As Arizona’s housing crisis persists, two critical housing initiatives are at the center of state budget negotiations: the state-level Low Income Housing Tax Credit (LIHTC) and the renewal of the Arizona Department of Housing (ADOH).
🔍 What’s Happening?
- Arizona Department of Housing (ADOH):
- Underwent a scheduled “sunset review” this session.
- Scrutiny intensified after a phishing scam diverted $2 million (later recovered).
- Rep. David Livingston supports a 1-year renewal with stronger oversight.
- Sen. Tim Dunn proposed a 4-year continuation, later amended in the House.
- A short-term extension signals lawmakers’ intent to keep ADOH under close watch.
- State-Level LIHTC Program:
- Complementary to the federal LIHTC, it has funded over 1,500 affordable units statewide.
- The program expires this year without new legislation, threatening future development.
- Governor Hobbs’ FY26 budget includes a $10M allocation, unlocking $500M in credits over 5 years.
🏘 Why It Matters for Investors
- The LIHTC program is a proven tool to offset Arizona’s high construction and land costs.
- Eliminating the state-level credit now would make Arizona the first to sunset such a program.
- Its expiration would reduce incentives to build housing for working families, seniors, and veterans.
- Investors and developers would lose a critical mechanism to make affordable deals pencil out.
🧭 What’s Next?
- Housing advocates and legislative leaders are working to preserve LIHTC in the final budget.
- Support from key Republican lawmakers is crucial.
- The budget outcome will significantly impact affordable housing pipelines in 2025 and beyond.