ARIZONA STATE SENATE

ANNA NGUYEN

LEGISLATIVE RESEARCH INTERN

MOLLY GRAVER

LEGISLATIVE RESEARCH ANALYST

FINANCE COMMITTEE

Telephone: (602) 926-3171

RESEARCH STAFF

TO:                  MEMBERS OF THE SENATE

FINANCE COMMITTEE

DATE:            March 21, 2022

SUBJECT:      Strike everything amendment to H.B. 2454, relating to affordable housing tax credit; extension

Purpose

Increases, from $4,000,000 to $6,000,000, the annual amount the Arizona Department of Housing (ADOH) must allocate for the Affordable Housing Tax Credit (Credit). Delays the repeal of the Credit until January 1, 2028.

Background

            The Tax Reform Act of 1986 enacted the Low-Income Housing Tax Credit (LIHTC) to finance the construction and rehabilitation of low-income affordable rental housing for individuals and families (26 U.S.C. § 42). The Internal Revenue Service allocates housing tax credits to designated state agencies which then award the credits to developers of qualified projects. ADOH allocates available tax credits each year in Arizona (A.R.S. § 35-728).

            In 2021, the Legislature established an insurer, individual and corporate Credit, administered by ADOH. ADOH must allocate $4,000,000 for the Credit in each calendar year. The amount of the Credit is at least 50 percent of the amount of the federal LIHTC for a qualified project. The Affordable Housing Tax Credit Review Committee is established to review the Credit every three years. The Credits, credit administration and the Affordable Housing Tax Credit Review Committee are repealed on January 1, 2026 (Laws 2021, Ch. 430).

            The strike-everything amendment to H.B. 2454 increases, from $4,000,000 to $6,000,000, the required allocation from ADOH for the Credit.

Provisions

1. Increases, from $4,000,000 to $6,000,000, the annual amount that ADOH must allocate for the Credit in each calendar year.

2. Delays, from January 1, 2026, to January 1, 2028, the repeal of the Credits, Credit administration and the Affordable Housing Tax Credit Review Committee.

3. Makes technical changes.

4. Becomes effective on the general effective date.