industrial development bond
allocations
DP |
Committee on Commerce and Economic Development |
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DPA |
Committee on Ways and Means |
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DPA |
Committee on Appropriations |
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DPA |
Caucus and COW |
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X |
As Transmitted to the Governor |
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HB 2390 changes the allocations for tax-exempt Industrial Development Bonds, guarantees the participation of qualified residential rental projects, and creates a study committee.
In 1986, the Legislature established a private activity bonding authority under the provisions of a 1984 federal Deficit Reduction Act. The federal program designates each state allotment of tax-exempt private activity bonds based on population. Until 2000, the allocation has been $50 per capita. Congress recently passed the federal Community Renewal Act that increases the allocation amount beginning in 2001 to $62.50 per capita, and increases to $75 in 2002. Beginning in 2003, the amounts will be adjusted for inflation. Projects financed with tax-exempt bonds must comply with the Internal Revenue Code and all applicable state laws.
The current private activity bond program in Arizona is administered through the Finance Division of the Department of Commerce. Private activity bonds are issued by or on behalf of a municipality or county to provide financing for projects used in the trade or business of a private user. The current state allocation is divided among five categories. The current categories are: 1) projects that are designated at the sole discretion of the Director of Commerce, 2) qualified mortgage revenue bonds (MRB) and qualified mortgage credit certificate programs (MCC), 3) qualified student loan projects, 4) manufacturing projects, 5) all projects not provided for in the other categories which include, but are not limited to qualified mortgage revenue bonds and qualified mortgage credit certificate programs for home improvement and rehabilitation.
Allocations are made on a first-come, first served basis for director’s discretion and MRB/MCC category. The student loan projects, manufacturing projects and the “all other” categories are allocated on a lottery system. Qualified projects apply to the Department of Commerce and a lottery is conducted in January of each year. Any unused allocations are then distributed in a subsequent lottery in June or July (there are no categories in the June/July allocation lottery).
HB 2390 changes the allocation formula to include qualified residential rental (multifamily) projects; however, it should be noted that these projects are already receiving funds each year through the current allocation formula.