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Arizona will spend more to address homelessness this fiscal year than it ever has before

At the Lincoln Family YMCA in downtown Phoenix, there’s a common area for the organization’s emergency housing program for homeless youth. Resident DeArrio Lowery is there on the couch, playing a game of chess before heading to his new job pushing wheelchairs at the airport.

“I’ve just been going with the flow,” Lowery said. “Working, saving money and seeing where it takes me.”

Lowery grew up in Richmond, Virginia. But the 22-year-old thought he’d find better job opportunities in another city, so a few months ago he got a one-way ticket to Phoenix. But without connections here, or much money, he ended up spending his first few nights in the city in a homeless shelter. There, he found out about YMCA’s new PHX350 program for people aged 18 to 24.

“This place is really helpful,” Lowery said. “I don’t know where I would be right now if it wasn’t for them.”

Lowery’s timing was really lucky. When he arrived in Phoenix in April, the dorm-style accommodations where homeless youth can stay for up to 90 days had just opened.

YMCA came up with the PHX350 program concept just last year, said Jenna Cooper, YMCA's vice president of community relations.

“We knew there was just this rise in the homeless youth population and we knew we could help,” Cooper said

Cooper’s team applied for a grant from Arizona’s Housing Trust Fund in December. By January, the organization had  been awarded $4.7 million from the state.

“To get the funds that quickly, to be able to allocate the funds, to hire the staff — a matter of months, which is light speed,” Cooper said.

Just a year or two earlier, that funding wouldn’t have been available.

Arizona’s Housing Trust Fund was  established in 1989 to pay for affordable housing, rental assistance and other programs to combat homelessness across the state. But for most of the past 15 years, it has been underfunded.

The fund had once pulled as much as $40 million a year from the state’s unclaimed property revenue. But during the 2008 Great Recession, lawmakers slashed the fund to just $2.5 million per year – not much for something that’s meant to support costly housing development.

In the years since, some Arizona lawmakers have sponsored bills to reinvest in the fund, but most  attempts were unsuccessful. In 2019, the state legislature agreed to direct $15 million to the fund as part of the state budget, and in last year, they budgeted $60 million for it.

But this year, lawmakers agreed to put  more money into the state’s Housing Trust Fund than has ever been allocated before — a massive $150 million.

“I jumped up and down and celebrated,” said Joan Serviss, the newly appointed director of the Arizona Department of Housing.

For years before Serviss was in that role, she led the nonprofit Arizona Housing Coalition, where one of her primary goals was lobbying for the state to spend more to solve its growing homelessness crisis.

Serviss credits Gov. Katie Hobbs with making housing a high priority in this year's state budget. But Serviss thinks lawmakers on both sides of the aisle agreed to the record spending because they are feeling more pressure than ever before to address housing and homelessness issues.

Homelessness increased 23% statewide from 2020 to 2022,  according to the U.S. Department of Housing and Urban Development — one of the largest increases in the nation.

“Our housing crisis is impacting everybody,” Serviss said.

In addition to the $150 million investment in the Housing Trust Fund, lawmakers plan to set aside an additional $60 million this year for a new Homeless Shelter and Services Fund administered by the Arizona Department of Housing. They also plan to spend $5 million for programs for homeless veterans and $5 million for corrections reentry programs.

Serviss’ department will begin allocating the 2023 Housing Trust Fund grants after the new fiscal begins July 1. She said she wants to see the $150 million spent on a mix of construction projects to begin to make up for the state’s housing shortage in the long-term and initiatives to get people off the street quickly in the short-term.

“Whether it be sprung structures, or transitional shelter options, or hotels and motels,” Serviss said. “It could be rental assistance.”

There are a lot of possibilities. Last year’s $60 million Housing Trust Fund investment boosted budgets of Arizona nonprofits working with homeless populations. It went into housing programs on the Navajo and Hopi reservations. It’s going toward construction of a Society of St. Vincent de Paul shelter for homeless seniors in South Phoenix. It’s backing homelessness research at ASU. It’s even helping one Arizona company design and manufacture off-grid homes made from shipping containers. And, of course, it paid for the YMCA to hire counselors, buy furniture and open 50 rooms to homeless youth in its downtown location.

The flexibility of the Housing Trust Fund is what makes it so useful, Cooper said.

“Many of the government funds we have here in Arizona are actually federal dollars that trickle down for state governments or local governments to allocate out,” Cooper said. “Those come with a lot of strings.”

Housing Trust Fund grants can make a broader impact by going out quickly and to a wider variety of projects. But how big will the impact be?

Serviss said that's hard to predict.

“I’d love to be able to say we’re just going to dramatically end the housing crisis for X amount of the population, but I think there’s a lot of barriers stacked up against us,” Serviss said.

While the Housing Trust Fund languished for over a decade, the state’s housing shortage grew worse. The state housing department estimates Arizona is 270,000 housing units short of current demand. Meanwhile, inflation has increased. New construction projects are facing high interest rates and supply-chain delays.

And this year’s $150 million budget was just a one-time investment. There’s no guarantee lawmakers will spend as much next year or the year after.

Still, Serviss said, she’s grateful for a historic opportunity.

“We have to be good stewards of that and have it be really strategically focused,” Serviss said. But, she added, “I’m cautiously optimistic.”

Knowing she’ll have the chance to green-light more projects like PHX350 is exciting, she said.

Lowery, one of the first participants in PHX350, is saving money, he's enrolled in a program to learn to be a welder, and he said he’s feeling good about his future.

There’s a quote he keeps repeating to himself: “Don’t be afraid to start over because you’re not starting from scratch, you’re starting from experience.”

Having a safe place to stay these last few months has made starting over in Arizona much less daunting, he said.

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Katherine Davis-Young is a senior field correspondent. She has produced work for NPR, New England Public Radio, Southern California Public Radio, PRI's The World, Washington Post, Reuters and more.She has a master’s degree in radio journalism from the USC Annenberg School of Journalism.She lives in central Phoenix with her husband, two daughters, and ill-behaved cat and dog. Her side-passions include photography, crosswords and hot sauce.