It cost $128 million to create 1,183 units of affordable housing in Phoenix. Is it enough?

Arizona still faces a big housing shortage — upwards of 50,000 units, by some counts — particularly when it comes to affordable housing. But, Local Initiatives Support Corporation, or LISC, is responsible for building tens of thousands of homes around the country and more than 1,000 here in metro Phoenix.

In 2024, LISC, invested more than $3 billion across the country to build 24,000 homes. Here in Phoenix, it was $128 million to create exactly 1,183 units of affordable housing.

So, that’s how much it costs to build affordable housing. But, how much more do we need? And how do we get there? The Show spoke with LISC CEO Michael Pugh more about just how big of an investment it would take to really fill the gap. He said their investments are just the start.

Full conversation

MICHAEL PUGH: We've seen those dollars leveraged. And that leverage has amounted to more than $430 million in terms of impact there. And then there's this incredible part that we also get to do is to provide grant funding. in many cases that help to seed a project, get it up and running. And over the course of our time with the Phoenix team, we've been able to contribute more than $5.7 million in grant dollars out there as well.

LAUREN GILGER: Yeah, OK. So a little investment or a big investment gets even bigger, it sounds like, in terms of economic impact.

Let's break it down a little bit though and talk about just how much it costs to build affordable housing. Like, is it equal to, does it cost less than, you know, building luxury housing for example of which we've seen probably more built in the Valley, I will say?

PUGH: So I think that it certainly costs less than building luxury housing, but the burden of building housing altogether has continued to be a significant issue. You know, we're faced with the fact that when we consider in Phoenix landlords, and home builders are all challenged with rising costs there. On average, what we're seeing is that it's about $320,000 per unit.

And that number, unfortunately, Lauren, continues to go up because when you think about the cost of goods and supplies, if you think about the insurance aspect, and there's a number of other costs embedded in there that just simply aren't getting cheaper. And, of course, then have to get passed on in some way, making it ultimately less affordable, less accessible for so many residents.

GILGER: Yeah, yeah. When you talk about other barriers to affordable housing, does NIMBYism often come up, this idea of trying to find places where the communities you're trying to build in will allow affordable housing to be built?

PUGH: Yeah, I think that it remains a challenge to get access to space for affordable housing and also demystifying what it means when we talk about affordable housing. Affordable housing doesn't mean that we are going to be, you know, in planning a bunch of communities where property values and the quality of housing and living will overall decline.

In fact, it means the opposite, and particularly because of the approach that we take, which is we not only support housing, but we think about nine national programs that ultimately build and support the ecosystems for communities so that small businesses can thrive, so the tax bases can improve, and ultimately supporting the local GDPs.

When we think about Phoenix, I think they've done some pretty incredible things. One of them, just from an innovation standpoint, is that they've really worked on having a clean dirt program for developers and lists managing the city of Phoenix EPA Brownfields Revolving Loan Fund, which can be used to remediate land for community projects like affordable housing. A lot of the pre-development work is often what hinders the ability for affordable housing to get started quickly.

GILGER: Pre-development work is in what we would call the red tape, right?

PUGH: That's right. Yeah.

GILGER: So talk about those public-private partnerships you described. If you're looking at, you know, trying to gin up investment for affordable housing, which we all know we need, but is hard to make happen in a way that making a luxury apartment complex is not, where do you look? Like, what kinds of places are willing to invest in this kind of thing? It probably often does have to come from a nonprofit sector, right?

PUGH: Well, one of the best examples that I can share with you is a recent project that we've just been a part of called La Victoria. And for this particular project, it's located at the light rail transit station. It's a great example of mixed-use development that's been created through intentional community development engagement. And it's a combination of public and private dollars. So the land was assembled by the city of Tempe. There was a leverage of list HUD Section 4 grant dollars to help with this project, leveraging tax credits on the low-income housing side, about $29 million in equity. And that was done through National Equity Fund.

So the combination of our trusted affiliate partner that is a specialist in the low-income housing tax credits, the combination of the work that the LISC Phoenix team has done to help bring this project together and working very closely with city government to be able to drive it to the finish line resulted in a total of 104 units created.

And so that's an example, in my opinion, Lauren, of how when you really work to leverage public and private dollars and have that vested interest from all parties to understand that this is also about quality, affordable living, we can really make a difference.

GILGER: Yeah. So let me ask you lastly then, Michael, about what's needed here. Like, we've seen HUD face pretty significant cuts under the Trump administration. Do you need more public investment? Like, is there, I know there are a long list for Section 8 housing here in the Valley. What kinds of, you know, resources would be helpful in trying to meet this affordable housing demand we have here?

PUGH: Yeah, I think that it's an excellent question. It really centers on the ongoing need for public and private partnerships. We've seen some great things come out of the Phoenix plan under their city's housing plan has really been able to help set and meet a goal of 50,000 homes that I think set as part of a goal for by 2030. And in that five year, for that five year plan, they're already on pace to exceed that goal from what I understand.

And so that doesn't happen without continuing to make sure that on the policy side, there is a strong advocacy and support. We have to continue to think about the zoning impact to make sure that quality affordable housing is available. And then the private dollars, understanding the ecosystem between creating affordable housing and workforce development, improving tax bases, improving GDP. Those all are very much interdependent upon each other.