Bond Volume Cap
Volume cap is the federally authorized dollar limit of tax-exempt bond financing States can issue for affordable housing (single-family homes and multifamily apartments), student loans, manufacturing, and exempt facilities (i.e. Solid Waste Disposal Facilities).
Qualified 501(c)(3) organizations are not subject to volume cap limit.
The volume cap for Arizona for 2023 is $883,103,640 and is distributed through the Arizona Finance Authority (“Authority”) with allocations defined by statute. The Director of the Arizona Finance Authority (“Director”) issues confirmations of the volume cap on a “first-come, first service” basis within each category.
Volume Cap Allocation from January 1 through June 30
In order to provide for fair distribution of the volume cap, the use of volume cap by category is limited by statute for the first six months of each year.
Distribution of Volume Cap Allocation from January 1 through June 30
- 10% Director’s Discretion 30% Urban Areas and 70% Non-Urban Areas
- 35% Mortgage Revenue Bonds and Mortgage Credit Certificates Programs
- By statute, only the Industrial Development Authorities of Maricopa and Pima Counties and the Cities of Phoenix and Tucson the Arizona Housing Finance Authority are eligible to issue mortgage revenue bonds and each may reserve a share of the allocated 35% based on population by January 31. Any amounts not reserved by the four IDAs by January 31 is subject to reallocation by the Arizona Commerce Authority.
- 20% Student Loan Program
- 15% Manufacturing projects – 30% Urban and 70% for non-urban until April 1
- 10% Qualified Residential Rental projects – 30% Urban Areas and 70% Non-Urban Areas
- 10% Other projects
Rules for Allocating Volume Cap from January 1 through June 30
- Confirmations issued on a “first come, first served” basis by the Director.
- Priority for allocations deemed to be filed at the same time is determined by the lottery.
- A request for allocation for which a confirmation has not been issued by 5:00 p.m. on June 30 will expire at that time, except for those requests seeking the Director’s discretionary allocation.
- A confirmation of allocation will expire at the earlier of 90 days from the date of confirmation or at 5:00 p.m. on June 30, unless:
- The bonds have been issued or a MCC program has been established; or
- The confirmation has been extended pursuant to an extension request.
Volume Cap Allocation from July 1 through December 16
- Other than the allocation subject to the Director’s discretion, any portion of the Volume Cap that has not been allocated, or for which the confirmations have expired by June 30, will be pooled and subject to allocation on a “first come, first served” basis.
- Requests for allocation confirmations are selected on a “first come, first served” basis.
- Priority among requests for allocation deemed to be filed at the same time is determined by lottery.
- A confirmation for more than $35 million will not be allocated to a project except for projects under the Director’s discretion.
- For this period, confirmations will not be issued for:
- MCCs and MRBs; or
- Student loan program.
- Unless the bonds have been issued or a MCC program has been established or the confirmation has been extended, a confirmation of allocation will expire at the earlier of:
- 90 days after the date of the confirmation, or
- 5:00 p.m. on December 16.
Volume Cap Allocation from December 17 – December 31
- Any portion of the State Ceiling that has not been allocated, or for which the confirmations have expired, will be pooled and subject to allocation by the Director for projects eligible for a carry-forward allocation.
- To receive an allocation, a notice of intent must be filed with the Department by December 15.
Costs and Fees
- Extension Application Fee. The Authority assesses a non-refundable application fee based on the amount of the allocation request. Currently, the fee is as follows.
| Fee | Request Amount |
|---|---|
| $500 | Up to $4,999,999 |
| $750 | From $5,000,000 to $19,999,999 |
| $1,000 | From $20,000,000 to $39,999,999 |
| $1,500 | From $40,000,000 to $59,999,999 |
| $2,000 | From $60,000,000 to $79,999,999 |
| $2,500 | Above $80,000,000 |
- Confirmation Fee. A non-refundable confirmation fee of $320 per million for which a confirmation is issued is to be paid to the Department. A.R.S. Section 35-909.
- Extension Security Deposit. Confirmations of allocation may be extended one time for up to 90 days, but not later than December 16, upon providing the Department with a refundable* security deposit equal to 1% of the amount of the confirmation. A.R.S. Section 35-910.
- Second Period Security Deposit. Before a confirmation will be issued, the Department must receive a refundable* security deposit equal to 1% of the principal amount stated on the request. A.R.S. Section 35-906.B.3.
- Third Period Security Deposit. Within 5 days after notification, the Department must receive a refundable* security deposit equal to 1% of the principal amount stated on the notice of intent. A.R.S. Section 35-907.B.2.
* Refundable only if the bond issue closes in a timely manner.
