ARIZONA STATE SENATE
RESEARCH STAFF
TO: MEMBERS OF THE SENATE
FINANCE COMMITTEE
DATE: March 21, 2022
SUBJECT: Strike everything amendment to H.B. 2610, relating to project unit size; affordable
housing
Purpose
Removes the 200-unit cap for affordable rental housing property to qualify for a property
tax exemption.
Background
Statute exempts, from property tax, property that is used exclusively for affordable rental
housing as prescribed by the Low-Income Housing Tax Credit (LIHTC) program or another
recorded restrictive covenant imposed by financing for affordable housing and related facilities.
An affordable housing rental property is exempt from property tax if the property does not exceed
200 units, is owned and operated by an eligible nonprofit corporation or a limited partnership or
limited liability company in partnership with or managed by an eligible nonprofit corporation,
maintains a restricted rent amount that does not exceed the amount prescribed by deed restrictions
or regulatory agreements pursuant to the property's financing or financial assistance terms and is
either: 1) financed with tax-exempt mortgage revenue bonds or general obligation bonds or by
local, state or federal loans or grants; or 2) eligible for and receives LIHTCs. The owner of a
tax-exempt property must certify that the monies that would have been used for property tax are
used to maintain the affordability of the units occupied by low-income households (A.R.S.
§ 42-11133).
The LIHTC program was enacted by the U.S. Congress in 1986 to promote the
development of affordable rental housing for low-income individuals and families. The LIHTC
provides funding for the development costs of low-income housing by allowing an investor to take
a federal tax credit equal to a percentage of the costs incurred (26 U.S.C. § 42).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Removes the 200-unit cap for affordable rental housing property to qualify for a property tax
exemption.
2. Makes technical changes.
3. Becomes effective on the general effective date.
KIYAHNA ARAZA
ASSISTANT RESEARCH ANALYST
MOLLY GRAVER
LEGISLATIVE RESEARCH ANALYST
FINANCE COMMITTEE
Telephone: (602) 926-3171