Construction is underway on an affordable housing complex funded in part by a state low-income housing tax credit and lauded by state and local officials who gathered at the building site Friday.

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Gorman and Co. — one of the nation’s largest producers of affordable housing — announced Centerline on Glendale will be the first rental home community financed using Arizona’s low-income housing tax credit. The 368 apartments are expected to be completed in fall 2024.

“As a social worker, I know firsthand how crucial stable housing can be to physical, emotional and economic well-being,” Gov. Katie Hobbs said at the Friday news conference, promising more support for projects that address homelessness or help residents who are one paycheck away from losing their home.

“Our housing policy agenda calls for expanding this program and making it permanent, just like we want to do with the housing trust fund,” Hobbs said.

According to the National Low-Income Housing Coalition, workers need to earn more than $23 per hour to afford a two-bedroom rental home in Arizona, where as of January, the hourly minimum wage is $13.85. One in five renter households in the state are considered extremely low income, according to NLIHC.

In July 2021, the Arizona Legislature passed SB 1124 creating a low-income housing tax credit for investors who have income tax liability in the state. It lets investors offset the cost of building much-needed affordable housing units in the state, but it caps the credit at $4 million per year for projects placed in service or ready for occupancy between June 30, 2022, and Dec. 31, 2025.

“The federal tax program does not produce an adequate number of units to keep up with demand, so many states around the country decided to institute a state housing tax that mimics the federal tax credit program,” Gorman President and CEO Brian Swanton said in an interview.

In a statement, the company said it secured $86 million in private investments from U.S. Bank, which is purchasing the state and federal tax credits and providing construction financing to the development that is slated to cost more than $120 million.

Centerline on Glendale — a series of buildings on a formerly vacant 13-acre site — is located near the southeast corner of 67th and Glendale avenues and is within walking distance of Glendale High School and two major bus lines, developers said. Rent will range from $497 to $1,837 per month.

Swanton said the apartments will serve households that earn zero to 80% of the countywide median income.

“The City of Glendale and AHCCCS (Arizona Health Care Cost Containment System) are both providing rental subsidies for this development, which allows people to come on at any income level sponsored below 60 percent of the median and only pay 30 percent of their rent,” Swanton explained.

Affordable housing developments aim to reduce the poverty rate, which is currently at 17.3 percent in Glendale, said Glendale City Councilmember Jamie Aldama.

Centerline on Glendale is also partnering with Local First Arizona, a community kitchen, and other local businesses to ensure the future residents are supported in their new homes. In addition to wrap-around supportive services, the development will include a splash pad, a dog park, a business incubation space, a fitness and recreation center, a walking path and electric vehicle charging stations, developers said.

While the housing units will help families in need, Gorman and Co. first had to remove homeless encampments from the land.

“We have 10 units that will be set aside for formerly homeless and chronically homeless individuals,” Swanton said.

He added there will be units targeted for those who are struggling with mental illness.

“We have a contract with AHCCCS to have a certain number of units on the property where we can help house these people for the next 20 years through a subsidy contract,” Swanton said.

Swanton said a challenge going forward for affordable housing projects like this one going forward is that the state tax credit program is running out of money.
“There is only one more round of credit allocation to go that is left from the original legislation,” Swanton said, adding other states have made these types of programs permanent and much larger.

There are more than 20 states in the country that have a state tax credit program that allows investors to build affordable housing in the communities with high demand for such units.

Ashlee Tziganuk, research analyst at the Morrison Institute for Public Policy, said Arizona is lacking not only affordable housing but all housing types. And zoning is one of the largest barriers to building.

“It’s really hard to build these types of projects when zoning is not in place to allow for these types of developments,” Tziganuk said, adding communities need to actively support more affordable housing efforts and not fight them.

“A big barrier to affordable housing is that we receive a lot of community pushback or NIMBYism,” an acronym for Not In My Backyard, Tziganuk said.