State auditors find repeated failures at Arizona’s affordable housing agency

Arizona's Auditor General found the state Department of Housing took as long as 115 days to notify property owners of urgent health and safety violations, including broken smoke alarms, an improperly installed water heater line, rodent infestations, and a bedroom window with sharp broken glass, at properties receiving federal low-income housing tax credits. One Peridot property that received $4.3 million in federal credits in 2005 had an ungrounded outdoor outlet go unreported for 82 days and unfixed for another 85, leaving tenants with the hazard for roughly six months.

This is the second audit in three years to find the same pattern: a 2024 report found the department couldn't even verify whether its $1.26 billion in affordable housing spending was helping the housing crisis it exists to address. Inspectors told auditors their training was inadequate and relied on inconsistent peer-to-peer coaching, and of 153 tenant eligibility files reviewed, 53 were missing key verification information.

The department has implemented just four of fifteen recommendations from the earlier audit, and auditors also found it failed to report at least one documented violation, a broken sink and inoperable range burner among them, to the IRS as federally required, a lapse that could prevent recovery of misused tax credits.

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