The CAPER report represents a collaborative effort between the Arizona Department of Housing and the Arizona Department of Economic Security. This document outlines the State’s affordable housing and community development resources, their methods of distribution, geographic funding objectives, and actions by the State to meet those objectives during the past fiscal year.

Housing plays a major role in the United States and Arizona economies. It is estimated that the housing industry accounts for one-fifth of our nation’s Gross Domestic Product. Despite the economic importance of housing, Arizona did not have a comprehensive approach or strategy for dealing with housing policy issues. In 1994, a Housing Summit addressed increasing concerns about the cost of housing. Participants from across the state met to discuss growing housing needs. A major outcome of the summit was the formation of the Affordable Housing Task Force, designed to review the state’s housing market and suggest ways the state could address housing affordability. Its principal recommendation was the creation of a permanent body that would focus attention on workable housing solutions. The Arizona Housing Commission was created by Executive Order in 1996 to serve as an advisory body to the Governor, the Legislature and the Arizona Department of Commerce, which is the primary agency currently responsible for housing programs. In 1997, the passage of House Bill 2011 formally established the Commission in statute.

The U.S. Department of Housing and Urban Development requires all government entities receiving federal low-income housing and community development funds to prepare an Annual Action Plan. This is a one-year plan to address the low-income housing and community development needs in the state of Arizona, with a special focus on serving the small cities and rural areas of the state. It consolidates the planning, application, and funding requirements for several programs funded by the U.S. Department of Housing and Urban Development: Community Development Block Grant; HOME Investment Partnerships Program; Emergency Solutions Grant; and Housing Opportunities for Persons with AIDS. The federal and state-funded housing and community development projects and programs described within the Action Plan are administered and implemented by ADOH, the Arizona Department of Economic Security, units of local or regional government, or non-profit agencies.

This report includes both housing data and policy recommendations which are meant to stimulate debate and provide a menu of options for policy makers and intends to fulfill the following goals:
• Provide information on key socioeconomic trends which affect housing affordability including population
growth, household formation, age distribution and income growth.
• Communicate information on housing market trends including home ownership rates, rent levels and vacancy rates, home sales prices and new construction activity.
• Analyze cost components of typical new single-family housing and multifamily construction in Arizona.
• Identify potential regulatory and policy barriers to housing affordability.
• Recommend leadership and resource policies that will avert a potential housing crisis and improve housing affordability across the state.

This paper complements a detailed assessment of job quality, based on analysis of industrial and occupational mix, recently completed by the Seidman Institute’s Center for Business Research. The overall conclusions in this report are consistent with those of the more extensive CBR research. Arizona’s economy grows very rapidly, but per person or per worker measures of wages, compensation, incomes, and gross state product are below the national average. No evidence exists that the situation is improving appreciably (or deteriorating). Indeed, the state appears to be creating income, wealth and quality jobs at rates that are similar to those displayed by other states. Arizona is a job-generating marvel and is among the nation’s leaders in aggregate growth. If the state is successful at improving the quality of its labor force and creating higher-quality jobs, its per worker and per person comparisons will improve.

Regional economic theory states that a local economy is driven by economic activities that import money into the region (county or state in this report) through the sales of goods and services to customers who do not live in the region. Such export activities differ from population-driven activities, which sell to and support the local population. “Export” in this usage is not limited to goods and services sold to customers from other countries, but includes all sales made to customers outside the local region — at the state level, in other states, and at the county level, in other counties within the state. An export activity sometimes is referred to as a “basic” activity — the terms are synonymous.