A.R.S. tit. 35 ch. 7 — Arizona Revised Statutes Title 35 Chapter 7 — Allocation Of Private Activity Bonding Authority

35-901. Definitions In this chapter, unless the context otherwise requires: 1. "Authority" means the Arizona finance authority established by title 41, chapter 53, article 2. 2. "Board" means the board of directors of the authority. 3. "Bond" means any obligation that is subject to the provisions of section 146 of the code, excluding obligations that received a carry-forward allocation in a prior year. 4. "Business day" means between the hours of 8:00 a.m. and 5:00 p.m., mountain standard time, any day of the week other than a Saturday, a Sunday or a legal holiday or a day on which the authority is authorized or obligated by law or executive order to close. 5. "Carry-forward project" means any project receiving a carry-forward allocation pursuant to section 35-907. 6. "Certificate of closing" means the certificate of closing adopted for use by and to be filed with the authority declaring that bonds were issued or that a qualified mortgage credit certificate program has been established. 7. "Code" means the United States internal revenue code of 1986, as amended, and its applicable regulations. 8. "Confirmation" means the allocation confirmation that confirms an allocation to a project in the form adopted for use by the authority. 9. "Director" means the director of the authority. 10. "Issued" means, with respect to a bond or bonds, either of the following: (a) The bond or bonds have been delivered and paid for in full. (b) For bonds issued pursuant to a draw-down loan for which a bond purchaser has agreed to receive and pay for the bonds of the issue in increments from time to time, all of the bonds are treated as issued on the first date on which the aggregate principal amount of such bonds delivered and paid for exceeds the lesser of fifty thousand dollars or five percent of the aggregate issue price of the issue. 11. "Issuer" means an entity or person issuing bonds. 12. "Manufacturing project" means a project as described in section 35-701, paragraph 7, subdivision (a), item (vii) or (xiii). 13. "Mortgage credit certificate" means a certificate as described in section 25(c)(1) of the code. 14. "Nonurban area" means all areas of this state not within the boundaries of the urban cities. 15. "Notice of intent" means the notice of intent to be filed with the authority in the form adopted for use by the authority. 16. "Project" means a qualified mortgage credit certificate program or any construction, acquisition, planned expenditure or other activity, including all phases of a multiphased project that requests allocations in the same year and including costs of issuance, capitalized interest and discounts, financed with bonds and located in this state or directly benefiting residents of this state. All qualified mortgage credit certificate programs and qualified mortgage revenue bonds, or combinations of such programs and bonds, of a single issuer or group of issuers acting together, constitute a single project for the purposes of this paragraph. 17. "Qualified mortgage credit certificate program" means a qualified mortgage credit certificate program as described in section 25(c)(2) of the code. 18. "Qualified mortgage revenue bonds" means an issue of bonds as described in section 143(a) of the code. 19. "Qualified student loan project" means an issue of bonds as described in section 144(b) of the code. 20. "Request" means the request for allocation to be filed with the authority in the form adopted for use by the authority. 21. "Security deposit" means cash, a bank cashier's check, a surety bond, a letter of credit or any other form of security approved by the director in favor of the authority that is received by the authority from an issuer or user to secure or extend an allocation. 22. "State ceiling" means the dollar limit of the aggregate amount of private activity bonds that may be issued in this state pursuant to section 146 of the code for each calendar year, beginning in 1988. 23. "Tax reform act of 1986" means P.L. 99-514 enacted by the ninety-ninth Congress, second session in 1986. 24. "Urban city" means a city having a population of not less than one hundred thousand persons according to the most recent United States decennial or special census. The area of each urban city is the boundary of the city as of January 1 of the current calendar year. 25. "Year" means the calendar year. 35-902. Allocation A. Subject to this chapter, the total amount of the state ceiling is allocated among projects pursuant to this section. The director shall issue confirmations on a first-come, first-served basis, subject to section 35-904, subsection A in the event of oversubscription, within any particular category of projects as described in subsection C, D or E of this section. B. Twenty-five percent of the state ceiling is allocated to projects that are designated at the sole discretion of the director. C. Thirty percent of the state ceiling is allocated to qualified mortgage revenue bonds and qualified mortgage credit certificate programs, including bonds and certificate programs for home improvement and rehabilitation. D. Forty percent of the state ceiling is allocated to qualified residential rental projects as described in section 142(d) of the United States internal revenue code of 1986. E. Five percent of the state ceiling is allocated to manufacturing projects. F. A request shall not be filed and a confirmation shall not be issued to a project unless the project is subject to section 146 of the code. A project is not deemed to have been allocated any portion of the state ceiling unless, in connection with the project, this chapter has been substantially complied with. G. Any request on file with the authority for which a confirmation has not been issued by 5:00 p.m. on March 31, other than a request for an allocation pursuant to subsection B or D of this section, is deemed to have expired at 5:00 p.m. on March 31. Other than a confirmation made pursuant to subsection B of this section or for which confirmations have not been extended pursuant to section 35-910, all or any part of any confirmation for which bonds have not been issued or for which a qualified mortgage credit certificate program has not been established by 5:00 p.m. on March 31, evidenced by the filing of a certificate of closing with the authority, is deemed to have expired. H. At any given time, an issuer, or an issuer together with one or more other issuers, may not file more than one request for each project, except that the authority may satisfy an allocation request from one or more categories of projects as described in subsection B, C, D or E of this section. This subsection does not prohibit an issuer from refiling a request for a given project if a prior request has expired or filing a request for each separate and distinct project. I. Beginning from and after October 30, 2023 until July 31, 2030: 1. From March 31 through July 31 of each year, except for the percentage allocated by the director pursuant to subsection B of this section, sixty percent of the remaining state ceiling is allocated to projects prescribed in subsections C and D of this section. 2. Notwithstanding section 35-905, subsection A, from March 31 through July 31 of each year, a confirmation may not be allocated to a project prescribed in subsection C of this section in an amount greater than $35,000,000. 35-903. Arizona finance authority designated as state registry; fee A. The Arizona finance authority is designated as the exclusive state registry for: 1. Requests. 2. Recordation of confirmations, whether outstanding or lapsed. 3. Certificates of closing. 4. Recordation of all requests for carry-forward amounts for specific projects. 5. Other records required for the administration of this chapter. B. The authority shall develop and maintain separate lists for urban cities, nonurban areas, statewide uses and the aggregate for all categories that summarize all information received pursuant to subsection A of this section. C. Requests and confirmations adopted or issued under this chapter shall be dated and numbered by the director in the order received and issued, and each item shall be independently entered on the proper list. Each list shall be composed in a manner sufficient to show, at any time: 1. The dollar amount of confirmations outstanding and not then lapsed. 2. The dollar amount of the remaining allocation then available. 3. The amount of confirmations actually closed. D. The authority may assess an application fee for processing the requests. 35-904. Obtaining and issuing confirmations A. Subject to section 35-905, a confirmation allocating a portion of the state ceiling to a project must be obtained before the sale or issuance of bonds or mortgage credit certificates by the issuer. A confirmation may be obtained by filing with the authority a request and evidence of an inducement resolution or other official action taken by the issuer in connection with the project. Requests filed by mail are deemed to be filed with the authority at 5:00 p.m. on the business day the request is actually received at the authority, whether by mail or email. All requests received on the same date and at the same time shall be dated and numbered by lot and confirmations to those requests shall be issued in the order determined by lot. B. On and after the first business day of each year, a request may be prepared and filed by the issuer or on behalf of the issuer by bond counsel or any other interested person. C. Except as provided in section 35-902, subsection G, section 35-909 and subsection D of this section, a confirmation issued before 5:00 p.m. on March 31 expires and an allocation is not deemed to be made unless the applicable bonds have been issued or a qualified mortgage credit certificate program has been established and a certificate of closing has been actually filed and received, not merely postmarked, including by email, with the authority not later than ninety days after the date of the confirmation or the first business day after the ninetieth day if the ninetieth day is not a business day. The confirmation may be extended as provided in section 35-910 beyond the ninety-day period or 5:00 p.m. on March 31. D. Notwithstanding subsection C of this section, a confirmation issued for a project to be funded in part with an urban development action grant to be made under section 119 of the housing and community development act of 1974 (P.L. 93-383; 88 Stat. 633) or a housing development grant to be made under section 301 of the housing and urban-rural recovery act of 1983 (P.L. 98-181, title III, section 301, 97 Stat. 1196 and amended October 17, 1984, P.L. 98-479, title III, section 103, 98 Stat. 2223) expires and an allocation is not deemed to be made unless the applicable bonds have been issued and a certificate of closing and evidence satisfactory to the director of the commitment to make an urban development action grant or a housing development grant with respect to such project have been actually filed and received, not merely postmarked, including by email, with the authority not later than 5:00 p.m. on December 26 or the next business day if December 26 is not a business day. E. Subject to this section and section 35-909, the confirmation shall ensure allocation in the manner prescribed by the code for a dollar amount of bonds or a qualified mortgage credit certificate program not in excess of the amount set forth in the confirmation. F. The director shall decline to issue confirmations at such time as the aggregate amount of bonds or mortgage credit certificates allocated under all confirmations previously issued and not expired, together with the proposed issue of bonds or mortgage credit certificates as to which a request has been received, would, through 5:00 p.m. on March 31, exceed the respective aggregate amount allocated under section 35-902, subsection C, D or E for such purpose, and from April 1, exceed the aggregate amount of the state ceiling that is not allocated under an unexpired confirmation nor within the discretion of the director pursuant to section 35-902, subsection B. On expiration of a confirmation or release of an allocation by the related issuer, the director shall issue a confirmation to the next numbered request which is equal to or less than the then available portion of the state ceiling or to the next numbered request if the principal amount of such request is reduced to an amount equal to or less than the then available portion of the state ceiling available for such purpose. Except for confirmations made pursuant to section 35-902, subsection B, the director may only issue a single confirmation for each request. G. A confirmation made pursuant to section 35-902, subsection B may be accompanied by a certificate executed by the director. On request, the director shall execute a certificate stating that the confirmation was not made in consideration of any bribe, gift, gratuity or direct or indirect contribution to any political campaign. The director may require such oaths or affirmations as the director considers to be necessary to verify the accuracy of the certificate. H. The director shall issue confirmations within three business days after receipt and shall issue confirmations in the order of receipt of fully and properly completed requests within the limitations of subsection F of this section. The authority shall notify the issuer and any other contact person listed in the request in writing, by email or by telephone of the issuance of a confirmation. The authority is not responsible for returning confirmations to the filing party. A confirmation shall be available for pickup at the authority after issuance of the confirmation. 35-905. Restrictions on confirmations; definition A. Before August 31, a confirmation shall not be allocated to a project in an amount greater than $35,000,000, except that this subsection does not apply to any project that is eligible to receive an allocation pursuant to section 35-902, subsection B, C or D. For the purposes of this section, the amount of allocation to a project shall also include any other state ceiling allocation received by any related person to the project. B. For the purposes of this section, "related person" has the same meaning as provided in section 147(a)(2) of the code, except that all references to fifty percent shall be changed to twenty-five percent. 35-906. Allocations obtained after March 31 through 5:00 p.m. December 16 A. Any portions of the state ceiling, including any portions of the state ceiling subject to a confirmation for which bonds have not been issued or for which a qualified mortgage credit certificate program has not been established by 5:00 p.m. on March 31, other than confirmations extended pursuant to section 35-910 and the state ceiling allocated to the discretion of the director pursuant to section 35-902, subsection B, shall be pooled and are subject to allocation among requests on a first come, first served basis. B. Obtaining and issuing confirmations on or after April 1 through 5:00 p.m. December 16 shall occur as provided in section 35-904, subject to the following restrictions and changes: 1. Requests may be filed on or after April 1 of each year. 2. A confirmation issued on or after April 1 through 5:00 p.m. December 16 expires and no issuer is deemed to have been allocated any portion of the state ceiling unless the issuer's bonds have been issued or a qualified mortgage credit certificate program has been established and a certificate of closing has been actually filed, and not merely postmarked, with the authority no later than ninety days after the date of the confirmation or the first business day after the ninetieth day if the ninetieth day is not a business day, or before 5:00 p.m. December 16, whichever occurs first. The confirmation may be extended as provided in section 35-910. 3. Before the director issues the confirmation, the authority must receive a security deposit in the amount of one percent of the principal amount stated in the request. The security deposit is forfeited to the authority if the bonds are not issued before the expiration of the confirmation or any extension. The security deposit shall not be required pursuant to this paragraph if the direct beneficiary of the bond proceeds is this state or a county, city, town or nonprofit entity, the issuer is a student loan corporation or the project will include urban development action grant or housing development grant financing, is a qualified mortgage revenue bond or is a qualified mortgage credit certificate program. 35-907. Allocations after 5:00 p.m. December 16; reallocation of carryforwards A. Any portions of the state ceiling for which bonds have not been issued by 5:00 p.m. December 16, other than confirmations extended pursuant to section 35-910, shall be pooled and are subject to allocation by the director to projects eligible for a carryforward allocation under the code. B. Obtaining and issuing a confirmation after 5:00 p.m. December 16 shall occur as provided in section 35-904, subject to the following restrictions and changes: 1. Before 5:00 p.m. on December 15, a notice of intent shall be filed with and received by the authority by any issuer, bond counsel or other interested person. The notice of intent shall be dated and numbered and confirmations shall be issued by the director to the issuers on December 17. Any portions of the state ceiling for which bonds have not been issued or carried forward pursuant to this section or for which a qualified mortgage credit certificate program has not been established by 5:00 p.m. December 26 shall be allocated by the director and confirmations shall be provided to such issuers before January 1. Issuers shall not file elections of carryforward purpose with the federal government under section 146 of the code until a confirmation has been delivered by the authority under this section for the bonds pertaining to a project. The failure to file a notice of intent results in the exclusion of the project from allocations to issuers of any portion of the current calendar year state ceiling. 2. A security deposit equal to one percent of the principal amount stated in the notice of intent shall be received by the authority within five days after notification by the director that the project is eligible for a carryforward allocation. A security deposit is not required if the direct beneficiary of the bonds proceeds is this state or a county, city, town or nonprofit entity, the issuer is a student loan corporation, the project includes urban development action grant or housing development grant financing, is a qualified mortgage revenue bond project or is a qualified mortgage credit certificate program or the confirmation is issued by the director on or after December 26. The security deposit is forfeited to the authority if bonds are not issued within three years after the receipt of the deposit. For bonds that are issued from and after December 31, 2015, any security deposit made in relation to the project for which the bonds are issued shall be refunded if the bonds are issued within three years after the receipt of the deposit that is required under this paragraph, whether or not carryforward allocation is used. C. Notwithstanding subsection B of this section and section 35-904, on written notice to the director, an issuer may reallocate all or a portion of any carryforward confirmation within the same carryforward purpose. A reallocation made pursuant to this subsection must be consistent with this section and with applicable federal law. A reallocation made pursuant to this subsection does not increase the aggregate amount of the original carryforward confirmation to which the reallocation relates or extends the term of the original carryforward confirmation during which the bonds must be issued. Reallocation of carryforward confirmation by an issuer will not result in a refund of any security deposit previously received by the authority on account of the original carryforward confirmation. The certificate of closing shall indicate to the authority if the carryforward confirmation was reallocated. 35-908. Principal amount of bonds issued less than confirmation; fee A confirmation is effective as to bonds or mortgage credit certificates issued in lesser amounts than the principal amount set forth in the confirmation, but for bonds issued after 5:00 p.m. June 1, if the principal amount of bonds issued is less than the principal amount set forth in the confirmation, a fee of one percent of the difference between the confirmation and the principal amount of the bonds shall be paid to the authority on filing the certificate of closing unless the direct beneficiary of the bond proceeds is this state or a county, city, town or nonprofit entity, the issuer is a student loan corporation or the project includes urban development action grant or housing development grant financing, is a project described in section 1317(3)(N) of the tax reform act of 1986, is a qualified mortgage revenue bond or is a qualified mortgage credit certificate program. The failure to make such payment within ten days after the filing shall result in a retroactive cancellation of the allocation and the barring of the direct private obligor from any future allocations. 35-909. Confirmation fees On the earlier of three business days after notice of issuance of the confirmation pursuant to section 35-904, subsection H or the filing of a certificate of closing, the authority shall be paid a nonrefundable confirmation fee of three hundred twenty dollars per million dollars for which a confirmation is issued. The failure to make timely payments of the confirmation fee shall result in the retroactive cancellation of the confirmation. 35-910. Extension of confirmations A. A confirmation may be extended one time for up to ninety days but not later than December 16 on providing the authority with a security deposit equal to one per cent of the principal amount set forth in the confirmation. The security deposit and request for extension shall be submitted to the authority before the expiration of the confirmation. Except as provided in subsection B, all extensions granted pursuant to this section expire on the earlier of ninety days from the date of the extension or at 5:00 p.m. December 16. No security deposit is required pursuant to this section if the project is a qualified student loan project, is a qualified mortgage revenue bond, is a qualified mortgage credit certificate program or is for home improvement and rehabilitation. Requests shall not be extended. B. A confirmation or extension of confirmation which expires at 5:00 p.m. December 16 may be extended to 5:00 p.m. December 26 by filing with the authority on or before 5:00 p.m. on December 16 a certificate certifying that the bonds will be issued before 5:00 p.m. December 26, and providing the authority with an additional security deposit equal to one per cent of the principal amount stated in the confirmation. All extensions granted pursuant to this subsection expire at 5:00 p.m. December 26. C. All security deposits received by the authority pursuant to this section are forfeited in favor of the authority if bonds are not issued before the expiration of the extension. 35-911. Powers of the authority; certifications The authority may do all things necessary or desirable to carry out the purpose of this chapter, including issuing certifications regarding the aggregate amounts of allocations on bonds or mortgage credit certificates. 35-912. Limitation of liability No pecuniary recourse may be had for any claim based on any obligation contained in this chapter against this state or the authority or any of the past, present or future agencies, officers, directors, employees or agents. 35-913. Special allocations for mortgage revenue bonds and mortgage credit certificates; definitions A. This section governs allocations of the state ceiling made by the director pursuant to section 35-902, subsection C. B. If the portion of a corporation's allocation computed pursuant to subsection C of this section is less than ten million dollars, the director shall first award ten million dollars of the state allocation to that corporation. Thereafter, the director shall award the remaining state allocation in the same proportion that the population of each of the remaining corporations' jurisdictions bears to the population of this state according to the census, minus the population of the corporations receiving a ten million dollar allocation pursuant to this subsection. C. Each corporation that is described in section 35-706, subsection E and that submits a request for allocation pursuant to section 35-902, subsection C shall receive a portion of the allocation made by the director in the same proportion that the population of that corporation's jurisdiction bears to the population of this state, according to the census but in no event less than ten million dollars. D. At any time before submitting a formal request for allocation, but no later than January 31, a corporation described in section 35-706, subsection E may submit to the director an allocation reservation for an amount not to exceed that portion of the allocation to which the corporation is entitled pursuant to this subsection. The allocation reservation may include an offer to use additional allocation amounts described in subsection E of this section for rural areas. On or before January 31, the Arizona industrial development authority may submit to the director an allocation reservation for the amounts described in subsection E of this section for rural areas. The allocation reservation does not constitute a formal request for allocation and does not obligate the Arizona industrial development authority or a corporation to submit a request for allocation. E. The director shall require that one or more qualified mortgage revenue bond or qualified mortgage credit certificate programs benefit the residents of rural areas. Between February 1 and March 1, an allocation of the unreserved portion of the state ceiling under section 35-902, subsection C shall be made by the director for this purpose. The recipient of this allocation shall be the Arizona industrial development authority, or the Arizona industrial development authority and one or more corporations, or one or more corporations that have executed a cooperative agreement and that have jointly submitted an allocation reservation pursuant to subsection C of this section. The director shall determine the recipient of the allocation described in this subsection by March 1 from the Arizona industrial development authority or one or more of those corporations that have offered to use the allocation described in this subsection in an allocation reservation submitted before February 1. If neither the Arizona industrial development authority nor any corporation offers an allocation reservation to use this allocation before February 1 the director shall select the Arizona industrial development authority or a corporation for that purpose. F. If the director selects the Arizona industrial development authority, or the Arizona industrial development authority and one or more corporations or one or more corporations to serve rural areas, the Arizona industrial development authority, the Arizona industrial development authority and one or more corporations or the corporation or corporations shall receive confirmation of the allocation described in subsection E of this section before March 1. Mortgage credit certificates or the proceeds of qualified mortgage revenue bonds made available through the portion of the state ceiling allocated pursuant to subsection E of this section shall be reserved for at least a one hundred eighty-day period exclusively for the financing of single family dwelling units in rural areas. The director may extend the one hundred eighty-day period at the time of allocation or a later time based on market conditions. The director at any time may modify any extension based on market conditions at the time. After the one hundred eighty-day period or any extension, whichever is later, the director may allocate any reservation that has not been used for use within the jurisdiction of any corporation that is described in section 35-706, subsection E and that gives its consent. G. The validity of a confirmation for qualified mortgage revenue bonds or a qualified mortgage credit certificate program to benefit residents of part of the state shall not be affected by reason of qualified mortgage revenue bonds or a qualified mortgage credit certificate program receiving a confirmation to benefit residents of another part of the state not being issued. H. Except as provided in subsections F and G of this section, a corporation shall not exercise the powers granted under section 35-706, subsection A, paragraphs 11, 12 and 13 outside of its own jurisdiction. I. At the time a confirmation is issued the director shall determine in writing the allocation amounts in the manner described in this section. In determining the recipient or recipients for the allocation described in subsection E of this section, the director may consider the effectiveness of alternative program structures in rural areas. No action may be brought questioning the accuracy of any determination made by the director pursuant to this section without a finding of the director's bad faith or wilful misconduct. J. Confirmations of the state ceiling under section 35-902, subsection C may be applied toward a qualified mortgage revenue bond program or qualified mortgage credit certificate program in any combination deemed appropriate by the issuing corporation with the approval of its governing body or by the board of the Arizona industrial development authority for a program for rural areas established by the Arizona industrial development authority. K. Denial of approval of the use of qualified mortgage revenue bond proceeds or qualified mortgage credit certificates in a city or town pursuant to section 35-706 or subsection L of this section does not affect the validity of the allocation or affect the amount of state allocation that is allocated for that purpose. L. The Arizona industrial development authority may not permit proceeds of bonds or a qualified mortgage credit certificate program in rural areas to be used to finance projects that are owner-occupied single family dwelling units within the corporate limits of an incorporated city or town, the unincorporated area of a county or a reservation for an Indian tribe, unless the governing body of the city, town, county or tribe has approved the general location and character of the residences to be financed. Before the issuance of bonds or mortgage credit certificates for that purpose, the authority shall give written notice to the governing body of each city, town, county or tribal reservation in which it intends to permit proceeds of an issue of bonds or mortgage credit certificates to be used to finance projects that are owner-occupied single family dwelling units and of the general location and character of the residences that may be financed. The governing body of the city, town, county or tribe is deemed to have given its approval unless it denies approval by formal action of the governing body within twenty-one days after receiving the written notice from the authority. Approvals given or deemed to have been given with respect to use of proceeds of an issue of bonds or mortgage credit certificates under this subsection may not be withdrawn. Denials may be withdrawn by the governing body of a city, town, county or tribe and approval may be given after a denial is withdrawn if the authority approves the withdrawal of the denial. M. For the purposes of this section: 1. "Census" means the most recent United States decennial census or the special census conducted in accordance with section 42-5033 if it is more recent than the most recent United States decennial census. 2. "Population" of a corporation's jurisdiction means population according to the census. The population of a corporation formed on behalf of a county equals the population of the county minus the population of any other corporation that is within the county, that is described in section 35-706, subsection E and that submits a request for allocation pursuant to section 35-902, subsection C. 3. "Rural areas" means all of the area of this state that is not located within the jurisdiction of a corporation described in section 35-706, subsection E.