ARIZONA STATE SENATE
RESEARCH STAFF
TO: MEMBERS OF THE SENATE
FINANCE COMMITTEE
DATE: March 18, 2022
SUBJECT: Strike everything amendment to H.B. 2337, relating to affordable housing;
qualified projects; eligibility
Purpose
Narrows, retroactive to September 29, 2021, the abatements, exemptions or other
reductions in state or local ad valorem property taxes for which a qualified project approved for
the Affordable Housing Tax Credit (Credit) is ineligible to abatements, exemptions or other
reductions prescribed in statutes governing the Government Property Lease Excise Tax (GPLET).
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 allocates available credits each year in Arizona (26 U.S.C. ยง 42).
Laws 2021, Chapter 430 established the Credit, administered by the Arizona Department
of Housing (ADOH). 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.
The GPLET was enacted in 1996 to allow government lessors to lease property owned by
the lessor to prime lessees. In lieu of property taxes, prime lessees must pay a GPLET on the
government property improvement to the county treasurer. Certain property and interests are
exempt from GPLET, including: 1) property used for public housing; 2) property of a corporation
organized or directed by a county, city or town to be used for public purposes; and 3) residential
rentals occupied by the prime lessee. A city or town may, for a limited period, abate the GPLET
of a government property that: 1) is located in a single central business district in the city or town
and is subject to a lease or development agreement entered beginning April 1, 1985; 2) is located
entirely within a slum or blighted area; and 3) resulted or will result in an increase in property
value of at least 100 percent (A.R.S. Title 42, Chapter 6, Article 5).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Narrows the abatements, exemptions or other reductions in state or local ad valorem property
taxes for which a qualified project approved for the Credit is ineligible to only GPLET
abatements, exemptions and reductions of state or local ad valorem property taxes.
2. Becomes effective on the general effective date, retroactive to September 29, 2021.
ANNA NGUYEN
LEGISLATIVE RESEARCH INTERN
MOLLY GRAVER
LEGISLATIVE RESEARCH ANALYST
FINANCE COMMITTEE
Telephone: (602) 926-3171