JLAC directs auditor to audit Arizona Department of Housing and state low-income housing tax credit program

The Joint Legislative Audit Committee voted to authorize a special audit of the Arizona Department of Housing that will review how the department administers the state low-income housing tax credit (LIHTC) program and evaluate the physical results of projects and the program's effect on the housing market.

Auditor General Lindsay Perry told JLAC that the office received a legislative request (in the meeting packet) asking the Auditor General to analyze policies and procedures used by the Department of Housing to manage the LIHTC program for fiscal years 2020 through 2025 and to examine the physical results and market impact. Perry recommended conducting the special audit in conjunction with the department's sunset review — a step she said would create efficiencies and allow issuance of the combined reports by Oct. 1, 2026.

Committee members asked about the LIHTC program's scale and the data available to evaluate it. Perry and members discussed figures from the Auditor General's prior work and agency reports: the office identified 17 outstanding recommendations from earlier housing audits and sunset work; a 9/30/2025 report cited in the hearing stated the state credit had assisted development or rehabilitation of 184 state-credit-assisted units to date; Perry said federal programs accounted for substantially higher totals (the transcript record cites roughly $867 million federal spending and about 4,300 multifamily homes and 28 single-family homes created in the federal portion). Members expressed interest in unit-level costs and potential market distortion from subsidized projects.

Representative Stahl Hamilton and other members noted the program is relatively new at the state level (spending began in fiscal year 2024 per the transcript discussion) and that the Legislature did not provide state LIHTC funding in the most recent budget session. Members asked about quarterly reporting and other available program data. Perry said her office could examine both the state and federal components where they intersect in the project portfolio.

The committee approved the motion to direct the Auditor General to analyze the Department of Housing's LIHTC program as part of the Department's sunset review. The motion carried by voice vote; members indicated the Auditor General could begin the work immediately and aim for an October 2026 report date.

Actions taken

- Motion: Direct the Auditor General to analyze Department of Housing policies and procedures for administering the state low-income housing tax credit program for FY2020'025 and to analyze the physical results and market impact; conduct the special audit in conjunction with the Department's sunset review. Outcome: approved by voice vote; report target Oct. 1, 2026.

Speakers quoted or cited in this article are taken from committee testimony and meeting records. The Auditor General emphasized the office's prior work and follow-up recommendations to explain capacity to conduct the combined audits.