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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
private activity bonding
Purpose
Modifies the requirements for allocating the state ceiling for private activity bonds.
Background
The Arizona Finance Authority (AFA) is charged with allocating the state ceiling for private activity bonds as imposed by federal law. The AFA must issue state ceiling confirmations on a first-come first-served basis within enumerated project categories in accordance with set allocation percentages. The allocation percentages of the state ceiling are set at: 1) 35 percent to projects that are designated at the sole discretion of the AFA Director; 2) 35 percent to qualified mortgage revenue bonds and qualified mortgage credit certificate programs, excluding programs for home improvement and rehabilitation; 3) 15 percent to qualified residential rental projects as described in the U.S. Internal Revenue Code (U.S. IRC) ; 4) 5 percent to qualified student loan projects; 5) 5 percent to manufacturing projects; and 6) 10 percent to all other financeable projects that are not described or provided for in statute (A.R.S. § 35-902).
A state ceiling confirmation, before December 17, must not be allocated to a project in an amount greater than $35,000,000, except to any project designated by the AFA Director, qualified mortgage revenue bonds or qualified mortgage credit programs and qualified student loan projects (A.R.S. § 35-905). Any portions of the state ceiling for which bonds have not been issued by December 16 must be pooled and allocated by the AFA Director to projects eligible for carryforward allocations under federal law. A notice of intent must be filed with the AFA, by December 15, from any issuer, bond counsel or other interested person with respect to projects eligible for carryforward allocations (A.R.S. § 35-907).
Statute defines state ceiling as the dollar limit of the aggregate amount of private activity bonds that may be issued in Arizona in accordance with the U.S. IRC for each calendar year (A.R.S. § 35-901).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Modifies the allocation of the state ceiling for private activity bonds as follows:
a) 10 percent, rather than 35 percent, to qualified mortgage revenue bonds and certificate programs, excluding home improvement and rehabilitation;
b) 45 percent, rather than 15 percent, to qualified residential rental projects as described in the U.S. IRC; and
c) 5 percent, rather than 10 percent, to all other financeable projects that are not described or provided for in statute.
2. Eliminates the prohibition for a bond issuer to transfer or assign its rights to an allocation of the state ceiling from:
a) one project to another project; or
b) itself to another bond issuer.
3. Requires the AFA to issue state ceiling confirmations within three business days after receipt.
4. Applies a restriction on a state ceiling confirmation from being more than $35,000,000 before December 17 to the following projects:
a) qualified mortgage revenue bonds and qualified mortgage credit programs; and
b) qualified student loan projects.
5. Eliminates the restriction on a state ceiling confirmation from being more than $35,000,000 before December 17 for qualified residential rental projects.
6. Requires any portion of the state ceiling remaining unallocated by December 16 to be pooled and allocated by the AFA Director to qualified residential rental projects eligible for a carryforward allocation, rather than any project eligible for a carryforward allocation.
7. Allows the notice of intent for carryforward allocations after December 16 to be filed by the statewide issuer, rather than any bond issuer.
8. Eliminates the notice of intent security deposit exemption for the following beneficiaries:
a) the issuer of a student loan corporation; or
b) a qualified mortgage revenue bond project or a qualified mortgage credit certificate program.
9. Allows a bond issuer, on written notice to the AFA, to reallocate any carryforward allocation properly obtained and issued after December 16 to another project of the same type, by the same bond issuer, if the project is located wholly within the jurisdiction of the bond issuer.
10. Requires a reallocation to be consistent with state and federal law.
11. Specifies that a reallocation:
a) increases the aggregate amount of the original carryforward allocation to which the reallocation relates; and
b) extends the term of the original carryforward allocation during which the bonds must be issued or a refund of any security deposit previously received by the AFA on account of the original carryforward allocation must be made.
12. Defines statewide issuer as the AFA.
13. Makes technical changes.
14. Becomes effective on the general effective date.
Prepared by Senate Research
February 6, 2023
JT/sr