Market Conditions and Needs Assessment

Throughout the State, it is estimated that 224,100 renter households and 171,400 owner households earning under 80% of the area median income are in need of housing assistance in FY 1995. By FY 1999, it is estimated that a total of 239,700 renters and 188,300 owners earning under 80% of the median income will require assistance. To date, available federal, state, local, and private housing resources have assisted only a limited amount of those in need. Of the total need outlined above, many of these households are cost burdened or severely cost burdened, paying from 30% to 50% of their income for housing. From a survey conducted within the State, there are significant waiting lists in effect for federal rental assistance programs. Often, waiting lists are over two years in duration. It is estimated that at least 14,100 homeless persons presently reside in Arizona, and these individuals require emergency, transitional and permanent housing facilities, as well as a host of social services. Elderly, disabled persons, AIDS victims, migrant and seasonal farm workers, and seriously mentally ill individuals all represent major special populations in the State in need of supportive housing facilities and services. The unique needs of these target groups are identified in more detail in the CP. Generally, the facilities and services presently committed and available to serve these persons are not adequate.

Arizona is experiencing sustained economic and employment growth. Prevailing economic conditions are quite strong with residential single-family permitting at in all time high, while multi-family market conditions are inducing escalating rental rates. For sale vacancy rates in single-family homes are quite low, as are multi-family rates. The rapid escalation in home values and apartment rental rates is stressing stock availability for lower income persons in need of assistance. While residential market conditions will eventually abate somewhat as the economy ultimately turns down, the opportunities afforded lower income families as a result of the recent real estate depression is not anticipated to occur again. The State intends on capitalizing on existing market conditions by stimulating the rehabilitation of owner occupied dwellings; pursuing acquisition and rehabilitation opportunities; fostering home ownership opportunities for credit- worthy borrowers; stimulating the production of multi-family production for lower income families; and seeking to address the needs of homeless persons and those with special needs through homeless prevention and the support of emergency, transitional, and permanent housing opportunities with needed support services.

The State has determined affordable housing priorities, which range from a high and medium priority for owner households in need, to high priority for elderly renters, and medium to high priority for other categories of renters. With respect to the needs of homeless persons and populations requiring supportive housing assistance, both medium and high priorities were assigned. The State anticipates pursuing housing rehabilitation, acquisition plus rehabilitation, home buyer assistance programs, rental assistance, new construction and the provision of needed supportive service efforts in the coming year. The types of assistance to be provided will vary on the family type and income level of households to be assisted.

With respect to the needs of homeless persons and special populations, a continuum of care has been identified in the plan. The State has addressed homeless prevention, support for a variety of homeless facilities, outreach and assessment needs, as well as the continuing need for permanent housing with services.

The State of Arizona has prepared a non-housing community development plan where long and short term strategies have been identified based on State needs. They include, but are not limited to the following:

• Stimulate the investment of other public and private resources with CDBG funds. Assist units of local government to secure and administer CDBG funds to address priority needs.
• Strategically invest CDBG resources to serve the maximum number of low and moderate income persons from projects assisted.
• Invest CDBG resources to foster the economic vitality of non-metropolitan Arizona, stimulate investment, and further neighborhood revitalization and redevelopment.
• Continue to streamline the State of Arizona CDBG program for small cities.
• Undertake priority technical assistance efforts to assist units of local government.

The State of Arizona strategic plan includes detailed efforts associated with: policies to be undertaken to affirmatively further fair housing; reduce the number of persons in poverty, identify and eliminate barriers to affordable housing production through focused technical assistance efforts; the development of needed incentive programs and other related activities; foster coordination between state agencies who address housing and community development issues; lead based paint abatement and evaluation; identify the affordable housing and community development resources available as well as proposed leveraging efforts and compliance with applicable match restrictions.

In the forthcoming fiscal year, the anticipated $5.02 million in federal HOME resources anticipated for the State will be distributed in the following manner:

• Northern Arizona Council of Government Region - covering Apache, Coconino, Navajo, and Yavapai counties. Funding objective of $1,121,498 (non-CHDO).
• Western Arizona Council of Government Region - covering Yuma, La Paz, and Mohave counties. Funding objective of $740,999.
• Central Arizona Association of Governments Region - covering Pinal and Gila counties. Funding objective of $503,059.
• Southeastern Arizona Governments Organization Region - covering Graham, Greenlee, Cochise, and Santa Cruz counties. Funding objective of $517,930.
• CHDO Allocation of $753,000 anywhere in the State.
• Metropolitan Non-CHDO allocation of $630,514.
• Administration - $502,000
• State Special Projects - $251,000

The selection of HOME recipients will be made based on a competitive selection process consisting of, but not limited to the following criteria:

• Local Housing Need/Market Analysis - 10 points; Leverage - 10 points;
• Project Underwriting and Budget Reasonableness - 20 points;
• Project Readiness - 10 points; Match - 5 points;
• Long-Term Supply of Affordable Housing - 5 points;
• Special Target Population Impacts - 10 points;
• Type of Assistance - 5 points;
• Special Project Impacts - 5 points;
• Very-low Income Targeting - 5 points;
• Project Management and Capacity - 15 points;
• Location of CHDO Project - 5 Bonus points.

About $603,000 in FY 1995 Emergency Shelter Grants are anticipated to be available to the State. For FY 1995, it is the intent to add ESG funds to community, state and federal funds currently used to assist homeless persons by:

1. making an amount equal to the FY 1994 allocation, less the State administrative allotment of 5%, available to the same local governments and private non-profit agencies that received FY 1994 funds for operations, essential services and prevention (agencies receiving rehabilitation funds will not be automatically refunded), and
2. making the remainder of the FY 1995 ESG allocation, less the state administrative allotment of 5%, available to local governments and private non-profit agencies through competitive applications.

For agencies which received the FY 1994 funds, new budgets, descriptions of activities to be funded by ESG, and new certifications will have to be submitted to the Department of Economic Security (DES), Community Services Administration (CSA). The new information submitted will be reviewed and negotiated where necessary, to assure compliance with ESG requirements. The portion of funds to be continued in existing contracts is approximately $436,550. The following chart provides the allocation of funds anticipated to be made available to providers in the counties or regions noted. Some providers serve multi-county areas and these funds may be so noted.

FY 1995 ESG RESOURCES

The evaluation criteria which will be used by DES-CSA on applications received in responses to the request for proposal (RFP) are, in priority order: scope of work; experience and expertise; and costs.

The total FY 1995 CDBG allocation is $11,419,000. Of this amount, $442,570 will be retained by Commerce, composed of 2% of the total allocation for administration, to be matched with state resources, plus $100,000 of unmatched funds and 1 % of the total allocation for technical assistance for local governments and non-profits. The balance of $10,976,430 will be available for applicants. Of this amount, 85%, or $9,329,966, will be allocated to the Regional Account (RA) which has sub-accounts for each of the four non-entitlement Regional Councils of Governments. These allocations are as follows:

• 29.4% or $2,743,010, to the Northern Arizona Council of Governments (NACOG), covering Apache, Coconino, Navajo and Yavapai Counties.
• 23.7% or $2,211,202, to the Western Arizona Council of Governments (WACOG), covering La Paz, Mohave and Yuma counties
• 21.4% or $1,996,613, to the Central Arizona Association of Governments (CAAG), covering Gila and Pinal Counties.
• 25.5% or $2,379,141, to the Southeastern Arizona Governments Organization (SEAGO), covering Cochise, Graham, Greenlee, and Santa Cruz Counties.

The remaining balance of 15%, or $1,646,464, will be allocated to the State Special Projects Account (SSP) for distribution by the Arizona Dept. of Commerce CDBG Program directly to units of local government. This total includes a 10% federally mandated "colonias set-aside" which must receive at least $1,141,900 from either the RA or the SSP. The basis on which resources will be allocated within each Regional Account for the COG districts noted above will vary. CDBG resources to be allocated under the State Special Projects Account will be competitive.

Anti-Poverty Strategy

According to the 1989 Census, 15.7% of the people in Arizona live below the poverty line. Arizona is tied with Tennessee has having the 13th highest rate of poverty of all 50 states.

The State's primary anti-poverty strategies are contained in the consolidated plan and revolve around policies such as:

On an on going basis from FY 1995 through FY 1999, work closely with the Governor's Office and Department of Economic Security, Health Services and Commerce', Job Employment and training Division to foster the provision of needed and tailored job training and placement programs for the recipients of affordable housing and homeless/ supportive housing programs.

On an ongoing basis from FY 1995 through FY 1999, and in concert with units of local government. encourage the commitment of CDBG resources for uses that directly or indirectly seek to provide employment and training opportunities for persons and households in poverty.

On an ongoing basis from FY 1995 through FY 1999 , encourage the commitment of State CEDE, Enterprize Zone and Work Force Recruitment resources to persons at or below the poverty level.

Lead-Based Paint

In 1994, Arizona experienced about 500 cases of elevated lead blood levels (poisoning). Approximately 80% of the cases were in metropolitan areas and 70% were in children under 4 years of age.

Specific actions the State will undertake this year to reduce the lead paint hazard include

• Amend all state and federally financed and administered affordable housing programs to allow lead paint hazard evaluation and reduction as eligible activities,
• Help sponsor workshops in non-metropolitan areas on lead based paint hazard evaluation and reduction techniques.
• In conjunction with state agencies and units of local government, develop procedures to license lead based paint hazard evaluation and reduction contractors.
• Ensure that lead based paint hazard reduction and evaluation procedures are incorporated in all federal housing assistance directly administered in FY 1995 by the State of Arizona through state agencies, instrumentality's thereof, or subcontractors.

The State of Arizona has cooperated with a wide variety of organizations in the preparation and design of its Consolidated Plan (CP) document, as follows:

A notice for public comment on the State's FY 1995 CP was sent out to over 1,500 individuals and organizations. This included elected officials; State, county and city governments officials; housing authorities and community development agencies; non-profit housing and social service agencies; lending institutions; real estate industry professionals; and for-profit housing developers. Eleven regional public meetings were held during the months of January and February (1995) in Prescott, Casa Grande, Yuma, Globe, Holbrook, Payson, Kingman, Sierra Vista, Tucson, Phoenix, and Flagstaff. Approximately 250 individuals attended these meetings. In addition to the above mailing, a press release was issued with many local newspapers advertising the hearings, some following up with stories. Other government and non-profit organizations also advertised the hearings by running stories in their respective newsletters. The public hearings were conducted by the Arizona Department of Commerce, Arizona Department of Economic Security and Arizona Department of Health Services.

Ongoing coordination has occurred between the Arizona Department of Economic Security, Arizona Department of Health Services and the Arizona Department of Commerce, the lead agency for preparing the Consolidated Plan. These state agencies have conferred on a close and continuing basis in the formulation, development and review of the FY 1995 State of Arizona Consolidated Plan.

In addition to soliciting the involvement of local government organizations, the State of Arizona has secured the input of a wide variety of affected and concerned organizations and individuals in the preparation and review of its CP. The types of organizations include, but are not limited to, the following entities: non-profit housing or social service organizations and providers; local housing authorities; Council of Government (COG) organizations; State agency service providers; housing related industry representatives; banking institutions; State elected officials; and the general public. The involvement of these organizations and individuals have been secured in the following manner concerning the development and review of the State's FY 1995 CP:

• State representatives have attended a wide variety of meetings with organizations and citizen advocacy groups on the subject of the CP.
• A statewide conference (Housing Summit), attended by over 150 persons, was conducted on December 5, 1994 to elicit the input of public and private organizations associated with the CP. From this meeting, input was secured relative to general CP objectives and goals. Several specific issue areas were treated at the Summit, which included: fair housing issues, local and state barriers to affordable housing, and perceived issues associated with the affordable housing delivery system at both local and state levels of government.
• All non-entitled CDBG grantees in Arizona conducted public hearings associated with their intended use of FY 1995 CDBG resources. This information has been used within the State FY 1995 CP.
• Pursuant to applicable federal regulations, the State of Arizona conducted an extensive, 30 day public review and comment effort concerning its CP. The comment process commenced on April 13, 1995 and terminated on May 13, 1995. A notification of the CP public comment period and summary was distributed to over 1,500 affected organizations alerting them to sites where the document was available for review, and copies of the FY 1995 CP were distributed to libraries, Councils of Government, entitlement communities, and to a variety of organizations requesting copies of the document A summary of the FY 1995 CP was placed in an Arizona newspaper with statewide circulation to solicit public comment as well. This advertisement was executed on April 12, 1995. Four public hearings were held in the cities of Flagstaff, Casa Grande, Phoenix, and Sierra Vista during the 30 day public comment period in April and May of 1995.

Mr. Steve Capobres
Manager
Office of Housing and Infrastructure Development
State of Arizona
3800 North Central, Suite 1500
Phoenix, AZ. 85012
PH: (602) 280-1365