The Department provides a variety of funding sources to eligible non-profit and for-profit housing developers to assist with the development of affordable rental properties. Sources of funding include:
Low-Income Housing Tax Credits
The Low Income Housing Tax Credit (LIHTC) was created to promote the development of affordable rental housing for low income individuals and families. To date, it has been the most successful rental housing production program in Arizona, creating thousands of residences with very affordable rents. Visit Low Income Housing Tax Credit (LIHTC) page for more information.
Private Activity Bonds and 501(c)(3) Bonds
Private Activity Bonds may be used for the development of rental housing in Arizona. The Arizona Finance Authority is responsible for allocating the State ceiling for Private Activity Bonds. Bonds must be issued by an Industrial Development Authority (IDA). The Arizona IDA issues bonds statewide. Local IDAs throughout the state also issue bonds for projects in their service areas. IRC Section 42(h)(4) allows low-income housing projects financed with tax-exempt bonds to be eligible for 4% tax credits if they meet the minimum requirements and adhere to regulations set forth in the Qualified Allocation Plan (QAP). Applicants should consult their legal advisors to determine a project's eligibility. Applications are accepted on a rolling basis. All applications submitted will be reviewed by ADOH for eligibility for the 4% tax credit. A bond hearing will be scheduled in accordance with A.R.S. 35-726(E), where required by law.
501(c)(3) bonds are private activity bonds issued to finance a facility owned and utilized by a 501(c)(3) organization. These bonds are not eligible for low-income tax credits.
State Housing Fund Program
ADOH combines Federal HOME and National Housing Trust Fund (NHTF) resources from the U.S. Department of Housing and Urban Development (HUD) with state resources from the State Housing Trust Fund (HTF) into a single housing program called the State Housing Fund (SHF). These funds are made available for the development of affordable permanent and transitional rental housing units.
Funds from the State Housing Fund are loaned either 1) as ADOH GAP Financing for tax credit developers or 2) upon an award pursuant to a Notice of Funding Availability (NOFA). Properties must comply with long-term rent and income restrictions.
Visit State Housing Fund (SHF) Rental Development Programs for more information.