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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
AMENDED
unclaimed property; housing trust fund
Purpose
Requires 55 percent of the proceeds from the sale of abandoned property to be deposited into the Housing Trust Fund (HTF) before statutory allocations to other funds are made. Establishes the Affordable Housing Tax Credit (Tax Credit) and outlines requirements for the Tax Credit.
Background
Proceeds from the sale of abandoned property are deposited into the state General Fund (state GF) after all other statutory required deposits are made each fiscal year. The statutory required deposits are as follows: 1) the first $2,000,000 into the Seriously Mentally Ill HTF; 2) the second $2,500,000 into the HTF; and 3) the next $24,500,000 in the Arizona Department of Revenue (ADOR) Administrative Fund (A.R.S. § 44-313).
The HTF is administered by the Director of the Arizona Department of Housing (ADOH) and consists of monies from the sale of unclaimed property, monies transferred from the Arizona Industrial Development Authority and investment earnings. Monies in the HTF may be spent on constructing or renovating facilities and on housing assistance, including support services for persons who have been determined to be seriously mentally ill and to be chronically resistant to treatment (A.R.S. § 41-3955).
ADOH was established to address affordable
housing issues in Arizona, including availability of affordable housing for
low-income and medium-income families and special
needs-adapted housing. ADOH is authorized to provide Arizonans with financial
assistance, training and education and advisory assistance toward the
development of safe and affordable housing. ADOH is responsible for setting
standards on quality and safety for manufactured homes, mobile homes and
factory-built buildings (A.R.S.
§ 41-3953).
The Department of Insurance and Financial Institutions (DIFI) conducts examinations and investigations and has the power to make and enforce rules and punishments for violations of penal provisions of insurance statute to the Attorney General (A.R.S. § 20-142).
ADOR is responsible for providing an integrated, coordinated and uniform system of tax administration and revenue collection for the state, including a coordinated electronic method of collecting state and municipal transaction privilege and affiliated excise taxes (A.R.S. § 42-1004).
There may be a fiscal impact to the state GF by changing the deposit into the HTF from $2,000,000 each fiscal year to a set percentage of the proceeds from the sale of abandoned property. The fiscal impact to the state GF for the Tax Credit would be determined on the amount of Tax Credits allocated each fiscal year.
Provisions
HTF
1. Deposits 55 percent of the proceeds from the sale of abandoned property into the HTF before allocations are made to other statutory funds.
2. Removes the requirement that $2,000,000 from the proceeds of the sale of abandoned property be deposited into the HTF.
3. Become effective on the general effective date.
Tax Credit
4. Establishes the Tax Credit and requires ADOH to administer the Tax Credit.
5.
Requires ADOH to allocate Tax Credits for projects in the state that
qualify for the federal
low-income housing tax credit and that are placed in service, beginning June
30, 2021, in an amount equal to at least 50 percent of the amount of the
federal credit allowed in each taxable year (TY).
6. Requires ADOH to allocate the Tax Credit according to ADOH's qualified allocation plan.
7. Requires ADOH to prescribe forms, procedures and criteria for applying, evaluating and qualifying for the Tax Credit.
8. Requires ADOH to issue an eligibility statement for each qualified project that identifies the qualified project, allocation year and amount of the Tax Credits allocated to the project.
9. Requires ADOH to allocate a total of $8,000,000 of the Tax Credits in any calendar year.
10. Specifies that an approved amount applies against the dollar limit for the year the application is submitted and any unused balance of the current calendar year cap carries forward to the following year.
11. Allows any taxpayer that owns an interest in an investment in a qualified project, that receives an eligibility statement from ADOH, a Tax Credit for TYs beginning January 1, 2021, if the taxpayer acquires interest before filing a tax return claiming the Tax Credit.
12. Requires the taxpayer to apply the Tax Credit against the taxpayer's insurance premium or income tax liability as provided by statutory procedures and terms.
13. Prohibits qualified projects from being eligible for any abatement, exemption or other reduction in state or local ad valorem property taxes.
14. Requires ADOH, on or before July 30 of each year, to hold a public hearing to solicit and accept public comments on the Tax Credit to be used for qualified projects that are financed through tax-exempt bond issuance.
15. Requires ADOH to post a copy of all comments submitted during a public hearing on ADOH's website before September 15 of the year in which the hearing was held.
16. Defines Internal Revenue Code, qualified project and taxpayer.
DIFI
17. Allows the Tax Credit to be applied against the premium tax incurred by a taxpayer if ADOH issues an eligibility statement for a qualified project.
18. Specifies that the amount of the Tax Credit:
a) is at least 50 percent of the amount of the federal low-income housing tax credit for the qualified project; and
b) may be on notice to DIFI to be allocated among partners, members or shareholders as seen fit.
19. Prohibits the total allocation of a Tax Credit among participants from exceeding the amount of credit approval by ADOH.
20. Allows a partner, member or shareholder to hold an investment exclusively in either state or federal Tax Credits allocated to the qualified project.
21. Requires the taxpayer in order, to claim the Tax Credit, to submit an eligibility statement provided by ADOH to DIFI with the taxpayer's premium tax return.
22. Specifies that the taxpayer must furnish the required documentation for the Tax Credit to be allowed.
23. Stipulates that if the amount of the Tax Credit exceeds the taxpayer's state premium tax liability, the excess amount may be carried forward for up to 5 consecutive TYs' premium tax liability.
24. States that if all or part of the Tax Credit is subject to recapture under the Federal Tax Code during the first 10 TYs after the project is placed in service, the Tax Credit is also subject to recapture in a proportional amount from all taxpayers that claimed the Tax Credit.
25. Specifies that the recapture is calculated by increasing the amount of taxes imposed in the following year by the amount recaptured.
26. States that a taxpayer who claims a Tax Credit against the state premium tax liability is not required to pay any additional retaliatory tax.
27. Allows the Tax Credit to fully offset any retaliatory tax imposed.
ADOR
28. Allows ADOR to allocate individual and corporate income Tax Credits for taxpayers who apply to ADOH and receive an eligibility statement for a qualified project.
29. Specifies that the amount of the Tax Credit:
a) at least 50 percent of the amount of the federal low-income housing tax credit for the qualified project; and
b) allows the allocation of the Tax Credit on notice to ADOR to be spread among partners, members or shareholders as seen fit.
30. Prohibits the total of the allocated Tax Credits among participants from exceeding the amount of Tax Credit approved by ADOH.
31. Allows a partner, member or shareholder to hold an investment exclusively in the state or federal Tax Credits allocated to the qualified project.
32. Requires the taxpayer in order, to claim the Tax Credit, to submit the eligibility statement from ADOH to ADOR with the taxpayer's income tax return.
33. Prohibits a Tax Credit from being issued until the taxpayer furnishes the required documentation.
34. Allows the taxpayer, if the amount of the Tax Credit for a TY exceeds the amount of taxes due on the claimant's income or if no taxes are due, to carry the amount forward for up to five consecutive years.
35. States that if all or part of the credit subject to recapture under the Federal Tax Code during the first 10 TYs after the project is placed in service, the credit is also subject to recapture in a proportional amount from all taxpayers that claimed the credit.
36. Specifies that the recapture is calculated by increasing the amount of taxes imposed in the following year by the amount recaptured.
Tax Credit Review Committee (Review Committee)
37. Establishes the Review Committee consisting of:
a) three members appointed by the Governor;
b) three members appointed by the President of the Senate; and
c) three members appointed by the Speaker of the House of Representatives.
38. States that appointed members serve at the pleasure of the person who made the appointment.
39. Specifies that members are not eligible for compensation and may receive reimbursement for expenses.
40. Requires the Review Committee to review the Tax Credits allowed on the fifth year after the Tax Credit has been effective and every five years thereafter.
41. Requires the Review Committee's review to include:
a) the history, rationale and estimated revenue impact of the Tax Credit;
b) whether the Tax Credit has provided a benefit to Arizona that includes corporate tax credits, measurable economic development, new investments, creation of new jobs or retention of existing jobs; and
c) whether the Tax Credit is unnecessarily complex in the application, administration or approval process.
42. Requires the Review Committee to report its findings and recommendations to the Legislature and Governor by December 15 of the year the Review Committee reviews the Tax Credit and provide a copy to the Secretary of the State.
43. Terminates the Review Committee on July 1, 2028.
Miscellaneous
44. Requires ADOH, DIFI and ADOR to adopt rules, publish and prescribe forms and procedures to administer the Tax Credit including criteria on eligibility statements.
45. Adds the Tax Credit to the income tax credit review schedule.
46. Contains a delayed repeal for the Tax Credit of December 31, 2029.
47. Specifies that the repeal of the Tax Credit does not:
a) limit or impair the issuance of premium tax credits or income tax credits or qualifies projects that receive a reservation from ADOH before December 31, 2029, or a taxpayer's ability to redeem the Tax Credit; and
b) affect any act done, right accruing or accrued or any suit in any civil cause of action before the repeal.
48. Contains a purpose clause which states that the purpose is to support the construction of new affordable housing projects in Arizona.
49. Contains a delayed effective date for the Tax Credit of December 31, 2020.
50. Makes conforming changes.
51. Becomes effective on January 1, 2021.
Amendments Adopted by Committee
1. Establishes the Tax Credit to be administered by ADOH.
2. Outlines procedures and requirements for ADOH, DIFI and ADOR to allocate the Tax Credit.
3. Establishes the Review Committee and outlines the review process and reporting requirements.
4. Adds a delayed effective date and repeal date relating to the Tax Credit.
Senate Action
APPROP 2/18/20 DPA 8-0-1
Prepared by Senate Research
February 20, 2020
LMM/kja