Assigned to FIN FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
FACT SHEET FOR S.B. 1602
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
1. Specifies that the valuation of a qualified project using the income-based method for
low-income multifamily residential rental property is not a reduction in state or local ad
valorem property taxes for the purposes of the Credit. FACT SHEET
S.B. 1602
Page 2
2. Deems a qualified project that is approved for the Credit as ineligible for any abatement or
other reduction in state or local ad valorem property taxes, rather than any abatement,
exemption or other reduction in state or local ad valorem property taxes.
3. Becomes effective on the general effective date.
Prepared by Senate Research
February 12, 2025
MG/ci