Scottsdale Families Face Housing Uncertainty as Arizona Lawmakers Debate $120 Million Rural Tax Credit in Budget Talks
Marcus Whitfield
The Budget Line That Could Reshape Arizona Housing
Arizona lawmakers are negotiating the final details of an $18 billion state budget while housing advocates push for a $120 million rural low-income housing tax credit program to be included in the deal.
The measure, House Bill 2804, would create a new tax credit for affordable housing projects in counties with populations under 800,000. The program would span 10 years and targets rural Arizona communities.
But the fate of the bill has become entangled in the broader budget standoff between Gov. Katie Hobbs and Republican legislative leaders.
"It's really the difference maker, very particularly in rural Arizona, between a project getting the green light or not being able to pencil in at all," said Nicole Newhouse, executive director of the Arizona Housing Coalition.
Why Scottsdale Should Pay Attention
HB 2804 does not directly fund projects in Scottsdale or other Valley cities. The bill targets rural counties.
But the budget negotiations are shaping state housing policy in ways that affect every Arizona resident.
Republicans in their budget proposal included a $14 million cut to the Arizona Housing Trust Fund, which provides housing assistance for low-income families across the state, including Maricopa County.
"Maybe we'd have lower rents if the governor wasn't stopping home construction over large parts of the state," said Senate Majority Leader John Kavanagh, R-Fountain Hills, during Senate floor debate.
Kavanagh referenced a 2023 moratorium enacted by Hobbs that halted new home construction in parts of the Valley due to assured water supply requirements. The Maricopa County Superior Court struck down the moratorium in April. The Hobbs administration is appealing the ruling.
The Numbers Behind the Debate
Here is what the sources show about Arizona's housing landscape:
- Arizona's existing $4 million low-income housing tax credit program expired at the end of 2025
- More than 1,500 housing units were created under the prior program
- Those units generated $745 million in economic impact from construction activity, according to a study by Elliott D. Pollack & Company
- The average home value in Arizona is now more than $420,000, according to Zillow.com
"It's a program that essentially pays for itself in economic development," said Courtney LeVinus, president of the Arizona Multihousing Association.
Mayors and Lawmakers Push for Inclusion
Mayors from 31 rural cities wrote to lawmakers and Gov. Hobbs on April 29, urging inclusion of HB 2804 in the budget.
"These credits will help close the gap in housing availability and affordability, which is essential for sustaining rural communities," the mayors wrote.
Sen. Wendy Rogers, R-Flagstaff, also supports the bill. She called it a "commonsense approach which tackles rural Arizona's housing crisis" in an opinion column published in the Arizona Daily Sun.
Gov. Hobbs previously called on lawmakers to renew the state's low-income housing tax credit program. It was left out of last year's budget deal.
Other Housing Bills Still Alive
Two additional housing measures remain in limbo as budget negotiations continue:
- Senate Bill 1401 from Sen. Kevin Payne, R-Peoria, would expedite plan review and permitting timelines for workforce housing. It is waiting for a House vote.
- House Bill 2999 from Rep. Jeff Weninger, R-Chandler, would allow housing developments to access tax-exempt bonds to finance infrastructure. The amended bill is waiting for a final read in the House.
When Will the Budget Pass?
Senate President Warren Petersen told KJZZ on May 20 that he and Hobbs are "probably 97% of the way there" on a deal.
Petersen said a budget could pass by early June in the best-case scenario. The Legislature and Hobbs must agree to a budget by July 1 to avoid a government shutdown.
Hobbs lifted her bill moratorium on May 14, signaling that negotiations had resumed after she vetoed the Republican budget proposal three weeks earlier.
"I'm confident we'll get to a bipartisan balanced budget that works for Arizona," Hobbs said Monday.
For Scottsdale families navigating a housing market with average home values above $420,000, the final budget deal will determine how much state support exists for affordable housing programs across the Valley.