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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
department of housing; continuation.
Purpose
Continues the Arizona Department of Housing (ADOH) for four years. Modifies the powers and duties of ADOH.
Background
Established in 2002, ADOH is responsible for: 1) establishing policies, procedures and programs to address the affordable housing issues confronting Arizona, including issues of low income families, moderate income families, housing affordability, special needs populations and decaying housing stock; 2) providing, to qualified housing participants and political subdivisions of Arizona, financial, advisory, consultative, planning, training and educational assistance for the development of safe, decent and affordable housing, including housing for low and moderate income households; and 3) maintaining and enforcing standards of quality and safety for manufactured homes, mobile homes and factory-built buildings. Programs administered by ADOH include rental development, rental assistance, home ownership assistance, housing rehabilitation, foreclosure prevention and homeless prevention. ADOH is primarily funded through federal resources and fees. According to the Joint Legislative Budget Committee (JLBC), ADOH administers approximately $190 million in federal and non-appropriated state housing and community development funds annually (A.R.S. § 41-3953; JLBC).
The House Commerce Committee of Reference (House COR) and the Senate Regulatory Affairs & Government Efficiency Committee of Reference (Senate COR) held public meetings on Tuesday, January 14, 2025, and Wednesday, January 15, 2025, to review the Auditor General's Performance Audit and Sunset Review Report, consider ADOH's responses to the statutorily outlined sunset factors and receive public testimony. The House and Senate CORs recommended that ADOH be continued with revisions (COR Report).
The ADOH is statutorily set to terminate on July 1, 2025, unless legislation is enacted for its continuation (A.R.S. § 41-3025.06).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Continuation
1. Continues, retroactive to July 1, 2025, ADOH until July 1, 2029.
2. Repeals ADOH on January 1, 2030.
3. Contains a purpose statement.
4. Requires ADOH's annual report submitted to the Governor and the Legislature to include, for ADOH-funded projects and initiatives:
a) the number of affordable housing units developed in Arizona;
b) any changes in homelessness rates in Arizona due to permanent supportive housing initiatives; and
c) any improvements in housing accessibility for underserved and rural populations in Arizona.
6. Requires the established standards to include clear signage on facilities denoting a drug-free zone and an expectation of cooperation with law enforcement regarding violations in accordance with the criminal code.
7. States that a grantee's refusal to comply with the established standards disqualifies the grantee from receiving any future funding from ADOH.
8. Requires Housing Trust Fund monies to be spent in the following order of priority:
a) constructing or renovating emergency shelter facilities so that there is a sufficient number of beds available to meet the need for emergency shelter and the number of emergency shelter beds must exceed the sum of the unsheltered homeless population and the homeless population in emergency shelter, as reflected in the latest point-in-time count, as well as the specific shelter needs of:
i. households with children, including parenting youth who are in emergency shelter or who are unsheltered;
ii. unaccompanied youth who are in emergency shelter or who are unsheltered; and
iii. victims of domestic violence who are in emergency shelter or who are unsheltered;
b) constructing or renovating transitional housing units so that there is a sufficient number of units available to meet the need for transitional housing taking into account the population likely to achieve independent, unsubsidized housing if served under the terms of transitional housing for a duration of 24 to 36 months, as determined by ADOH; and
c) constructing or renovating other types of shelter or housing as determined by ADOH to best serve the need of individuals who have been determined to be seriously mentally ill and to be chronically resistant to treatment.
9. Requires all programs established by ADOH and funded by the Housing Trust Fund (Fund) to be reviewed by JLBC.
10. Requires ADOH to establish and implement a comprehensive performance measurement system within 12 months after the effective date that includes:
a) annual goals with measurable benchmarks for each housing program in Arizona;
b) mechanisms for data collection and review to assess the effectiveness of the housing programs administered by ADOH; and
c) quarterly reporting to the President of the Senate and the Speaker of the House of Representatives regarding:
i. program performance outcomes;
ii. suggested improvements for affordable housing;
iii. reductions in homelessness; and
iv. other key metrics.
11. Requires ADOH to conduct a biennial evaluation of all housing programs in Arizona to assess program alignment with Arizona housing goals and ensure compliance with all statutory requirements.
12. Requires ADOH to establish secure wire transfer protocols to mitigate fraud risks, including all of the following:
a) dual authorization for all wire transfers exceeding $10,000;
b) working within ADOH's authority to implement real-time fraud detection and reporting measures integrated into the financial management system; and
c) mandatory reconciliation and auditing of all wire transfers on a monthly basis.
13. Requires ADOH to:
a) conduct biennial reviews of regulatory fees associated with manufactured housing in Arizona to ensure alignment with regulatory costs;
b) submit any proposed fee changes to the Board of Manufactured Housing for approval and be subject to a 30 day public comment period; and
c) resolve all manufactured housing related complaints within the U.S. Department of Housing and Urban Planning guidelines in accordance with federal law.
14. Requires ADOH to:
a) have all staff complete a conflict-of-interest disclosure form annually;
b) review all forms to determine whether there are any substantial interest disclosures; and
c) maintain a special file of all substantial interest disclosures.
15. Requires ADOH to establish a tracking system that monitors complaint resolution timelines and provide quarterly reports regarding any unresolved complaints to:
a) the Board of Manufactured Housing;
b) the President of the Senate; and
c) the Speaker of the House of Representatives.
16. Requires ADOH to report any instance of fraudulent activity involving state monies to the Governor, JLBC and Auditor General within 10 business days.
17. Requires ADOH to initiate restitution efforts within 30 days after identifying the fraudulent activity.
Quarterly Reporting
18. Requires ADOH to provide quarterly reports to the President of the Senate and the Speaker of the House of Representatives regarding the use of monies from the Fund, that include:
a) details on all financial transactions in the Fund; and
b) detailed information on recipients of monies from the Fund and any projected and realized results and analyses of the performance of the Fund in comparison to the goals of the Fund.
19. Requires ADOH to conduct a review of all approved and paid payments since July 1, 2021, to identify any improper payments made to grantees and how to recover monies.
20. Requires ADOH to outline the status of the review and recovery activities in the required quarterly reports.
21. Repeals the quarterly reporting requirement on January 1, 2027.
Miscellaneous
22. Requires the Auditor General to appear before the appropriate committee of reference and the Joint Legislative Audit Committee to present the 18-month follow-up of the sunset report for ADOH.
23. Defines permanent supportive housing as long-term housing assistance paired with supportive services aimed at individuals experiencing homelessness or individuals with special needs.
24. Defines comprehensive performance measurement system as a systematic process for tracking, evaluating and reporting on program outcomes, including establishing goals, performance benchmarks and measurable outcomes.
25. Defines wire transfer protocols as secure processes and standards to prevent unauthorized financial transfers.
26. Makes technical and conforming changes.
27. Becomes effective on the general effective date, with a retroactive provision as noted.
Amendments Adopted by Committee
1. Requires ADOH's annual report submitted to the Governor and Legislature to include:
a) the number of affordable housing units developed in Arizona;
b) any changes in homelessness rates in Arizona due to permanent supportive housing initiatives; and
c) any improvements in housing accessibility for underserved and rural populations in Arizona.
2. Requires all programs established by ADOH and funded by the Housing Trust Fund (Fund) to be reviewed by JLBC.
3. Requires ADOH to establish and implement a comprehensive performance measurement system within 12 months after the effective date that includes:
a) annual goals with measurable benchmarks for each housing program in Arizona;
b) mechanisms for data collection and review to assess the effectiveness of the housing programs in Arizona; and
c) quarterly reporting to the President of the Senate and the Speaker of the House of Representatives regarding:
i. program performance outcomes;
ii. suggested improvements for affordable housing;
iii. reductions in homelessness; and
iv. other key metrics.
4. Requires ADOH to conduct a biennial evaluation of all housing programs in Arizona to assess program alignment with Arizona housing goals and ensure compliance with all statutory requirements.
5. Requires ADOH to establish secure wire transfer protocols to mitigate fraud risks, including all of the following:
a) dual authorization for all wire transfers exceeding $10,000;
b) real-time fraud detection and reporting measures integrated into the financial management system; and
c) mandatory reconciliation and auditing of all wire transfers on a monthly basis.
6. Requires ADOH to:
a) conduct biennial reviews of regulatory fees associated with manufactured housing in Arizona to ensure alignment with regulatory costs;
b) submit any proposed fee changes to the Board of Manufactured Housing for approval and be subject to a 30 day public comment period; and
c) resolve all manufactured housing related complaints within 120 days.
7. Requires ADOH to establish a tracking system that monitors complaint resolution timelines and provide quarterly reports regarding any unresolved complaints to:
a) the Board of Manufactured Housing;
b) the President of the Senate; and
c) the Speaker of the House of Representatives.
8. Requires ADOH to report any instance of fraudulent activity involving state monies to the Governor, JLBC and Auditor General within 10 business days.
9. Requires ADOH to initiate restitution efforts within 30 days after identifying the fraudulent activity.
10. Requires ADOH to provide quarterly reports to the President of the Senate and the Speaker of the House of Representatives regarding the use of monies from the Fund, that include:
a) details on all financial transactions in the Fund; and
b) detailed information on recipients of monies from the Fund and any projected and realized results and analyses of the performance of the Fund in comparison to the goals of the Fund.
11. Requires ADOH to conduct a review of all approved and paid payments since July 1, 2021, to identify any improper payments made to grantees and how to recover monies.
12. Requires ADOH to outline the status of the review and recovery activities in the required quarterly reports.
13. Repeals the quarterly reporting requirement on January 1, 2027.
14. Defines permanent supportive housing as long-term housing assistance paired with supportive services aimed at individuals experiencing homelessness or individuals with special needs.
15. Defines comprehensive performance measurement system as a systematic process for tracking, evaluating and reporting on program outcomes, including establishing goals, performance benchmarks and measurable outcomes.
16. Defines wire transfer protocols as secure processes and standards to prevent unauthorized financial transfers.
17. Makes technical and conforming changes.
Amendments Adopted by Committee of the Whole
1. Requires ADOH to:
a) have all staff complete a conflict-of-interest disclosure form annually;
b) review all forms to determine whether there are any substantial interest disclosures; and
c) maintain a special file of all substantial interest disclosures.
2. Specifies that ADOH must work within its authority to implement real time fraud detection and reporting measures integrated into the financial management system.
3. Specifies the ADOH annual reports must include specified outcome-based metrics for ADOH-funded projects and initiatives.
4. Requires the comprehensive performance measurement system that ADOH must establish to require a mechanism for data collection and review to assess the effectiveness of the housing programs administered by ADOH, rather than in Arizona.
5. Requires all complaints related to manufactured housing to be resolved within the U.S. Department of Housing and Urban Development guidelines in accordance with federal law, rather than within 120 days.
6. Requires ADOH, under the direction of the Director, to establish standards, as a condition of funding for programs receiving grants or other sources of funding from ADOH, concerning the prohibition of the sale, manufacture or possession of dangerous or narcotic drugs in facilities or programs funded by ADOH.
7. Requires the established standards to include clear signage on facilities denoting a drug-free zone and an expectation of cooperation with law enforcement regarding violations in accordance with the criminal code.
8. States that a grantee's refusal to comply with the established standards disqualifies the grantee from receiving any future funding from ADOH.
9. Requires Housing Trust Fund monies to be spent in the following order of priority:
a) constructing or renovating emergency shelter facilities so that there is a sufficient number of beds available to meet the need for emergency shelter and the number of emergency shelter beds must exceed the sum of the unsheltered homeless population and the homeless population in emergency shelter, as reflected in the latest point-in-time count, as well as the specific shelter needs of:
ii. unaccompanied youth who are in emergency shelter or who are unsheltered; and
iii. victims of domestic violence who are in emergency shelter or who are unsheltered;
b) constructing or renovating transitional housing units so that there is a sufficient number of units available to meet the need for transitional housing taking into account the population likely to achieve independent, unsubsidized housing if served under the terms of transitional housing for a duration of 24 to 36 months, as determined by ADOH; and
c) constructing or renovating other types of shelter or housing as determined by ADOH to best serve the need of individuals who have been determined to be seriously mentally ill and to be chronically resistant to treatment.
10. Requires the Auditor General to appear before the appropriate committee of reference and the Joint Legislative Audit Committee to present the 18-month follow-up of the sunset report for ADOH.
11. Makes technical and conforming changes.
Senate Action
RAGE 2/20/25 DPA 7-0-0
Prepared by Senate Research
March 10, 2025
JT/JRM/ci