Arizona State Department aids housing

Mark Fogarty
12/30/03

PHOENIX - The Arizona Department of Housing has recently funded American Indian housing in the state to the tune of $2 million.

The money comes from the federal Low Income Housing Tax Credits, which are administered by the state, supplemental state grants to tribal LIHTC recipients, and a deferred, forgivable loan to Cocopah Indian Housing Development.

Arizona is one of the few states that have a mandatory set-aside for tax credits to assist housing on tribal lands. Its 2003 awards have included three developments on reservations, and a fourth to benefit urban Indians in the Phoenix area.

In all, Native projects were awarded a little more than $1 million out of a state tax credit total of $10 million. The state department added more than $900,000 in supplemental money from its Housing Trust Fund. The money will go to build or rehab about 150 units of housing.

Two of the programs are on the Fort Apache Reservation of the White Mountain Apache Tribe. Two are on the Cocopah Reservation, and the fifth is in the Phoenix metro region.

The White Mountain projects, Apache Ridge II and "AZ 16-26," will rehab rental units in Whiteriver and Cibecue, and build new townhomes in Whiteriver. Totals are 22 units for Apache Ridge II, and 40 for AZ 16-26.

Tax credits awarded for AZ 16-26 were $369,414, and $97,017 to Apache Ridge II. The Cocopah project, North Reservation- Phase I, got $414,929 in credits to build 40 units of single-family rental homes in Yuma.

The urban project, Whispering Palms Apartments on East Georgia Avenue in Phoenix, received $189,531 in tax credits for renovation and new construction of 20 one-, two-, and three-bedroom units.

The state department gave supplemental grants of $399,500 for Apache Ridge II, a development of White Mountain Apache Community Development Corp., and $263,200 for Whispering Palms, which is being developed by Native American Connections.

A fifth project funded, also on the Cocopah Reservation, was not a tax credit deal but a $274,672 deferred, forgivable loan for a project in Somerton. This will go towards rehabs on 28 units.

Tax credits are dollar-for-dollar tax deductions for firms that make equity investments into these Native housing projects. They are much prized by investors because, in addition to the one-for-one credit, they can be purchased at a discount, adding to savings.

Developers sell the tax credits to the investors after they receive the awards. In the case of tribally-related entities, tax credits are a good fit because, as sovereign nations, Indian tribes usually do not pay federal taxes, and so don't need the tax credits for themselves.

Tax credits, which were first granted in 1986, are intended to provide part, but not all, of the financing needed for a low-income housing project.

Some of the other funding partners in these projects include the U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture for the Somerton project, which will total 45 units when done, and USDA on Apache Ridge II, which will total $1.9 million in financing.

Whispering Palms will total $3.1 million in costs when it is finished.

Other Arizona tribes that have used the LIHTC to develop housing include the Ak-Chin Indian Community, the Salt River Maricopa Indian Community, and the Yavapi.

The Ak-Chin Indian Community used the LIHTC to develop seven new homes and rehabilitate 30 more. The 700-member tribe was awarded $265,000 in tax credits in 2002. Ak-Chin sold them to investors at 77 cents on the dollar, raising some $200,000.

In addition to the financings, the state Department of Housing recently held a statewide tribal funding workshop to bring tribes, agencies and lenders together to talk about infrastructure, mortgage finance, land title barriers, and other issues.

The workshop, according to the National American Indian Housing Council, followed a summit led by the state's governor that included a focus on tribal housing needs.

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