The Arizona Low-Income Housing Tax Credit program, established in 2021 to give tax incentives to developers of affordable housing, will sunset in December.
A bipartisan coalition created the program under former Gov. Doug Ducey, but opponents blocked an expansion plan from moving forward in the State Legislature this year.
A total of 31 states and the District of Columbia have LIHTC programs. Arizona is the first state to establish and then terminate a program.
Affordable housing advocates say the loss of tax credit incentives will harm affordable housing development in the state. LIHTC opponents said they prefer broader tax cuts with a more universal benefit.
To qualify for LIHTC incentives, a development is required to dedicate at least 40% of units with rent restrictions directed toward residents earning 60% or less than Area Median Gross Income or at least 20% of units for residents making 50% or less than Area Median Gross Income.
Gov. Katie Hobbs’ Office said she was not able to secure a Republican champion to extend/expand the program as part of the tumultuous budget negotiations with the State Legislature this year, despite there being a degree of support for the measure.
LIHTC was established nationally under former President Ronald Reagan in 1986. The federal program is still accessible and may be accessed separately from state-level programs.
The Arizona program had roughly $4M for affordable housing expenditures and had contributed to more than 1,500 units across the state over its lifespan, including funds specifically targeted toward housing in rural portions of the state. (Source)