Building Hope for Housing

Why is housing in Flagstaff so expensive? There are many reasons, but I’ll name just a few. First, it’s not just Flagstaff. Communities large and small across the country are experiencing housing costs that have grown out of reach for residents. Nationwide, building hasn’t kept pace with population growth as we exited the Great Recession. Secondly, it’s hard to save enough money for a down payment on a house when your rent is so high it eats up too much of your income. Add in high construction costs and little public funding to help an affordable project “pencil out”.

What can be done? I want to share a bit of what the City of Flagstaff is doing and to share hope that we will continue to make progress on this tough issue.

We need all types of housing.

We need emergency shelter, transitional housing, permanently affordable, rental, ownership, smaller homes, and homes for people to move into should they increase their income and desire to. We need single family homes, apartment buildings, duplexes, triplexes, fourplexes, and condos. We won’t solve this problem using one tool or building one type of housing. When attacking this problem, we must recognize that holding on to our neighbors who have built their lives here and continuing to make progress on this issue requires action and vocal support.

What’s affordable?

Housing is considered affordable when a renter or owner pays no more than 30% of their gross monthly income on housing costs. If you make $1,000 dollars per month, your rent and utilities shouldn’t be more than $300 per month to be considered affordable.

What has the city helped to provide?

The city’s Housing Division staff, along with the Housing Commission, developed and now administer the bond programs that were placed on the ballot and approved by voters. The $20 million bond is allowing the city to expand its homebuyer assistance program, provide incentives for developers (nonprofit and for-profit) to include affordable units in their rental projects, repurpose existing buildings into rental housing, and to redevelop city-owned housing, making them more energy efficient and creating additional affordable units.

When the city’s budget allows, General Fund dollars have been allocated to affordable projects and to the Incentive Policy for Affordable Housing. These incentives provide financial assistance and zoning flexibility, including fee reductions, density bonuses, and parking reductions in exchange for affordable units being included in new developments.

City staff from multiple divisions, led by Planning and Development Services staff, have been working on the Land Availability and Suitability Study and the Code Analysis Project (LASS+CAP). First, they analyzed every parcel of land in Flagstaff: size, ownership, current use, and zoning. The second part, the CAP, seeks to understand which codes are integral to charting our community’s desired direction and which may act instead to raise housing prices and hinder forest health and fire protection. The progress of both projects have been presented to council repeatedly over the last two years and staff’s recommendations to council are scheduled to be discussed at the June 16 work session.

Federal Low Income Housing Tax Credits (LIHTC) have been invaluable for getting affordable housing built across the country—including Flagstaff.

Created in 1986, the Low-Income Housing Tax Credit (LIHTC) is the most successful affordable housing program in American history. Its genius lies in its structure: rather than relying on direct government spending, LIHTC pairs federal tax credits with private investment to produce housing that the market alone would never build.

However, with construction costs running 40% above pre-COVID levels, federal tax credits alone won’t cover the financing gap for the full cost of development. Because rents in LIHTC properties are capped by design to be affordable, developers cannot pass rising costs on to tenants — creating a financing gap that must be closed for a project to move forward.

Bridging that gap typically requires layering multiple funding sources: low-cost loans, grants, local government contributions, and other subsidies. Among these tools, state housing tax credits have emerged as one of the most powerful and flexible — capable of generating meaningful private equity in the same way the federal program does. In expensive markets, especially, state credits are often the difference between a project that pencils and one that never breaks ground.

Roughly half of the nation’s state legislative bodies budget money for state Housing Tax Credit programs, unfortunately, Arizona lawmakers allowed our state’s successful program to expire at the end of last year. This made Arizona the first and only state in the nation to do so and is a loss to Arizona cities’ efforts to facilitate affordable housing projects. We have been actively working alongside fellow advocates to reestablish the program, with new legislation focused specifically on rural Arizona—where affordable housing options are scarcest, and the financing gaps are greatest.

Republican Representative Teresa Martinez introduced such a bill—supported by Flagstaff’s Representatives Blackman, Peshlakai, and Tsosie, and Senators Hatathalie and Rogers—and it passed out of the House. Unfortunately it stalled in the Senate so we reached out to rural mayors from every corner of the state and 32 signed on to our letter to Governor Hobbs, asking her to include money for the program in her FY27 budget.

Our request is to allocate $12M annually for 10 years for rural affordable housing, allowing us to leverage private investment by providing state tax credits that make projects financially feasible. None of the tax credits are issued until a project is completely built and occupied by tenants. This means there is no financial impact to the State General Fund for this fiscal year, and likely the next several years.
 
Housing that’s affordable for residents is a complex topic deserving of open minds, curiosity, support, and action. There’s no one solution and there’s no one group or organization that can solve it. If you’re not already, I urge you to become a housing advocate and help me advocate for support at the state and federal levels. As a nation, state, and community we need to treat housing as a problem in need of a long-term solution. This isn’t a partisan issue, and it requires evidence-based solutions that don’t swing with elections. This means funding that’s reliable and available—and not turned on and off like a faucet.

As always, I’m available to Flagstaff residents by email. You can also view my weekly calendar.

To read the City of Flagstaff’s Housing Division 10-year plan, find rental assistance, learn more about the Community Homebuyer Assistance Program, and much more, visit the Housing Division’s website.

To read our letter to Governor Hobbs regarding the Rural LIHTC bill, visit the update on this site.

This column appears in the June 2026 Flagstaff Business News.