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Issue: Aimee Yentes

Affordable housing tax credit draws ardent debate

Modern apartment complex in suburban neighborhood

Some lawmakers and housing advocates fear two bills proposing a state low income housing tax credit program are the wrong response to the mounting issue of housing affordability in Arizona.

The program, currently operated in Arizona from the federal level, offers tax credits against insurance premium taxes and corporate income taxes to developers of qualified affordable housing projects.

The bills, introduced by Rep. Regina Cobb, R-Kingman, and Sen. David Gowan, R-Sierra Vista, would allocate $8 million over six years to a state tax credit program. About 20 other states have enacted or proposed similar programs.

“We are already behind in what affordable housing is doing in the west side of the United States, so right now we need, I think, a little catch up time to do,” Cobb said. “I think if we don’t do some type of affordable housing tax credit … I think we need to start someplace and start working towards putting money into that.” 

Cobb said the most financially insecure people are at the greatest disadvantage when it comes to finding affordable housing because the market is controlling rent prices. According to a Yardi Matrix report, year-over-year rent growth in Phoenix was at 4.3% in January — the fourth-highest rate in the nation.

Regina Cobb
Regina Cobb

“The market is pretty high right now for what a rental unit is, especially in the downtown Phoenix area,” she said. “Some of the really condensed metropolitan areas, I think the housing is pretty high, so I think you’ll see a lot more homeless people.”

Gibson McKay, who spoke on behalf of Affordable Equity Partners at a House Appropriations Committee meeting February 3, said a state low income housing program could generate 2,500 jobs per year and $740 million in wages in the state.

“What we say is that it’s about $480 million in tax revenue will be generated over the course of this so we think it’s a push, but it brings about 12,000 units to the state of Arizona,” McKay said.

Realtor.com’s 2021 Housing Forecast predicts home sales in the Phoenix-Mesa-Scottsdale metro area will increase 11.4% and prices will rise 7% this year. The state, historically known for its low housing costs compared to other states, has seen housing scarcity and population growth push prices upward. 

This scarcity is worse for extremely low-income renters. For every 100 extremely low-income renter households, there are only 26 affordable and available rental homes, according to a 2020 report by the National Low Income Housing Coalition. 

The report also found at Arizona’s then minimum wage of $12 an hour, affordable monthly rent was $624 — fair market rent for a zero-bedroom unit was $782. For extremely low-income renter households, affordable monthly rent was $547.

Brian Swanton, president and CEO of housing developer Gorman and Company, told the House Appropriations Committee his company has 2,000 affordable housing units across the state and an 8,000-family waiting list.

“The lack of affordable housing in our state, as you probably know, is astonishing,” he said. “We see it at our leasing offices every day. We turn away thousands of households every year due to the lack of availability.”

While advocates of the bill praised its potential to incentivize affordable housing project development, some are skeptical, saying it approaches the issue of affordable housing from the wrong angle. 

Andrew Sugrue, assistant director of policy and advocacy at the Arizona Center for Economic Progress, said the proposed tax credits don’t address current housing needs exacerbated by Covid, and center on developers rather than the affected community members. 

In order to qualify for tax credit, at least 20% of a development’s units must be rent-restricted and occupied by people with income lower than 50% of the area median gross income, or at least 40% of the units must be rent-restricted and occupied by people with income lower than 60% of the area median gross income. 

“I think that there’s a real chance that we’re missing the folks that are … most desperate when it comes to housing instability, and so if we’re not serving those with the greatest obstacles in the current shortage, then what is this trying to do?” Sugrue said.

He said the program would do little to address the classism and racism that affect housing accessibility, and he doubts whether the Legislature will follow through with accountability oversight.

A 2018 study by the Government Accountability Office reported minimal oversight of LIHTC programs and unreliable data from the IRS to assess compliance and taxpayer protections. Another investigation by NPR and Frontline shows the tax credit program has produced fewer housing units and at a higher cost as time goes on.

The investigation details cases of fraud under the program, where developers submitted inflated numbers on construction costs in order to receive more money than projects required.

Aimee Yentes, on behalf of the Arizona Free Enterprise Club, told the House Appropriations Committee these fraud concerns are part of what has kept her organization in opposition to the bills for the past four years. However, when asked, Yentes said she didn’t know of any examples of low income housing tax credit fraud in Arizona.

As far as oversight plans go, the two bills include the creation of a committee that would review tax credits on the fifth year after the effective date of the credit and every five years after that, and submit a report to the governor and Legislature. 

Cobb also said the credits would not be given out until buildings are built and 92% occupied.

Gowan’s SB1327 passed through the Senate 17-13 on February 17, and Cobb’s HB2562 got tentative approval February 18 and must still receive a formal floor vote.  

“I can’t see a better time than this year to help with housing and what we’ve gone through in this past year,” Cobb said.

Senate panel moves to block private funds for elections

In this Oct. 23, 2019, file photo, Facebook CEO Mark Zuckerberg testifies before a House Financial Services Committee hearing on Capitol Hill in Washington. (AP Photo/Andrew Harnik, File)
In this Oct. 23, 2019, file photo, Facebook CEO Mark Zuckerberg testifies before a House Financial Services Committee hearing on Capitol Hill in Washington. (AP Photo/Andrew Harnik, File)

Raising the specter of Mark Zuckerberg influencing who holds office in Arizona, Republican lawmakers moved Monday to block counties from taking money from any private source to help run future elections.

The party-line vote by the Senate Government Committee on HB2569 follows the disclosure that nine Arizona counties got more than $6 million last year from the Center for Tech and Civic Life. Jennifer  Marson, executive director for the Arizona Association of Counties, said the grants were to help defray some of the costs of running an election during the Covid pandemic.

Marson pointed out to legislators that the four of the nine counties had Republican majorities, four had more Democrats and voter registration is close to evenly split in Maricopa County. And in each case, she said, the grants, including how the money would be spent, were approved by county supervisors.

But Scott Walter, a former special assistant to President George W. Bush who now heads the Capital Research Center, said that doesn’t prove anything.

Walter, whose organization that says it studies unions, environmental groups and nonprofit and “activist” groups, said Republicans did better in turnout in 2020 than prior years in the six counties which didn’t get CTCL grants.

“But in funded counties, Democratic turnout rocketed upward,” he said. “Funding a county helps Democrats almost twice as much as it helps Republicans.”

More to the point, he said in those nine funded counties, Democrats beat Republicans by close to 122,000 votes, far more than the 10,457-vote edge that Joe Biden had statewide over Donald Trump.

But in the nine counties that got the money, Democrat turnout in 2020 “rocketed” to far higher levels than what they were in prior election cycles.

“And that’s not just the case here,” Walter said, saying that counties in other states where CTCL grants were given “miraculously performed enormously better for Democrats than counties that did not receive funding.”

Aimee Yentes, lobbyist for the Arizona Free Enterprise Club, which tends to support Republican causes, said that’s no accident: CTCL reported that $400 million came from Zuckerberg and his wife, Priscilla Chan.

“There’s no mystery about his political leanings,” she said. “We’ve seen these biases infiltrate his social media platform and the curation of content, in filtering of conservative messages and outright bans of individuals with opposing political opinions.”

Sen. Martin Quezada, D-Glendale, said the grants in each case were aimed at funding election administration. For example, he said, CTCL said it was financing drop bosses, drive-through voting, renting and cleaning new polling places and equipment for handling mail-in ballots.

“They aren’t saying, ‘You should vote one way or the other,’ ” Quezada said. “They aren’t saying that one group is correct, one group is not.”

Sen. J.D. Mesnard, R-Chandler, said he’s surprised that Democrats are OK with these outside grants.

“If this model of influence sort of works out in one party’s favor in one instance, the other party’s going to be right back at it the next time using the same tools,” he said. “And this will cascade into a brand new way that outside influence, particularly from extremely wealthy people, can very covertly, influence our elections.”

Quezada said the real story is more complex.

He said it starts with the lies that are told about how the election was mishandled, how the election was “stolen” and how they can’t be administered fairly.

“And then we turned around and denied that funding to our local governments,” Quezada said.

But he did say that the supporters of the legislation are right on one point: More money on voter education does influence turnout.

“When more people vote, the people with weak policy arguments lose,” Quezada said.

Sen. Kelly Townsend, R-Mesa, said there are larger issues here.

“Would we be OK if that money came from Russia or any other hostile country, or not hostile?” she asked, such as Canada. “If we wouldn’t be OK with international contributions to our elections, why should we be OK if it’s a millionaire or a billionaire?”

The measure, which already has cleared the House, now goes to the full Senate.

This isn’t the first time Republican interests have argued that Zuckerberg influenced the results of the 2020 election.

A lawsuit filed last December in Maricopa County Superior Court challenged the results of the presidential election saying the money from the Facebook billionaire deliberately skewed the vote here for Biden.

Attorney David Spilsbury, representing four Arizona residents who identified themselves as members of something called the Arizona Election Integrity Association, said Zuckerberg’s money was designed to create a “two-tiered treatment of the American voter,” putting funds into “progressive strongholds” to turn out more voters.

But Spilsbury dropped the lawsuit after the Secretary of State’s office said the lawsuit was without legal merit and threatened to pursue legal fees and sanctions against him.

Tax hike to aid fire districts advances

Deposit Photo

Arizona voters might be deciding in November whether to bump up sales taxes to patch up fire districts’ budgets, if a measure working its way through the House passes.

The House Land, Agriculture and Rural Affairs Committee voted March 21 to advance Senate Concurrent Resolution 1049 with a strike-everything amendment asking voters if they want to boost the transaction privilege tax by one-tenth of 1%. This would raise $150 million to $200 million a year for the state’s 144 fire districts.

“All we’re asking of the Legislature is to pass it on to the voters,” said Bryan Jeffries, president of the Professional Fire Fighters of Arizona. “We’re not asking them to necessarily take a position on this.”

Jeffries said fire districts throughout the state saw devastating revenue cuts, in some cases as much as 50%, due to the drop in property tax collections after the Great Recession and have responded by freezing pay and making cuts, including to trucks and personnel in some cases. He said fire districts are entirely funded by property taxes, unlike city-funded departments that have “multiple levers to pull,”

“We’ve cut to the bone, and to respond to emergencies, you need people,” he said. “We don’t have robots.”

Some fire districts can’t fund basic life-or-death services at this point, Jeffries said.

“We are several million dollars underfunded every year,” said Buckeye Valley Fire District Chief Mark Burdick. “We’re barely keeping our heads above water.”

Burdick said understaffing and a general lack of resources makes response times long. He said his district would use the revenue to hire new staff, get equipment and outfit all stations for use.

Rep. Kevin Payne, R-Peoria, introduced the legislation earlier this session as House Concurrent Resolution 2004, but held it before it was heard in the House Military Affairs and Public Safety committee on February 14. Sen. Paul Boyer, R-Glendale, reintroduced the same measure as a strike-everything amendment to his SCR1049.

“No legislators will have to have their scorecards dinged for raising taxes because we’re not raising taxes, we’re just giving voters the opportunity to weigh in,” Boyer said.

Paul Boyer

Boyer’s proposal has the backing of firefighting groups such as the Arizona Fire District Association, the Arizona Ambulance Association and the Professional Fire Fighters of Arizona, while fiscally hawkish organizations such as the Republican Liberty Caucus of Arizona and the Arizona Free Enterprise Club are opposed.

“Not every person in this state receives a service from a fire district,” said Aimee Yentes, vice president of the Free Enterprise Club. “It really isn’t fair to expect in my community to pay not just for my service but for other communities’ services as well.”

And, she said, fire districts’ woes are not entirely due to outside forces. She said mismanagement and waste is responsible for some of their problems.

“They want local control of the money but access to statewide revenues,” she said. “They shouldn’t have it both ways.”

The measure must still get the support of the full House and advance through the Senate.

Senate Minority Leader Rebecca Rios, D-Phoenix, said that she and her party are generally in favor of passing bills with referendums allowing the voters to decide whether they want to be taxed, although the bill did not go through the “proper” channels in the Senate.

Aimee Yentes

Eight lawmakers on the House committee – four Democrats and four Republicans – voted to advance the bill, with one Republican opposed and one voting “present.” Rep. Lupe Diaz, R-Benson, who cast the present vote, said he wants to help fire districts but wondered whether lawmakers should find the money elsewhere in the budget. He said he isn’t sure how he plans to vote on the House floor.

“We’re living in a time (where) there’s high inflation going on,” he said. “People’s minds are on money and how much money they’re really spending and not spending.”

Supporters argued that funding rural fire districts adequately is a matter of statewide concern that shouldn’t be borne entirely by local property taxpayers. Some of them answer calls in touristy areas, or answer calls on large stretches of interstate.

“I think a statewide tax like this is important because it helps all of these districts,” said Rep. Brenda Barton, R-Payson.

Barton did, however, say she would rather the Legislature do it as a bill rather than asking voters, since it would be easier to change it down the road if adjustments need to be made.

Jeffries said the firefighters commissioned a study by Jim Rounds, a conservative economist who is a senior fellow at the Goldwater Institute, which found that the tax would improve economic conditions since some places, such as Pinal County, are limited in how much growth can occur now due to the strictures on emergency services.

“(The tax is) one-tenth of 1%, which is a penny on $10 of sales tax, which is a very conservative number,” Jeffries said. “But we’re trying to go about this in as conservative a way as possible.”

Jeffries sounded confident voters will approve the increase if given the chance. He said putting some of the funding on the sales tax would be more equitable than the current system, which relies entirely on property taxes to fund fire districts. And, he said, elderly voters understand the need for prompt emergency services with quick response times.

“We have polled the voters extensively,” Jeffries said. “It is clear to us the voters understand this issue and they want to help their local fire departments combat this challenge. I think voters understand we have a heavy tourism industry in the state of Arizona and those tourists don’t always pay their fair share for local emergency services.”

 

Trump backers give $5.6M for Senate audit

Cyber Ninjas owner Doug Logan, a Florida-based consultancy, talks about overseeing a 2020 election ballot audit ordered by the Republican-led Arizona Senate at the Arizona Veterans Memorial Coliseum, during a news conference April 22, 2021.(AP Photo/Ross D. Franklin)
Cyber Ninjas owner Doug Logan, a Florida-based consultancy, talks about overseeing a 2020 election ballot audit ordered by the Republican-led Arizona Senate at the Arizona Veterans Memorial Coliseum, during a news conference April 22, 2021.(AP Photo/Ross D. Franklin)

Groups linked to Donald Trump and conspiracy theories about the 2020 election have put more than $5.6 million into the audit run by a man who himself has touted some of the same rhetoric. 

But it’s unlikely that Arizonans ever will find out who is really behind all that cash. 

Cyber Ninjas CEO Doug Logan disclosed he has taken in more than $5.7 million. That’s on top of the $150,000 contract he has with the Senate to conduct the review of the results of the general election in Maricopa County and see if Joe Biden really outpolled Donald Trump. 

And the lion’s share of that, about $3.25 million, came from The America Project, set up by millionaire Patrick Byrne, the former CEO of “overstock.com.” Byrne already has said he believes what happened was “a fraudulent election.” 

As to who is behind all that money, there’s no legal way to find out. 

The America Project is set up under the Internal Revenue Code as a 501(c)(4) “social welfare organization.” And that precludes it from having to disclose the actual donors. 

Rod Thompson, who handles media for Logan and Cyber Ninjas, said there would be no further details released. 

America’s Future put in an additional $976,000. 

The chairman of the board is Michael Flynn who served as Trump’s national security adviser who was pardoned by Trump after twice pleading guilty to lying to the FBI about his conversations with a Russian diplomat. And its president is Ed Martin who, along with Phyllis Schlafly and Brett Decker, wrote “The Conservative Case for Trump.” 

Its website describes the organization as “the nation’s leader in the fight to preserve American values and ideals, protect the nation’s constitutional republic, promote strong American families, revitalize the role of faith in our society, and advance the virtues of free market capitalism.” 

There also was $605,000 from Voices and Votes, headed by Christina Bobb who used her position as a host on the Trump-oriented One America News Network to both say she was covering the audit as well as raising money for it. 

Other funds include $550,000 from Defending the Republic, a group headed by Trump attorney Sidney Powell, and $280,000 from Election Integrity Fund for the American Republic, a group set up specifically to generate cash for the Arizona audit that is run by Michigan attorney Matt DePerno, who was accused of spreading misinformation in his state about election fraud. 

All of these groups also are set up under federal tax law to allow them to shield the identity of the true donors. 

Thompson said he cannot say how that $5.7 million – plus the $150,000 in taxpayer dollars – compares with the actual cost, as the audit is not yet over. There apparently is nothing that precludes the dollars from being funneled personally to Logan or to pro-Trump causes. 

Senate President Karen Fann said Logan’s list fulfills a promise he made to disclose the source of outside funds which he and others have been soliciting. 

But the Prescott Republican said she is not disturbed by the failure of any of the organizations to break down the individual contributors. And she told Capitol Media Services she will not ask for that. 

“If I ask them for that, then should I ask for names of those to contribute to anti-abortion organizations?” Fann asked. She said that’s why the U.S. Supreme Court has ruled that certain contributions should be protected under the First Amendment. 

That relates to a 1958 ruling where Alabama sought to block the NAACP from operating in that state because it would not provide various records, including membership lists. The justices ruled that the demand for the list was unconstitutional. 

Fann said that makes sense. 

“Caucasians were being threatened by the Ku Klux Klan when they stood up for African Americans with political contributions,” she said. 

Fann has defended having virtually the entire cost of the audit, which she has declared to be an official government function, paid by outsiders, including those who she does not know. 

But that decision also comes on the heels of lawmakers voting to make it a crime for any outside group to provide money to state or local entities to help run elections or conduct voter registration efforts. 

That followed the disclosure that nine Arizona counties got more than $6 million last year from the Center for Tech and Civic Life. Jennifer Marson, executive director of the Arizona Association of Counties, said that helped defray some of the costs of running an election during the Covid pandemic. 

Republicans in the legislature, however, noted that the $400 million CTCL gave out came from Facebook billionaire Mark Zuckerberg and his wife, Priscilla Chan. And Aimee Yentes, a lobbyist for the Arizona Free Enterprise Club, which tends to support GOP causes, said Zuckerberg is a known liberal, accusing him of curating content, filtering conservative messages and banning individuals with opposing political opinions. 

Fann said the audit is costing far more than anticipated, blaming at least some of that on what she said has been the lack of cooperation by Maricopa County. That included a series of legal battles over what, if anything, the Senate is entitled to have, battles that so far have largely gone the Senate’s way. 

She also said there were unanticipated costs, like having to rent space in the Veterans Memorial Coliseum and obtain 24-hour security. Fann said that would not have been necessary had the county allowed Cyber Ninjas to conduct its review at county election offices. 

And a new legal battle may be in the works, with Fann having issued new subpoenas not only to the county but to Dominion Voting Systems, which provides the leased election equipment to the county. Among the things Fann wants for Cyber Ninjas are passwords, security keys and other information necessary to access the programming in the equipment.