By Roland Murphy for AZBEX
With three major announcements so far, June has turned out to be a month filled with important developments for affordable housing in Arizona. One of those announcements helps ensure even bigger developments to come, literally.
In the first announcement, the Arizona Department of Housing reported the state has set a record for Low-Income Housing Tax Credits this year. Federal 9% LIHTC credits awarded this year total $30.1M distributed to 16 developments around the state, including seven in rural areas – the most in state history.
The record amount follows a reengineering of the tax credit award process and the rollout of a new State Tax Credit program.
“This new process reduced the burdensome regulatory framework for allocating these highly coveted tax credits and has led to increased developer interest in building affordable housing in Arizona,” ADOH Director Tom Simplot said in announcing the awards. “The State Tax Credit program is fulfilling its goal to stimulate the construction of new affordable housing in our state.”
The 33 applications received requesting LIHTC credits was the highest volume ever. Two of the seven rural projects – one in Yavapai County and one in Gila County – are the first to receive STC funding, which totals $1M in addition to the $30.1M LIHTC total.
The 16 projects receiving funds this year will add 1,142 new housing units across the state, of which 940 are designated as affordable.
Funds Announced to Preserve Affordable Units
Along with the announcement of LIHTC funding for new projects, ADOH issued a Notice of the Availability Of Funds under the State Rescue Recovery Fund – American Rescue Plan.
According to the announcement, “This NOFA will provide $10M for the preservation of existing affordable housing projects. Applicants may be eligible for the lesser of $78K per unit or $5M per project.”
Applications are available here, and the Department is accepting applications effective immediately. There are three primary criteria for acceptance:
- Projects must be near the end of either their LIHTC compliance or other affordability period;
- Funding must be used for hard construction costs, and
- The projects must have been affordable for at least 10 years.
According to the notice, “Eligible activities should be ready to begin implementation within 30 days of execution of the Funding Agreement.”
New Law Expands LIHTC Project Size
Opening the door for even more LIHTC incentivized affordable housing development around the state, Governor Doug Ducey signed House Bill 2610 into law earlier this month.
The long-sought new legislation removes “the arbitrary cap on the size of affordable housing apartment communities constructed by non-profits wanting to qualify for a property tax exemption. The new law encourages more construction of larger affordable apartment communities across the state that rent solely to income-eligible tenants,” according to a press release from ADOH.
Before HB2610, non-profit developer-built communities were restricted to 200 units or fewer if they wanted to qualify for real estate tax exemptions. The law also mandates non-profits certify using their tax exemption savings to sustain the affordable property. This is intended to ensure the properties maintain adequate operating funds for ongoing improvements and renovations.
“We believe this law will directly result in more, new affordable housing,” said Simplot. “The 200- unit limit was an arbitrary deterrent preventing non-profit organizations from receiving property tax exemptions, which is a primary method the state uses to stimulate the creation of new affordable housing.”