Picking a credit program and competition bucket — Arizona

What you are actually choosing

ADOH administers both programs out of one Qualified Allocation Plan, but the two paths work nothing alike. 9% credits are awarded through a scored competition that runs once a year, gated by a minimum-point floor before an application even reaches formal scoring. 4% credits are officially unscored — ADOH awards them first-come, first-served to complete applications — but every 4% deal still needs a Private Activity Bond Volume Cap allocation, and that cap doesn't come from ADOH at all. It comes from the Arizona Finance Authority, a separate state agency, before ADOH will issue the Section 42(m) Determination of Qualification of Tax Credits letter a bond-financed deal needs.

One naming quirk worth flagging before you build a calendar around it: the QAP states that ADOH "will award 9% LIHTCs from Arizona's 2027 and 2028 ceilings" under this 2026-2027 plan — the calendar year a round is labeled by lags the federal ceiling year it actually draws against by one year. An applicant who assumes the "2026 round" spends the 2026 federal ceiling is off by a year on the underlying credit supply, even though the application deadline itself falls in 2026.

Points are a gate, and a high one

9% LIHTC scores split into three tracks with different ceilings, and only the New Construction/Tribal track states an explicit numeric floor an application must clear before ADOH will formally score it at all.

Unlike a program where the scoring categories are mostly soft-money leverage ratios, Arizona's biggest categories reward concrete project choices: Proximity to Amenities (40 points, Google-Maps-documented driving distance to grocery, medical, transit, and employment), Rehabilitation Work (60 points, scaled to per-unit rehab hard costs above the $25,000 threshold minimum), Project-Based Rental Assistance (40 points, scaled to the share of units carrying a federal operating subsidy), and Supportive Housing (30 points, either 15% tenant-based rental assistance or deeper targeting to special populations). Chasing points here usually means changing the deal, not just the paperwork.

What isn't publicly available is a CTCAC-style self-score-versus-final-score revision history — ADOH doesn't publish how often self-scores get corrected in formal review the way California's agencies do. Treat a self-computed score as an estimate until ADOH's own scoring confirms it, not as the number you'll be ranked on.

The tiebreaker, when the gate isn't enough

With as few as two or three awards available in most set-asides statewide per year, ties are not a rare edge case — they're the mechanism that decides who gets funded when demand exceeds slots at the same score. Both scoring tracks use the identical three-step cascade.

Rank 3 isn't just a tiebreaker — it's also a scoring category. QAP §V.C.8 awards 5 points for each additional 5-year period an applicant commits beyond the 30-year minimum affordability period, up to 20 additional years (50 total). A developer weighing a longer extended use period should model it once: it moves both the score and, if tied, the ranking.

Bucket election: four set-asides, a handful of slots statewide

Every 9% application competes in exactly one set-aside (QAP §III.A.1), and no Principal may hold more than one award in a round. The four set-asides are small enough that the difference between the top and second-ranked application in the same bucket is the difference between an award and a one-year wait.

Within both the Rural/Balance-of-State and Metro categories, ADOH makes one award per county on an alternating basis, starting with the highest-scoring project in each category — a second award can't land in a county that's already had one until every other county in that category has had a turn (§III.A.1). In Metro that means awards alternate strictly between Maricopa and Pima County: a strong Pima application can lose to a weaker Maricopa one purely because it's Maricopa's turn, and vice versa.

Scattered-site projects are capped at two sites in the 9% round and scored all-or-nothing: every category is scored based on whichever site scores lowest — for example, if only one of two sites sits in a Qualified Census Tract, the application gets zero QCT points for both sites, not partial credit (QAP §III.A.1).

4% and the bond gate ADOH doesn't hold

"Non-competitive" doesn't mean unconditional. To apply for 4% LIHTCs, an applicant must submit a bond inducement resolution (or preliminary resolution) and secure a Private Activity Bond Volume Cap allocation from the Arizona Finance Authority before ADOH will issue the Section 42(m) Determination of Qualification letter — ADOH's own review is first-come, first-served among complete applications, but the bond capacity behind it is a separate agency's allocation, not ADOH's to hand out (QAP §V.A).

The federal bond-financing math that governs every state applies in Arizona too: the One Big Beautiful Bill Act's amendment to 26 U.S.C. §42(h)(4)(B) — P.L. 119-21 §70422(b) — added a 25%-of-aggregate-basis path alongside the traditional 50% test for waiving the competitive-allocation requirement on bond deals, for bonds issued after December 31, 2025. Arizona's own QAP doesn't visibly layer a separate state-specific percentage formula on top of that federal floor: the October 2025 second-draft text — the most recent version this guide could confirm directly, since ADOH's final adopted PDF sits behind bot-detection this guide did not attempt to bypass — states only that a confirmed Private Activity Bond Volume Cap allocation from the Arizona Finance Authority is required before ADOH will issue the Determination of Qualification letter, with no percentage test attached. If the adopted final QAP adds a state-specific issuance-threshold formula beyond that, it wasn't present in the draft reviewed here — confirm directly with ADOH or the Arizona Finance Authority before sizing a bond request to any such formula.

The two paths also treat developer fee deferral differently once you're in them: 9% caps deferral at half the total fee, with anything above $2,750,000 forced into deferral; 4% instead forces anything over 15% of the developer fee itself into deferral, and the fee locks in at Form 8609 issuance (QAP §VI.B.8). These are not the same test — modeling a 4% deal against the 9% deferral rule (or vice versa) misstates cash available at closing.

Arizona's own credit: the State Tax Credit, and whether it's still running

Arizona ran a state-funded companion credit — the affordable housing tax credit, referred to in the QAP as the State Tax Credit or STC — under A.R.S. §41-3954, enacted by SB 1124 (2021) and administered by ADOH "according to the department's current qualified allocation plan." As codified, the statute caps STC at $4,000,000 in credits per calendar year and sets each project's award at not less than fifty percent of its federal LIHTC amount for projects placed in service after June 30, 2022. SB 1124 funded the program for four years, and that funding window sunset December 31, 2025. In its active years it wasn't a separate competition — STC rode the same QAP process and, through the 2024 and 2025 rounds, was tracked through a distinct "Rural STC" application and reservation list paired with the Rural set-aside.

Two attempts to extend it past that sunset both stalled in committee: HB 2576 (2024) would have raised the annual cap to $8,000,000, extended the award cycle through calendar year 2031, and replaced the fixed 50%-of-federal-credit formula with ADOH discretion to award "the amount... necessary for the economic feasibility of the qualified project"; a similarly aimed 2025 bill, HB 2660, would have pushed the sunset to December 31, 2030. Neither reached the Governor's desk. The 2026-2027 QAP itself treats STC as little more than an afterthought — the term appears exactly twice in the entire 55-page document, both purely definitional, with no set-aside, scoring criteria, or application process described anywhere, a sharp contrast to the multi-page treatment given the federal 9% and 4% programs. That, combined with industry reporting describing Arizona as having become the first state to let its state housing tax credit lapse, points toward STC not currently funding new awards for 2026 or 2027 — don't build a deal's capital stack around it without confirming directly with ADOH whether any STC allocation exists for the specific round you're applying in.

Calendar, fees, and the doors that shut for a year

The construction-start clock is a real one-way door: ADOH requires evidence that construction or rehabilitation is underway by December 31 of the calendar year following the initial 9% award. A Principal who misses that mandatory start date is barred from applying for 9% credits in the next funding round entirely — not merely penalized on score.

Returning or recycling an allocation carries its own one-way door: an ownership entity that returns and recycles a valid allocation between July and December can receive the same current-year credit amount back, but none of the Principals on the returned project may appear on any application in the next 9% round, and the project can't apply for 4% credits or ADOH gap financing until construction starts on the project that received the recycled allocation.