ARIZONA STATE SENATE
Phoenix, Arizona
industrial
development bond allocations
Purpose
Establishes an industrial development bond allocations study committee to study the utilization of private activity bonds, review the user selection process and evaluate and make recommendations for future allocations and methods for selecting bond recipients.
Background
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. Up 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. This year, the allocation amount is $62.50 per capita and will rise to $75 in 2002. Beginning in 2003 and thereafter, the amounts will be adjusted for inflation. Projects financed with tax-exempt bonds must comply with the Internal Revenue Code and any applicable state laws.
The current private activity bond program in Arizona is administered through the Finance Division of the Department of Commerce (DOC). 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 DOC, 2) qualified mortgage revenue bonds (MRB) and qualified mortgage credit certificate programs (MCC), 3) qualified student loan projects, 4) manufacturing projects, and 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” category are allocated on a lottery system. Qualified projects apply to the DOC, and a lottery is done in January of each year. Any unused allocations are then distributed in a lottery in June or July (there are no categories in the June/July allocation lottery).
H.B. 2390 establishes a study committee on industrial development bond allocations charged with studying the utilization of private activity bonds, reviewing the user selection process and evaluating and making recommendations for future allocations and methods for selecting bond recipients.
There is no anticipated fiscal impact to the state general fund associated with this measure.
Provisions
1. Establishes and prescribes the membership of a study committee (terminating December 31, 2001) on industrial development bond allocations charged with the following:
2. Requires the study committee to submit a report by December 1, 2001 to the Governor and Legislature that includes the recommendations of the study committee.
3. Requires legislative staff, DOC and the Governor’s Agency on Housing or DOC Division of Housing and Infrastructure Development, whichever is operational, to provide assistance to the study committee.
4. Provides for a general effective date.
Amendments
Adopted in Committee
1. Adds a fourth member of the Senate to the study committee.
Amendments Adopted in Committee of the Whole
1. Returns the private activity bond allocation schedule to its current distribution.
2. Modifies the membership of the study committee.
CED 01/22/01 DP 6-0-4-0 COM 3/28/01 DPA 6-0-0-0
WM 2/20/01 DPA 7-0-3-0 FIN 4/4/01 W/D
APPROP 3/6/01 DPA 7-6-0-3 3rd Read 4/17/01 18-11-1-0
3rd Read 3/20/01 49-6-5-0
Prepared by Senate Staff
April 17, 2001