Arizona advocates are celebrating the creation of the state’s Low Income Housing Tax Credit (LIHTC), funded through S.B. 1124. The legislation provides $4 million annually for four years, which could leverage as much as $160 million to build affordable homes. Governor Doug Ducey signed the bill on July 9.
The federal LIHTC program has provided important affordable housing investments throughout the state, funding about 97% of the affordable housing stock in Arizona. Arizona’s current housing market produces approximately 1,500 affordable housing units annually. But the state has a shortage of approximately 136,000 rental homes affordable and available to extremely low-income (ELI) renter households (earning less than the poverty level or 30% of area median incomes), and LIHTC on its own does not, without deeper federal or other subsidies, build and operate homes affordable to these lowest-income renters.
In passing this legislation, Arizona joins 16 other states and the District of Columbia with state-level LIHTC programs. Arizona’s state LIHTC will have the same regulatory parameters as the federal counterpart and sunset after December 31, 2025.
The legislation was the result of ongoing work from affordable housing advocates, industry groups, and state legislators. Senator David Gowan (R- Sierra Vista) and Representative Regina Cobb (R-Kingman) sponsored House and Senate bills earlier this year that proposed an allocation of $8 million over six years for a state tax credit program. Neither bill passed through the legislature, but both legislators continued advocating for a state tax credit by including it as part of budget negotiations, including this provision as part of budget negotiations towards the tail end of the legislative session.
“Arizona’s tax credit is the single largest investment the state has made to affordable housing,” said Joan Serviss, executive director of the Arizona Housing Coalition. “This tax credit was the result of many years of hard work done by our membership and housing advocates. This is a true community win. And we look forward to building, pun intended, upon its success to bolster the tax credit when it sunsets in 2025.”