Lower income individuals may face challenges finding affordable housing. Opportunities are available for developers to meet the needs of struggling families while benefiting from tax credits and favorable financing. Developers, investors and builders need to understand opportunities available to secure financing for the construction of low income housing.
Lotzar Law Firm, P.C. has comprehensive knowledge of low income housing tax credit programs, as well as tax-exempt and taxable bond financing for the construction of housing developments. Lotzar Law Firm, P.C. can help builders, developers and investors to understand financial incentives available for construction projects and to apply and qualify for programs to build low income housing. Call today to speak with a Scottsdale, AZ real estate development attorney to learn more about public housing vs. affordable housing and about the opportunities available for new construction and rehabilitation of housing units.
Public Housing vs. Affordable Housing
Public housing developments are overseen by the Department of Housing and Urban Development (“HUD”). They are administered by one of 3,100 local housing agencies. In most cases, the local housing agency both owns and manages the public housing development. When new public housing projects are to be built, governing agencies may go through a competitive bidding process and pay for the construction of new developments with public funds. The new developments will be owned by the housing authority.
There are exceptions. Sometimes, public housing projects are operated by private management companies. Sometimes, ownership is transferred to private subsidiaries or other entities responsible for operating the developments in accordance with public housing rules. A Public Housing Capital Fund also funds renovation of public housing developments while the Choice Neighborhoods Initiative (first funded in 2010) provides a limited number of annual grants to revitalize public housing developments that have become distressed.
Public housing is affordable to residents because rents are subsidized. However, there are differences between public housing vs. affordable housing.
Lower income individuals do not always live in public housing developments or in developments that accept Section 8 vouchers to subsidize rent. The Low-Income Housing Tax Credit (“LIHTC”) program provides incentives for private developers and investors to build affordable rental housing within communities.
Developers and investors can qualify for LIHTCs to fund construction with a commitment to set aside a certain percentage of apartments in the development for low-income people. Tax credits are available if at least 20 percent of units in a development are occupied by people or families with income at or below 50 percent of the area median income (“AMI”). Credits are also available if at least 40 percent of units are occupied by people or families at or below 60 percent of AMI. These units must be rent-restricted. Dollar-for-dollar reductions in tax liability are available, so the LIHTC program provides a strong financial incentive for developers.
A state’s LIHTC allocations are too small to meet the demand for LIHTCs, so the application process is very competitive. Developers interested in providing affordable housing should speak with an attorney about the difference between public housing vs. affordable housing and should develop a plan for winning a tax credit award, or taking advantage of other special financing for new construction and rehabilitation of low income developments. Contact Lotzar Law Firm, P.C. today to learn more.
Subchapter C Corporations and Subchapter S corporations need bylaws. Bylaws are a part of corporate compliance or corporate formalities. Along with regular annual meetings of the board, keeping minutes, and filing business taxes, bylaws are a key part of maintaining a separate identity for your corporation. You need bylaws to ensure the corporate veil is not pierced and to maintain the liability protections that come with being incorporated. Bylaws also allow you to define your business structure, the roles of your employers and officers, and the plan for conducting corporate affairs.
A Scottsdale, AZ business lawyer will assist with the creation of bylaws and will advise you on this requirement and other obligations that you must fulfill to maintain corporate formalities. Your attorney will also advise you on whether you must file bylaws with the Secretary of State or take other steps to give your bylaws legal force. Do not jeopardize liability protections or tax benefits associated with incorporating your business- contact Lotzar Law Firm, P.C. today for help with all aspects of starting or incorporating your organization.
Your Company Does Not Need to File Bylaws with the Secretary of State or Corporation Commission
Arizona requires your corporation to have bylaws. The bylaws must provide information on how the Board of Directors is to be elected for your organization. The bylaws should also provide information on what votes will be required in order for your organization to take a particular action. To understand requirements for bylaws in Arizona, see A.R.S. § 10-206 and 10-3206. Bylaws can contain any provisions not prohibited by law.
Although your corporation must have bylaws by law in Arizona, the Arizona Corporation Commission does not accept bylaws. You do not have to file bylaws with the Secretary of State or corporation commission. The A.C.C. does not keep copies of bylaws on file and cannot provide a copy of corporate bylaws to interested parties.
The Arizona Corporation Commission cannot provide advice concerning the content of bylaws, and cannot tell you whether bylaws that you have created are valid and meet state requirements for maintaining corporate formalities. There are no forms available from the A.C.C. for standard corporate bylaws.
Although you do not need to file bylaws with the Secretary of State or Corporation Commission, you still must keep these documents on file in case questions are ever raised about the validity of your corporate operations. If you are sued and a motion is made to pierce the corporate veil, having a copy of the bylaws on file can be used as one piece of evidence demonstrating that your company complied with Arizona laws. If you are audited by the IRS and questions are raised regarding whether your business is a sham designed to reduce tax liability rather than a legitimate corporation, you want to be able to produce bylaws.
Lotzar Law Firm, P.C. can help write bylaws for your organization. We’ll also make sure you comply with other Arizona and federal requirements for maintaining your corporate identity. Call today to speak with a Scottsdale, AZ business lawyer and learn more.
Private activity bonds are municipal securities the proceeds of which are used by private entities to finance airports, docks, utility facilities, and certain residential rental projects, among other things. Private activity bonds provide important opportunities for developers and investors.
The general process for issuing private activity bonds is set by the state of Arizona within federal guidelines. Lotzar Law Firm, P.C. has helped many clients to qualify for the issuance of private activity bonds. Call today to schedule a consultation and learn more about how we can assist you in securing PABs.
What is the General Process for Issuing Private Activity Bonds?
The Arizona Department of Commerce has authority over bookkeeping and ministerial tasks associated with allocating private activity bonds in the state. Arizona Revised Statutes section 35-701 also establishes guidelines for industrial development corporations to be formed and receive authorization for issuing private activity bonds.
Requests for allocations can be filed by a qualified state university; a qualified issuer of student loan bonds; an industrial development authority, or other qualified issuers. Interested third parties may request allocations, as can bond counsel acting on behalf of the issuer.
Requests for allocation may be submitted by mail to the Arizona Department of Commerce or may be hand-delivered. Allocations are processed and confirmations are issued on a first-come, first-serve basis so hand delivery is often necessary as a practical matter. If multiple requests for allocation have been submitted and are received at the same time, a lottery system will be utilized in order to establish the priority of the requests for allocation. Refundable security deposits must be submitted before confirmations will be issued, and non-refundable confirmation fees must be paid after allocation.
Applications for private activity bonds can be submitted within one of three different periods. The first period extends January 2 through June 30; the second extends from July 1 through December 16 and the final third period extends from December 17 through December 31. A fee must be paid when making a request for allocation. The fee depends upon the requested amount.
The Internal Revenue Code section 146 establishes an aggregate amount of activity bonds that may be used annually by Arizona. Prior to April 1, 70 percent of the PABs allocated to manufacturing projects must be reserved for projects that are located in areas with populations of 100,000 or under (non-urban locations). This 70 percent allocation limit also applies to allocations available under the discretion of the director.
Lotzar Law Firm, P.C. has extensive knowledge of the general process for issuing private activity bonds. Our Scottsdale, AZ lawyers can help you to submit your application in a timely manner and can assist with completing all requirements. Our goal is to do everything possible to ensure you receive an allocation of private activity bonds. Call today to schedule a consultation and learn more about how our attorneys can assist you.
Before entering into a business transaction, the tax implications must be fully understood. Reorganizations may have tax implications for seller shareholders if those shareholders receive consideration from an acquirer that does not qualify as exempt.
Scottsdale, AZ business law attorneys at Lotzar Law Firm, P.C. represent clients in all types of business transactions including tax exempt reorganization. Tax exempt reorganization refers to mergers & acquisitions transactions that do not generate tax obligations. Lotzar Law Firm, P.C. provides qualified legal representation for investors and business owners to protect your legal and financial interests. Call today to schedule a consultation and learn how we can help with tax exempt reorganization.
Understanding Tax Exempt Reorganization
Tax exempt reorganization is similar in most ways to a typical M&A deal except the acquirer uses stock instead of debt or cash for a substantial part of the consideration that is provided to sellers.
The Internal Revenue Code section 368 sets forth several conditions that must be fulfilled in order for a merger & acquisition transaction to be considered a tax exempt reorganization. The IRC requires:
- Continuity of the ownership interest. Generally, 50 percent or more of consideration provided to sellers must be stock owned by the acquirer.
- Continuity of the business operations. The acquirer of the business must maintain ongoing business operations for a period of at least two years after the completion of the tax-exempt M&A transaction. This means the acquirer must either use a substantial part of the assets of the target in an existing business or must continue to conduct the business that the acquired organization was historically involved in.
- Legitimate business purpose. The tax exempt reorganization must have some legitimate or valid purpose. The reorganization may not be undertaken solely for the purposes of avoiding or reducing income tax obligations.
The tax exempt reorganization may also not be a part of a broader plan to complete a taxable acquisition. The step transaction doctrine applies to combine a series of multiple transactions that are formally kept separate but that are part of a larger whole. If the tax exempt reorganization combines with other steps taken to constitute a taxable acquisition, then the reorganization will not be treated as exempt.
IRC section 368 lists several types of corporate acquisition structures that can qualify as a tax exempt reorganization or as a tax-deferred reorganization. These include a Type A; Type B and Type C stock-for-assets acquisition. Statutory mergers; statutory consolidations; and forward and reverse triangular mergers are among the different types of transactions that can be considered a tax exempt reorganization.
Lotzar Law Firm, P.C. has represented many clients at all phases of a tax exempt reorganization. It is important to be represented by a qualified Scottsdale, AZ lawyer familiar with the relevant sections of the Internal Revenue Service code when entering into these complex transactions. Call today to schedule a consultation and learn more about how we can help you with all of your mergers & acquisitions transactions.
Arizona law requires every limited liability company (LLC) and corporation to be registered in the state if it transacts business or conducts affairs. Both nonprofit organizations and for-profit organizations must obtain authority to operate from the Arizona Corporation Commission if they were organized in another state.
Lotzar Law Firm, P.C. will assist in determining if your nonprofit is conducting affairs or if your for-profit organization’s activities fall within the definition of transacting business. Our attorneys can advise you on whether registering as a foreign entity is necessary and can complete the legal registration process on your behalf. Call today to schedule a consultation and learn more.
Requirements for Registering as a Foreign Entity in Arizona
If your organization intends to transact any business or conduct any affairs, you must become qualified or registered. The process involves filing appropriate paperwork. The instruction for the Application for Authority to Transact Business or Conduct Affairs are found in C018i. The Application for Authority is available online and can be printed and submitted to the Arizona Corporation Commission.
The Application requires you to describe the character of your business and provide a street address for the principal foreign office as well as the known place of business in Arizona where operations will be conducted. A statutory agent or registered agent must be named at the time of filing. This agent must have a legal address within the state of Arizona that is not a post office box.
Completion of the Application in full with accurate and correct information is required for registering as a foreign entity in Arizona. Lotzar Law Firm, P.C. can complete this application on behalf of your business entity to help secure approval to become qualified to transact business or conduct affairs.
Additional documentation must be submitted when registering as a foreign entity in Arizona. This may include:
- A copy of the Articles of Incorporation for the organization.
- A copy of any amendments to the Articles of Incorporation.
- A certificate authenticating the existence of the corporation from the state of origin within 60 days of the date the Application for Authority is filed
A copy of the Application for Authority must be published within an approved newspaper in the state of Arizona within 60 days of the time when the Application for Authority has been filed. Proof of the publication must be provided to the Arizona Corporation Commission within a period of 90 days after the Application for Authority has been published. Proof may be provided in the form of an Affidavit.
Finally, a filing fee is also required when the Application for Authority is submitted. An additional fee for expedited processing may also be paid.
For the application to be approved, the name of your organization must not conflicting an existing Arizona business including corporations; fictitious names adopted by foreign corporations; and the names of limited partnership organization or limited liability companies. It must also not conflict with a trade name that has been register with the Arizona Secretary of State.
Lotzar Law Firm, P.C. will research to ensure your name is original and acceptable and will complete all other aspects of registering as a foreign entity in Arizona on behalf of your organization. Call today to learn more.
All new business enterprises in the state of Arizona must comply with naming rules and restrictions. Business organizations must have unique names that cannot be confused with any domestic or foreign nonprofits or for-profit companies. A new venture must select a name not already in use as a corporate name; forced fictitious name; Limited Liability Company, Limited Liability Partnership or registered trade name.
Other criteria for naming a business entity involves including certain words appropriate to the entity type or excluding words with restrictions on use. Lotzar Law Firm, P.C. knows all restrictions on naming an Arizona company and can advise you on naming your organization.
Our Scottsdale, AZ business attorneys will research your company name to ensure it meets Arizona standards and will complete all necessary paperwork to register your new organizations name with the state and the federal Internal Revenue Service. Call today to learn more.
Restrictions on Naming an Arizona Company
All for-profit corporations must follow requirements and restrictions on naming an Arizona company as set forth in A.R.S. § 10- 401 and A.R.S. §10-1506. A for-profit corporation must contain one of the following words or a permissible abbreviation thereof:
- Association (Assoc.)
- Corporation (Corp)
- Limited (LTD)
- Incorporated (Inc.)
For-profit corporations are not permitted to include terms implying they are a limited liability company. The business name may not include the words:
- Limited liability company (LLC or L.L.C.)
- Limited company (LC or L.C.)
Written approval from the Arizona Department of Financial Institutions is required prior to registration if the corporation contains the words:
- Banc or Banco
- Savings Association
- Credit Union
- Building Association
- Savings & Loan Association
- Trust or Trusty Company
- Savings Bank
Professional corporations must meet all requirements and restrictions on naming an Arizona company but must also contain additional words in their name including one of the following:
- Professional Association, P.A. or PA
- Professional Corporation, P.C. or PC
- Service Corporation, S.C. or SC
- Chartered or Chtd.
- Limited or Ltd.
Nonprofit corporations must meet all of these specific criteria as well as additional restrictions if the nonprofit is founded as a cooperative. Nonprofits have additional startup requirements not applicable to for-profit corporations and an attorney specializing in nonprofits should be consulted. Lotzar Law Firm, P.C. has represented clients starting nonprofits throughout Arizona.
Limited Liability Companies (LLCs) also have naming requirements and restrictions. The mandates for naming of an LLC are established in A.R.S. § 29-602. The LLC must include the words:
- Limited Liability Company, or L.L.C. or LLC
- Limited Company, or L.C. or LC
The LLC must not contain the words incorporation, association, corporation nor any form of these words including abbreviations. LLCs are subject to the same restrictions on the use of financial terms as corporations and must obtain prior approval from the Arizona Department of Financial Institutions to include the word “bank,” or its derivatives and related words.
Lotzar Law Firm, P.C. advises startups on all aspects of forming a new organization, including naming. Call today to schedule a consultation and learn how a Phoenix, AZ business lawyer can help get your business started.
Buy-sell agreements are an essential part of any start-up to protect owner/investors from costly future problems. A buy-sell agreement is a legally binding contract stipulating the terms and conditions under which any owner can sell or transfer an interest in a business. Traditionally, buy-sell agreements provide guidelines for the future of the business in the event of departure, death, divorce and disability.
Buy-sell agreements when starting a business with friends and family are as important as contracts when starting a company with any business associates. Trust in family members is not sufficient to protect your interests in all financial transactions. A Scottsdale, AZ business startup attorney can negotiate the terms of a buy-sell agreement and draft a legally binding contract. Contact Lotzar Law Firm, P.C. today for legal advice on creating an effective buy-sell agreement.
Buy-Sell Agreements When Starting a Business With Friends and Family
You need buy-sell agreements with all co-investors and co-owners in a business because:
- Owners could divorce. Arizona is a community property state and an interest in a business established during the marriage may be divisible by the court. A buy-sell agreement ensures you are not forced to work with a friend or family member’s ex-spouse.
- Disagreements could arise and owners could leave. Many successful businesses have been undone by family feuds. Uncertainty about the future of an organization resulting from the departure of an owner can drive clients and potential customers away and undermine the effectiveness of operations.
- Takeover attempts could occur. Co-owners could be approached with an offer of sale. Without a buy-sell agreement, you have little control over the transfer of your co-owner’s shares.
- An owners departure may become necessary. Owners may be forced to leave due to disability or to pursue other business ventures. A buy-sell agreement can establish guidelines for valuing the departing owner’s interests in the company.
Lotzar Law Firm, P.C. can review your organization’s structure and foundational documents to advise you on the necessity of a buy-sell agreement. Ownership shares in privately held small companies are among the most complex types of investments to liquidate or transfer. Buy-sell agreements make it simpler for owners to divest themselves of their interests in the organization.
Lotzar Law Firm, P.C. will:
- Determine necessary provisions to include in a buy-sell agreement to protect your future financial interests and the ongoing success of your organization.
- Negotiate the terms and conditions of all contract provisions with co-owners and advise you on your rights and obligations under the contract.
- Draft a legally enforceable contract that meets all standards of contract formation in the state of Arizona.
- Assist in the development of a valuation formula for departing co-owners of your business organization.
- Represent you in disputes regarding the interpretation of a buy-sell agreement.
Smart business owners take every step possible to plan for future contingencies. Buy-sell agreements when starting a business with friends and family are essential to protect your investment in the organization. Call today to schedule a consultation with Lotzar law Firm, P.C. to get started on your agreement.
Individual businesses may require a license specific to the goods or services the organization will provide.
Learn more about How Do I Obtain a License or Permit for My Business in Arizona in this presentation.
As long as you comply with all local rules, you can open different chapters of your nonprofit throughout the country with the same trademark and the same mission statement.
Learn more about Non-Profit Operate in More than One State in this presentation.