Housing Trust Fund Policy - Citywide

This report provides an overview of the City of Phoenix’s Housing Trust Fund and
requests City Council approval of the Housing Trust Fund Policy.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Summary
The City of Phoenix has long prioritized increasing the supply of housing for all income
levels and family sizes. Building on this prioritization of housing, Phoenix City Council
approved the City of Phoenix’s first housing policy plan, the Housing Phoenix Plan, in
2020. The City has exceeded the Housing Phoenix Plan’s goal of creating or
preserving 50,000 housing units by 2030 with more than 61,000 housing units created
or preserved as of September 2025.

Understanding the need for additional funding tools and to further the commitment
toward affordable housing within the City of Phoenix, Phoenix City Council created the
Phoenix Housing Trust Fund on May 21, 2025. Funded through American Rescue Plan
Act (ARPA) interest earnings in addition to contributions from Government Property
Lease Excise Tax (GPLET) and rezoning projects, the Housing Trust Fund currently
has a balance of $3.5 million.

A housing trust fund is a dedicated source of funding for affordable housing activities
that is administered at the local level. Taking the City of Phoenix’s affordable housing
needs and priorities into account, the Housing Department has developed a Housing
Trust Fund Policy to guide the administration and use of funds for the City’s Housing
Trust Fund. The policy provides a framework for administration of the fund and future
funding awards, outlines permissible uses of fund dollars, sets priorities for funding
awards and specifies parameters of those awards. The proposed Housing Trust Fund
Policy is included as Attachment A.

Responsible Department
This item is submitted by Deputy City Manager Gina Montes and the Housing
Department.



ATTACHMENT A

DRAFT - City of Phoenix
Housing Trust Fund Policy

Purpose

This policy is intended to outline the administration and use of the City of Phoenix’s
Housing Trust Fund. The Housing Trust Fund is intended to accelerate and support the
creation and preservation of affordable housing within Phoenix.

Background

While the City has long prioritized increasing the supply of housing for families at all
income levels and family sizes, there remains a great need for additional housing
resources for low-income and extremely low-income families. The City’s 2024 Housing
Needs Assessment concluded that there was an affordable rental housing gap of
approximately 59,000 affordable and available units for households at or below 50
percent of the area median income.

Arizona State statutes restrict the use of tools other jurisdictions utilize to increase the
supply of affordable housing like housing-related impact or linkage fees, tax increment
financing and inclusionary zoning. These restrictions, coupled with fluctuations in
federal and state funding levels, increased competition for low-income housing tax
credits and existing affordable housing units reaching the end of their required
affordability period, necessitate additional investment in the creation and preservation of
affordable housing within Phoenix.

Understanding the need for additional funding tools, Phoenix City Council created a
Housing Trust Fund on May 21, 2025.

Funding

The Housing Trust Fund may be funded by any source available to the City, including
but not limited to, the following:

 General Fund contributions as designated by City Council
 American Rescue Plan Act (ARPA) interest earnings
 Government Property Lease Excise Tax (GPLET) project payment in-lieu
contributions
 Rezoning project payment in-lieu contributions
 Bond proceeds
 Proceeds from the sale or lease of real property
 Philanthropic donations designated for the Housing Trust Fund




Administration

The Housing Trust Fund will be administered by the Housing Department.

The Housing Department will be responsible for developing and implementing the
procedures to execute disbursement of approved fund activities. These responsibilities
include the necessary program development, agreement management, project
monitoring and affordability compliance to ensure prudent investment of Housing Trust
Fund resources. Accordingly, a small portion of funds, not to exceed 15 percent of the
total fund annually, may be utilized for Housing Department administrative expenses.

Disbursement and use of Housing Trust Fund funds must be consistent with this policy
and any developed programmatic guidelines. All funding award recommendations will
be brought to City Council for approval prior to agreement execution.

Funding distribution priorities will be prepared by the Housing Department and
periodically reviewed by City Council for consistency with current housing needs.

Use of Funds

Use of Housing Trust Fund funds should accelerate and support the creation or
preservation of affordable housing within Phoenix. The following list of permissible uses
is designed to provide flexibility in addressing Phoenix’s housing needs, while providing
consistency with Housing Phoenix Plan policy initiatives.

 Homeownership Activities
o Expanding efforts to advance affordable homeownership through further
investment in established Open Doors Down Payment Assistance and
Community Land Trust programs

 Preservation and Strategic Acquisitions
o Enabling the acquisition of existing residential developments for purposes
of preservation or transitional housing and/or strategic land purchases for
the purposes of affordable housing creation

 Affordable Housing Pre-Development and Construction Short-Term Loans
o Supporting development projects through a revolving loan fund that
provides low-interest, short-term loans for pre-development and/or
construction periods
 Funds provide a substitute source for higher-cost equity in a
project’s capital stack to enable more projects to come to fruition




 Gap Financing for City Affordable Housing Development Projects
o Strengthening efforts to redevelop City-owned property with affordable
housing and community amenities through Choice Neighborhoods,
Housing Phoenix Plan-affiliated sites and other identified redevelopment
projects

 Gap Financing for Private Affordable Housing Development Projects
o Furthering the impact of the existing federal HOME-funded Affordable
Rental Housing program, funding will be used to partner with non-profit
and for-profit affordable housing developers to create or preserve
affordable rental or homeownership units in projects of all sizes
 Funds are permitted to support a project’s plan review, permit or
impact fees in addition to development costs
 Eligibility not limited to low-income housing tax credit (LIHTC)
projects

 Other Uses Meeting Housing Trust Fund Policy Intent
o Providing additional adaptability to support creative housing solutions, as
determined by the Housing Director and approved by City Council

Funding Priorities

Recommendations for project funding will need to demonstrate consistency with
outlined funding priorities. Funding priorities have been developed to address the needs
identified in the 2024 Housing Needs Assessment, ability of projects to leverage City
funds and enhanced project design.

 Affordable Housing Needs – Funding is intended to assist households at or
below 80 percent of the area median income. Additional consideration will be
given for projects that integrate mechanisms to serve households at or below 50
percent of the area median income, which is the greatest need identified in the
2024 Housing Need Assessment. An exception for the creation of ADUs may be
permitted.

 Leverage of City Funds – The City’s Housing Trust Fund is a finite source of
funding. As such projects, where feasible, should seek to leverage other funding
sources or community partnerships to enhance the lives of residents.

 Enhanced Project Design – Projects that seek Housing Trust Fund assistance
should integrate thoughtful and enhanced design features. Features can include
units that provide inclusivity for larger families, sustainability elements designed
to support lower utility costs and/or accessibility features to enhance quality of life
for seniors or persons with disabilities.

Expectations for consistency with funding priorities will be further outlined in program
documentation based on project type and level of funding.




Funding Parameters

Funding programs will encompass the below funding parameters. As applicable,
parameters are designed to be consistent with the City’s existing affordable housing
funding programs.

For non-city affiliated projects, detailed information on specific funding parameters will
be outlined in developed program documentation and communicated to project
applicants.

 Funding Limits
o Minimum and maximum subsidies per unit or per project that are regularly
updated based on current housing costs

 Distribution of Funding
o Funding provided as low-interest loan, forgivable loan or grant, as
appropriate based on applicant entity and funding source

 Minimum Affordability Terms
o Prescribed based on use and amount of funding provided, based on
existing funding programs:
 40 years for gap financing
 5 to 15 years for down payment assistance
 In perpetuity for the community land trust
 5+ years for other programs

 Affordability Restrictions
o Secured via land use restrictive agreement (LURA), deed of trust or other
deed restriction