FOR CAUCUS & FLOOR ACTION

REVISED

ARIZONA STATE SENATE

RESEARCH STAFF

JULIE SZPERLING

LEGISLATIVE RESEARCH ANALYST

COMMERCE COMMITTEE

Telephone: (602) 542-3171

Facsimile: (602) 542-7833

TO: MEMBERS OF THE SENATE

DATE: March 14, 2002

SUBJECT: Strike everything amendment to S.B. 1066

Purpose

An emergency measure that expands the definition of “projects” eligible to receive financing through industrial development authorities.

Background

Industrial development bonds are securities issued by or on behalf of a local government to provide debt financing for projects used most often by a private user. Industrial development bond financing normally results in reduced financing costs since interest on the bonds is not subject to federal income taxes. The bonds are an obligation of the private user, not the issuing authority.

In Arizona, the issuer of industrial development bonds is an industrial development authority (IDA) on behalf of a municipality or county. Currently, there are 18 categories of facilities (each called a “project”) which an IDA may finance under Arizona law, and all are eligible for tax-exempt financing if the is owned by a 501(c)(3) entity and used by the 501(c)(3) entity for its nonprofit purpose.

The strike everything amendment to S.B. 1066 expands the definition of “projects” available to receive financing through an IDA to include new or existing correctional facilities that contract exclusively with the Arizona Department of Corrections or the Arizona Department of Juvenile Corrections for the housing of inmates or persons adjudicated delinquent. Proponents indicate that the ability to utilize the industrial development financing would attract state correctional facilities for economic development purposes.

There is no anticipated fiscal impact to the state general fund associated with this measure.

Provisions

1. Expands the definition of “projects” with respect to a corporation formed with the permission of a municipality or county, other than the Arizona Board of Regents, to include new or existing correctional facilities that contract exclusively with the Arizona Department of Corrections or the Arizona Department of Juvenile Corrections for the housing of inmates or persons adjudicated delinquent.

2. Makes technical changes.

3. Becomes effective upon signature of the Governor.

Amendments Adopted by Committee

· Adopted the strike-everything amendment.

Senate Action

FIN 1/28/02 DP 8-0-0

COM 3/13/02 DPA/SE 6-0-0

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