Arizona just became the 20th state in the country to adopt a state affordable housing tax credit program. On July 9th, Governor Doug Ducey signed S1124 which creates the Affordable Housing Tax Credit administered by the Arizona Department of Housing (ADOH). This new program could spur an investment of up to $160 million in affordable housing for the state of Arizona by establishing a $4 million 10-year credit allocation for the next four years.
As the Department prepares to launch this new affordable tax credit program, it is important to reflect on how we got to this point. Over the past several years, Arizona has seen a spike in the cost of housing, rents continue to climb and some of our most vulnerable are living outside. As more new jobs come into the state, there’s also an increased need for more affordable workforce housing. These realities motivated affordable housing developers and housing stakeholder groups to advocate for the creation of an affordable housing tax credit.
As a result of their efforts at the legislature, affordable housing developers will now have access to a new source of tax credit financing that can be paired with other federal and local funds to incentivize the construction of more affordable units. In addition to the new state tax credit program, the Department is making a large amount of gap financing available to Low Income Housing Tax Credit (LIHTC) developers. For the 2021-2022 LIHTC round, projects financed with four percent LIHTC will be eligible for up to $2 million per project in gap financing from the State Housing Trust Fund. ADOH is also offering gap financing from the National Housing Trust Fund, making a total of $21 million available for gap financing in a single year.
The new state affordable housing tax credit is one more important tool in providing much needed affordable housing, permanent supportive housing and workforce housing in Arizona. Along with the large amount of gap financing made available by ADOH, this new program is sure to have a positive impact on thousands of Arizonans.
Housing Matters | Summer 2021