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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
affordable housing; qualified projects; eligibility
Purpose
Specifies that the property valuation of a project that qualifies for the Affordable Housing Tax Credit (Credit) that uses the owner-elected statutory income-based valuation method is not a reduction in state or local property taxes for the purposes of the Credit.
Background
The Low-Income Housing Tax Credit (LIHTC) Program was enacted by the U.S. Congress in 1986 to finance the construction and rehabilitation of low-income affordable rental housing for individuals and families. The Internal Revenue Service allocates housing tax credits to designated state agencies which then award the credits to developers of qualified projects. The Arizona Department of Housing (ADOH) allocates available credits each year in Arizona (26 U.S.C. § 42).
Laws
2021, Chapter 430 established the Credit, administered by the ADOH. The
ADOH must allocate $4,000,000 for the Credit in each calendar year until
January 1, 2026. A qualified project approved for the Credit is ineligible for
any abatement, exemption or other reduction in state or local ad valorem
property taxes otherwise allowed by statute.
Low-income multifamily residential rental property is property
for which the owner received an allocation of federal income tax credits
through the LIHTC Program. An owner or operator of qualifying low-income
multifamily residential rental property may elect a statutory income-based
method for valuing the property. The county assessor must value low-income
multifamily residential rental property based on the income method to value
using the actual annual income and actual annual expenses of the property and
using the county
assessor-determined capitalization rate. If a low-income multifamily
residential rental property has fully transitioned to current use as a
conventional multifamily property, the property no longer qualifies for the
statutory income-based valuation method (A.R.S.
§ 42-13603).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
2. Makes technical changes.
3. Becomes effective on the general effective date.
Amendments Adopted by Committee
· Reinstates the determination that qualified projects that are approved for the Credit are ineligible for any statutory property tax exemptions.
Senate Action
FIN 2/17/25 DPA 4-3-0
Prepared by Senate Research
February 18, 2025
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