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.

Arizona Housing Commission Task Force on Tax‐Exempt Mortgage Financing was established to review and report on 1) the availability of financing for single‐family housing and 2) the role of the private activity bond allocation process in facilitating the availability of housing for low‐to‐moderate income families in all areas of Arizona. The Task Force is required to issue an annual report of its activities, findings, and recommendations, including information reported to it by the four major Industrial Development Authorities and the Arizona Housing Finance Authority. These five entities issue tax‐exempt single‐family mortgage revenue bonds, mortgage credit certificates and other forms of Private Activity Bonds.

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.

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.

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.

A landmark assessment of infrastructure needs in Arizona was produced by the L. William Seidman Research Institute in May 2008 for the Arizona Investment Council (AIC): "Infrastructure Needs and Funding Alternatives for Arizona: 2008-2032", that addressed infrastructure needs in four categories: energy, telecommunications, transportation, and water and wastewater. The information from the AIC report is a major input to the report that follows. Other types of infrastructure — most notably education, health care, and public safety — also are analyzed here to provide a more complete picture of infrastructure needs in Arizona. The goals of this report are to place Arizona’s infrastructure needs into national and historical contexts, to identify the changing conditions in infrastructure provision that make building Arizona’s infrastructure in the future a more problematic proposition than in the past, and to provide projections of the possible costs of providing infrastructure in Arizona over the next quarter century.