ARIZONA STATE SENATE
Phoenix, Arizona
industrial
development bonds; rental property
Purpose
Makes the temporary allocation schedule for private activity bonds permanent and directs the Arizona Housing Commission to establish a committee to make recommendations on allocations and improvements to the system.
Background
The private activity bond program in Arizona is administered by the Arizona Department of Commerce (DOC). Private activity bonds are securities issued by or on behalf of a local government to provide debt financing for projects used in the trade or business by a private user. Last legislative session, the allocation schedule for private activity bonds was changed to allow for a 10 percent allocation for qualified residential rental projects for calendar years 2002 and 2003 (Laws 2001, Chapter 338). Beginning January 1, 2002, Arizona's volume cap is allocated as follows:
a) 10 percent for the discretion of the Director (reverts to 15 percent beginning January 1, 2004).
b) 35 percent for mortgage revenue bonds and/or mortgage credit certificates (no change beginning January 1, 2004).
c) 10 percent for qualified residential rental projects, 30 percent of which shall be set aside for 180 days for rural projects (eliminated beginning January 1, 2004).
d) 20 percent for student loan bonds certificates (no change beginning January 1, 2004).
e) 15 percent for manufacturing projects certificates (no change beginning January 1, 2004).
f) 10 percent for all other projects which may be financed through private activity bonds other than mortgage revenue bonds, mortgage credit certificates and manufacturing projects (reverts to 15 percent beginning January 1, 2004).
Laws 2001, Chapter 338 also established the Study Committee on Industrial Development Bond Allocations, which met during the interim to study the utilization of private activity bonds for the past five years, review the process by which prospective users of private activity bonds are selected and evaluate and make recommendations for future allocations and methods for selecting bond recipients. The Committee adopted two recommendations: 1) permanently set aside 10 percent of the State’s private activity bonds for qualified residential rental projects, 30 percent of which is set aside for rural projects for a period of at least 180 days and 2) require the Arizona Housing Commission to create a committee to review the housing allocations and process and make recommendations on improving the system.
S.B.1204 codifies the recommendations of the Committee, making the temporary allocation schedule for private activity bonds permanent and requiring the Arizona Housing Commission to establish a committee to make recommendations on allocations and improvements to the system.
There is no anticipated fiscal impact to the state general fund associated with this measure.
Provisions
1. Makes the current allocation schedule for calendar years 2002 and 2003 for private activity bonds permanent.
2. Requires the Arizona Housing Commission to establish a temporary committee composed of representatives of all stakeholders in industrial development authority financing for single family and multiple family housing allocations.
3. Requires the committee to submit a report of its recommendations on allocations and improvements to the system by December 1, 2002 to the Governor, the President of the Senate and the Speaker of the House of Representatives.
4. Makes conforming changes.
5. Provides for a general effective date.
Prepared by Senate Staff
January 31, 2002