE REVENUE BONDS OR A QUALIFIED MORTGAGE CREDIT CERTIFICATE PROGRAM RECEIVING A CONFIRMATION TO BENEFIT RESIDENTS OF ANOTHER PART OF THE STATE NOT BEING ISSUED.

H. EXCEPT AS PROVIDED IN SUBSECTIONS F AND G OF THIS SECTION, A CORPORATION SHALL NOT EXERCISE THE POWERS GRANTED UNDER SECTION 35-706, SUBSECTION A, PARAGRAPHS 11, 12 AND 13 OUTSIDE OF ITS OWN JURISDICTION.

I. AT THE TIME A CONFIRMATION IS ISSUED THE DIRECTOR SHALL DETERMINE IN WRITING THE ALLOCATION AMOUNTS IN THE MANNER DESCRIBED IN THIS SECTION. IN DETERMINING THE RECIPIENT OR RECIPIENTS FOR THE ADDITIONAL ALLOCATION PURSUANT TO SUBSECTION E OF THIS SECTION, THE DIRECTOR MAY CONSIDER THE EFFECTIVENESS OF ALTERNATIVE PROGRAM STRUCTURES IN RURAL AREAS OF THE STATE. NO ACTION MAY BE BROUGHT QUESTIONING THE ACCURACY OF ANY DETERMINATION MADE BY THE DIRECTOR PURSUANT TO THIS SECTION WITHOUT A FINDING OF THE DIRECTOR'S BAD FAITH OR WILFUL MISCONDUCT.

J. CONFIRMATIONS OF THE STATE CEILING UNDER SECTION 35-902, SUBSECTION C MAY BE APPLIED TOWARD A QUALIFIED MORTGAGE REVENUE BOND PROGRAM OR QUALIFIED MORTGAGE CREDIT CERTIFICATE PROGRAM IN ANY COMBINATION DEEMED APPROPRIATE BY THE ISSUING CORPORATION WITH THE APPROVAL OF ITS GOVERNING BODY.

K. DENIAL OF APPROVAL OF THE USE OF QUALIFIED MORTGAGE REVENUE BOND PROCEEDS OR QUALIFIED MORTGAGE CREDIT CERTIFICATES IN A CITY OR TOWN PURSUANT TO SECTION 35-706 DOES NOT AFFECT THE VALIDITY OF THE ALLOCATION OR AFFECT THE AMOUNT OF STATE ALLOCATION THAT IS ALLOCATED FOR THAT PURPOSE.

L. FOR PURPOSES OF THIS SECTION:

1. "CENSUS" MEANS THE MOST RECENT UNITED STATES DECENNIAL CENSUS OR THE SPECIAL CENSUS CONDUCTED IN ACCORDANCE WITH SECTION 42-5033 IF IT IS MORE RECENT THAN THE MOST RECENT UNITED STATES DECENNIAL CENSUS.

2. "POPULATION" OF A CORPORATION'S JURISDICTION MEANS POPULATION ACCORDING TO THE CENSUS. THE POPULATION OF A CORPORATION FORMED ON BEHALF OF A COUNTY EQUALS THE POPULATION OF THE COUNTY MINUS THE POPULATION OF ANY OTHER CORPORATION THAT IS WITHIN THE COUNTY, THAT IS DESCRIBED IN SECTION 35-706, SUBSECTION E AND THAT SUBMITS A REQUEST FOR ALLOCATION PURSUANT TO SECTION 35-902, SUBSECTION C.

Sec. 7. Housing commission task force on tax exempt mortgage financing; duties

A. The housing commission task force on tax exempt mortgage financing is established consisting of the following members:

1. Four members who are appointed by the governor and who are members of different boards of directors of eligible corporations described in section 35-706, subsection E, Arizona Revised Statutes. The governor shall make appointments pursuant to this paragraph from nominations submitted by the respective boards of directors of eligible corporations.

2. Four members who are appointed by the governor, who are members of the state housing commission and who are not members of any boards of directors of eligible corporations described in section 35-706, subsection E, Arizona Revised Statutes, or an employee or agent of such a corporation.

3. Four advisory members of the legislature, two of whom are members of the senate, who are not of the same political party and who are appointed by the president of the senate and two of whom are members of the house of representatives, who are not of the same political party and who are appointed by the speaker of the house of representatives. Members appointed pursuant to this paragraph are nonvoting members and are not counted for the purposes of determining a quorum.

B. The governor shall designate one of the members who is appointed pursuant to subsection A, paragraph 1 or 2 of this section, to serve as chairperson. The task force shall elect a vice-chairperson from among its voting members.

C. The task force shall meet at least twice a year at the call of the chairperson, to review the availability of financing for single family housing and the role of the private activity bond allocation process in facilitating the availability of financing for low to medium income families in all areas of this state.

D. The task force shall issue an annual report of its activities, findings and recommendations on or before August 31 of each year. To the extent the information is available the annual reports shall contain the information required in subsection E, paragraphs 1 and 2 of this section. The task force shall submit the annual report to the governor, the president of the senate, the speaker of the house of representatives and the chairperson of the state housing commission. In the years that an interim or final report is required, the annual report may be combined with the interim or final report.

E. The task force shall issue an interim report on or before August 31, 2002 and a final report on or before August 31, 2004 on the availability of financing for single family housing and the distribution and use of private activity bonds in this state. The task force shall submit its reports to the governor, the president of the senate, the speaker of the house of representatives and the chairperson of the state housing commission. The reports shall contain at least the following:

1. Information concerning the uses of private activity bonds issued by eligible corporations during the two preceding calendar years.

2. Information concerning the use of mortgage revenue bond proceeds or mortgage credit certificates issued during the preceding three calendar years, including:

(a) The dollar amount of mortgage revenue bonds and mortgage credit certificates issued.

(b) The location of the recipients of loans financed through mortgage revenue bonds.

(c) The location of the recipients of mortgage credit certificates.

(d) The dollar amount of loans and credit certificates processed by each mortgage lender or program administrator.

(e) A summary of demographic information concerning the recipients of loans financed through mortgage revenue bonds or mortgage revenue bonds or mortgage credit certificates, to the extent permitted by law.

(f) A detailed schedule of the costs associated with the mortgage revenue bond program or the mortgage credit certificate program including issuance costs, program administration costs, program marketing costs, recipient fees and charges and any other costs or charges.

3. Recommendations for any modifications to title 35, chapters 5 and 7, Arizona Revised Statutes.

Sec. 8. Industrial development authorities; reporting requirements

Beginning in 2000, annually before June 1, each corporation that is organized under title 35, chapter 5, Arizona Revised Statutes, shall submit information to the housing commission task force on tax exempt mortgage financing established by section 7 of this act to facilitate the development of the task force reports. The housing commission task force on tax exempt mortgage financing shall prescribe the required form and contents of the information submitted.

Sec. 9. Effective date

This act is effective from and after December 31, 1999.

Sec. 10. Delayed repeal

Sections 7 and 8 of this act are repealed from and after December 31, 2004.

APPROVED BY THE GOVERNOR MAY 19, 1999.

FILED IN THE OFFICE OF THE SECRETARY OF STATE MAY 19, 1999.