Public Purpose Menu

In addition to requiring that an Applicant meet all of the obligations set forth in the Internal Revenue Code and Arizona state statutes, the Authority imposes public purpose obligations which obligate either a for profit or non-profit developer to make an election with respect to the following 2 alternative public purpose conditions:

Alternative No. 1 – An Applicant may agree to pay the Issuer a fee at closing equal to 25 basis points of the principal amount of the bonds issued (taxable and tax-exempt).
 
Alternative No. 2 – An Applicant may agree that each of the following 4 covenants be included within the financing documents:
 
  • An Applicant will pledge to utilize 25% of the excess cash flow from the operation of the Project, provide tenant services at the Project;
  • An Applicant will covenant that any affiliated project management company will cap its fees at 5% for the entire term of the Bonds while outstanding;

  • An Applicant will covenant that any affiliated property management company shall agree to subordinate in whole its project management fees to the debt service on the Bonds; and

  • An Applicant shall establish a rent differential program which, at a minimum, will maintain the current rents charged tenants of lower income units until market rate tenants of similar units exceed the rents charged by the tenants of lower income units by at least 5%. Thereafter, an Applicant shall maintain such 5% market differential throughout the Qualified Project Period.