Gov. Katie Hobbs recently signed a bipartisan bill to improve housing supplies and affordability by creating a new infrastructure financing option for developments.
House Bill 2999 adds a new type of special taxing district, called a State Affordability Infrastructure District, under the Arizona Finance Authority. According to a local news report, the updated financing mechanism will allow districts to use tax-exempt bonds to pay for infrastructure—such as roads, water and sewer—over time.
The fact sheet attached to the legislation details how property owners in a development area say the bill’s purpose is to, “Allow real property owners to petition the Arizona Finance Authority, until June 30, 2036, to establish a state affordability infrastructure district that is managed by a district board comprised of real property owners in the district and allows a district to issue and sell bonds and levy taxes and assessments.”
Arizona already has 36 types of special financing districts, including fire districts, irrigation districts, power districts and community facilities districts. The fact sheet says, “A municipality or county may assess development fees to offset costs associated with providing necessary public services to a development, including the costs of infrastructure, improvements, real property, engineering and architectural services, financing and professional services. The payment schedule for development fees must be provided by the municipality or county. Based on the cost identified in the infrastructure improvements plan, the municipality or county must provide a development fee credit or reimbursement for the dedication of public sites, improvements and other necessary public services or facility expansions included in the infrastructure improvements plan and for which a development fee is assessed, to the extent the public sites, improvements and necessary public services or facility expansions are provided by the developer.”
Infrastructure costs for new housing developments are usually paid early in the process and may be added to a new home’s cost. Under the affordability district structure, the costs will now be able to be paid over time through tax-exempt bonds issued by the district, which Hobbs and supporters of the bill in the Arizona Legislature say will facilitate new housing production and should reduce new home prices.
Spreading infrastructure expenses over the improvements’ life span is expected to lower both initial down payment costs and the overall costs of affected homes.
The news report quoted Hobbs as saying, “For too long, only the wealthiest investors have been able to pay for long-term assets over the entire life of those assets. With this tool, everyday homeowners can effectively do the same for the public infrastructure in their communities, and that leaves more money in their pockets today to reach their goals and provide for their families.”
Bill sponsor Rep. Jeff Weninger (R-Chandler) cited infrastructure as one of the most significant costs included in the price of new homes and said the legislation will speed up construction while ensuring taxpayers and municipalities outside the project area do not bear responsibility for the district’s debt. The debt will be the sole responsibility of the district.
Under HB 2999, district boards will be chosen through nonpartisan elections and will be responsible for preparing and adopting annual budgets, maintaining information on district websites and drafting feasibility studies for the projects they consider.