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COMMUNITY DEVELOPMENT ASSESSMENT
FOR
THE STATE OF ARIZONA

A GUIDE TO ARIZONA’S
COMMUNITY DEVELOPMENT ENVIRONMENT

COMMUNITY DEVELOPMENT DEPARTMENT
FEDERAL RESERVE BANK OF SAN FRANCISCO

FOREWORD
Anne McDonough-Hughes
December 2004
The Community Affairs Department of the Federal Reserve Bank of San Francisco has
developed a new series of reports for the nine states in the Twelfth District that both
detail the demographic, economic, governmental, and institutional underpinnings of each
state and provide an analysis of the various community development needs within each
state. These reports, which we are calling “Environmental Assessments,” are meant to
provide a framework for the array of community development activities that the
department undertakes across the District. The hope is that the reports will not only
provide a helpful compilation of existing community development needs and resources
for each state, but will also allow us to target our time and resources to those areas that
both show the greatest need and offer the opportunity for the most meaningful role.
We hope that you will find these Environmental Assessments useful and that the
information presented will enhance your understanding of the state of community
development in each location.
We look forward to your comments and suggestions.
Joy Hoffmann
Vice President
Community Affairs Department

Jack Richards
Senior Community Affairs Manager
Community Affairs Department

TABLE OF CONTENTS

METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
COMMUNITY DEVELOPMENT ENVIRONMENT
I.

DEMOGRAPHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

II.

ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

III.

STATE AND LOCAL GOVERNMENT . . . . . . . . . . . . . . . . . . . 22

IV.

NONPROFITS AND FINANCIAL INSTITUTIONS . . . . . . . . . 26

COMMUNITY DEVELOPMENT NEEDS AND RESOURCES
V.

AFFORDABLE HOUSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

VI.

SMALL BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

VII.

POVERTY AND ASSET ACCUMULATION . . . . . . . . . . . . . . . 44

VIII.

NATIVE AMERICANS AND IMMIGRANTS . . . . . . . . . . . . . . 51

METHODOLOGY
In an attempt to provide a framework for performing our own community development
work, the Community Affairs Department of the Federal Reserve Bank of San Francisco
has produced separate reports entitled “environmental assessments” for each of the nine
states which comprise the Federal Reserve’s Twelfth District: Alaska, Arizona,
California, Hawaii, Idaho, Nevada, Oregon, Washington, and Utah. Each report is
divided into two sections: one covering the overall “Community Development
Environment” in the state, and the other covering the “Community Development Needs
and Resources” in the state. These environmental assessments are intended to bring
together available research and information in both of these areas.
Specifically, the chapters in the “Community Development Environment” section cover
the demographic, economic, governmental, and institutional underpinnings in each state,
providing detail such as each state’s industrial structure, economic outlook, banking
system, nonprofit groups, and government departments involved in community
development. In the second section, each report delves into four separate areas of
“Community Development Needs and Resources:” affordable housing, small business,
poverty and asset accumulation, and issues specific to native people and immigrants.
A key resource for both the data and the approach taken in this effort was the 2002 State
Asset Development Report Card, published by an influential research and advocacy
organization, CFED (formerly known as the Corporation for Enterprise Development).
CFED’s report analyzes a great deal of data on a range of factors affecting asset
accumulation and poverty for each state in the nation. The CFED report divides its
analysis into separate evaluations of “Asset Outcomes” and “Asset Policies” for each
state, producing an overall grade (A, B, C, D, or F) for each. Not only do our reports
reference virtually all of the individual rankings which feed into CFED’s two overall
grades, but they also follow a somewhat similar approach in dividing each of the
community development areas in each state (affordable housing, small business, poverty
and asset accumulation, and native people and immigrant issues) between “needs” and
“resources” in a manner similar to CFED’s “Asset Outcomes” and “Asset Policies.”
The reports then build on these CFED comparisons by drawing on the considerable
resources already produced by a variety of national and local organizations in these
subject areas for each state, pulling together their major data, analyses, and conclusions
into one single report. The reports were designed by Scott Turner, who managed the
project, with additional oversight and editing by Jack Richards. This Arizona
Environmental Assessment was written by a second year student from the Goldman
School of Public Policy at the University of California, Berkeley, Anne McDonoughHughes. The Arizona Environmental Assessment was also supported by significant data
and material gathering by a member of the Community Affairs Department’s field staff,
Lena Robinson. Websites referenced in this report were accessed between September and
December of 2004, and we have attempted to provide accurate links to content
referenced, although content and/or location may change over time. We should note here

that while the Federal Reserve Bank of San Francisco sponsored these environmental
assessments, they reflect only the views of the author.
We gratefully acknowledge the community development practitioners in each state who
agreed to review drafts of these reports and provide helpful feedback. In addition, we
have attempted to ensure there are no errors or omissions in this report, but encourage
you to contact us if you believe important changes are warranted. Please contact us by the
end of February 2005, and we will be pleased to make appropriate revisions and post an
edited version of the reports on our website in March 2005.

CONCLUSIONS
COMMUNITY DEVELOPMENT ENVIRONMENT
1. Demographics
Arizona is the sixth largest state in the U.S. in total area, 1 and its population of
5.58 million made it the 18th largest in terms of population as of 2003. 2 The state’s
population has grown rapidly, with an 8.8% increase between 2000 and 2003 following
a 40% increase between 1990 and 2000. 3 In terms of race and ethnicity, Arizona has
much lower proportions of Black/African-American and Asian residents and much higher
proportions of Native American residents and residents of Hispanic origin than the U.S.
overall. 4
2. Economy
Arizona’s economy is dominated by services, although manufacturing and construction
also play important roles in the state. The state’s manufacturing sector is heavily
concentrated in high-technology industries, which provide more than half of all
manufacturing employment. 5 Arizona was especially hard hit by the recession of 20012002, during which its unemployment rate increased by two percentage points. 6 In the
past few months, however, the state has shown some of the strongest job growth in the
nation. 7 Recent economic improvement has been driven largely by continued strong
population growth, with demographic-based industries such as construction, retail, and
real estate playing a major role in the upswing. 8 Nevertheless, while the overall economic
outlook for Arizona is strong, its per capita income growth continues to lag that of the
nation, indicating a need to attract better-paying jobs in sectors such as healthcare,
technology, and defense. 9
3. Governmental and Financial Sectors
Arizona has relatively low state debt levels and enjoys strong credit ratings. 10 After
weak revenue performance in FY 2002 and FY 2003, the state’s financial position has
improved during FY 2004. 11 In the financial sector, there are 78 separately-chartered
banks and in Arizona, although more than two thirds of the FDIC-insured deposits in the
1

Netstate.com, The Geography of Arizona, http://www.netstate.com/states/geography/az_geography.htm.
U.S. Census Bureau, Statistical Abstract of the United States: 2003,
http://www.census.gov/statab/www/ranks.html.
3
U.S. Census Bureau, Arizona QuickFacts, http://quickfacts.census.gov/qfd/.
4
U.S. Census Bureau, Census 2000 Data, http://www.census.gov/main/www/cen2000.html.
5
Arizona Department of Commerce, Arizona Economy,
http://www.commerce.state.az.us/business/economy.asp.
6
Economy.com, Arizona’s Economic Future, August 2002, p. 3.
7
FDIC, Arizona State Profile, Fall 2004.
8
Economy.com, Arizona State Profile, August 2004.
9
Economy.com, Arizona State Profile, December 2003.
10
Standard and Poor’s, Arizona Tax Secured, General Obligation Credit Profile, August 2004.
11
Ibid.
2

state are controlled by three of them. 12 There are also 65 credit unions, which together
control almost 14% of combined bank/credit union assets, more than twice the national
average. 13 Finally, Arizona also has 10 certified Community Development Financial
Institutions, 14 which combined had $32.3 million in financing outstanding to more than
12,000 customers in the state at the end of FY 2002. 15
COMMUNITY DEVELOPMENT NEEDS AND RESOURCES
1. Affordable Housing
Arizona faces a shortage of affordable housing. The state is ranked relatively poorly
in the affordability of its rental housing and in its homeownership rate. An estimated
44% of renters and 20% of homeowners are experiencing either housing affordability or
quality problems, and the growth in the number of housing units in the state,
particularly affordable units, is constrained by the limited availability of private
land available for development. 16 The degree of affordability problems varies by
region, and in the most expensive areas, including the Flagstaff MSA and Coconino,
Pinal, and Mohave Counties, nearly 60% of renters are unable to afford the two-bedroom
fair market rent. 17 However, despite its low housing affordability, the state can be
credited for a number of homeownership assistance programs, including a state housing
trust fund, property tax circuit breaker programs, and first-time homebuyer assistance
programs. 18 Overall, the availability of affordable housing has clearly not kept pace
with the state’s rapid growth and needs additional support.
2. Small Business
Small business in Arizona lags somewhat behind the rest of the nation. Businesses
with fewer than 10 employees account for only 10% of employment in the state, the
seventh-smallest share in the country. In addition, Arizona has a relatively low
entrepreneurship level, and also ranks very low in the level of private loans to small
business. The state is seen as having below-average overall business development
capacity and business vitality, 19 but has been praised for its transformation toward a “new
economy.” 20 While a number of small business assistance programs are available from
both governmental and nonprofit sources, local entrepreneurs assert that the state
lacks many of the elements necessary for the success of small businesses, such as
early-stage venture capital and educational opportunities. 21
12

FDIC, Deposit Market Share Report: Arizona, June 2004.
Arizona Credit Union League, Credit Union Fact Sheet, http://www.cuna.org/download/arizona_fs.pdf.
14
CDFI Fund, U.S. Department of the Treasury, Certified CDFI’s – Alphabetical by State and County,
November 2004.
15
CDFI Coalition, CDFIs in Arizona: 2004 Fact Sheet, http://www.cdfi.org/states/Arizona2004.pdf.
16
Arizona Housing Commission (AHC), The State of Housing in Arizona 2000, pp. 4-5.
17
National Low Income Housing Coalition (NLIHC), Out of Reach 2003, Arizona state data.
18
CFED, State Asset Development Report Card (SADRC), 2002, p. 34.
19
CFED, 2004 Development Report Card for the States, http://drc.cfed.org/grades/arizona.html.
20
Robert Atkinson, Progressive Policy Institute, The 2002 State New Economy Index, June 2002, tables.
21
Dee Power and Brian Hill, Arizona Entrepreneurs: Critical Factors to Success, April 2002,
http://www.capital-connection.com/azsurveyprinter.html.
13

3. Poverty and Asset Accumulation
Approximately 14% of Arizona’s population lives in poverty, making Arizona’s poverty
rate 14th worst among all the states. Even more significantly, the state has low
rankings in the area of asset accumulation, with large percentages of its households
having zero net worth or otherwise considered asset poor. 22 However, Arizona ranks first
in the country in terms of having the smallest difference between asset poverty of maleand female-headed households, and fourth in terms of the difference between white- and
non-white headed households. The state also can be credited with a number of
supportive asset accumulation and preservation policies, especially in the areas of
workers’ compensation and health insurance. 23 In addition, IDA programs are supported
by both state policy 24 and a statewide alliance, which has set a goal of opening 10,000
IDA accounts in the state over the next five years. 25
4. Native Americans and Immigrants
Arizona has the third-largest Native American population in number and the sixth
largest in terms of percentage of population in the nation. 26 However, Native
Americans in the state face higher-than-average unemployment 27 and more than 35% of
them live below the poverty level. While there are a number of supportive institutions in
the state serving this population, the problems faced by Native Americans in areas
such as affordable housing are significant.
An even larger percentage of the state’s population is foreign born (12.8%), ranking
Arizona eighth highest on this measure. The bulk of the state’s foreign born hail from
Latin America, with the largest percentage born in Mexico. Eighty-five percent of the
foreign-born residents speak a language other than English at home, 28 and one quarter
of this immigrant population lives below the poverty level, compared to only 17.9%
of immigrants nationwide. Again, a number of resources are available to serve the
foreign-born population, but as with Native Americans, additional support is critical.

CFED, SADRC, p. 34.
Ibid, p. 34.
24
Ibid, p. 121.
25
Assets for Arizona Alliance, IDAs in Arizona: A Case Statement, September 2003, p. 1.
26
U.S. Census Bureau, Statistical Abstract of the United States: 2003.
27
Arizona Department of Economic Security, 2003 Special Unemployment Report, June 2003.
28
U.S. Census Bureau, Census 2000 Data.
23

STATE OF ARIZONA
SELECTED COMMUNITY DEVELOPMENT INDICATORS

Affordable Housing
Homeownership Rate 29
Rental Affordability Rate 30
Severely Cost-Burdened Renter Households 31

Rate
65.9%
-23.8%

State Rank
43rd
43rd
40th

Small Business
Small Business Employment Rate 32
Entrepreneurship Rate 33
Level of Private Loans to Small Businesses 34

9.8%
11.1%
--

44th
35th
46th

Poverty and Asset Accumulation
Poverty Rate 35
Households with Zero Net Worth 36
Personal Bankruptcy Rate 37

13.9%
16.3%
14.2

37th
42nd
28th

Native Americans and Immigrants
Native American Population 38
Native American Poverty Rate 39
Foreign-Born Population 40
Foreign-Born Poverty Rate 41

5.0%
37.3%
12.8%
25.0%

6th
-8th
--

U.S. Census Bureau, U.S. Statistical Abstract 2003; represents the percentage of housing units that are
occupied by owners, ranked from highest percentage (1st)
30
NLIHC; rank is calculated based on a weighted average of the state’s median gross rent, renter market
affordability ratio, and percent of severely cost-burdened renters, ranked from most affordable (1st)
31
NLIHC; Up Against a Wall, November 2004; represents the percentage of renter households in the state
spending more than 50% of their income on rent in 2003, ranked from lowest percentage (1st)
32
U.S. Census Bureau, County Business Patterns 2001; represents the share of total state employment
attributable to firms with fewer than 10 employees, ranked from highest share (1st)
33
CFED, SADRC; represents the percentage of the labor force that owns employer and non-employer firms
as of 2000, ranked from highest percentage (1st)
34
Ibid; represents the dollar amount of private business loans under $1 million per worker, ranked from
highest amount (1st)
35
U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2003;
represents the average percent of people living below the federal poverty level during the period from 2001
to 2003, ranked from lowest percentage (1st)
36
CFED, SADRC; represents the percentage of households with zero or negative net worth, ranked from
lowest percentage (1st)
37
American Bankruptcy Institute; represents personal bankruptcy filings in 2003 per thousand households
in the state, ranked from fewest filings (1st)
38
U.S. Census Bureau, Census 2000; represents the percentage of the state’s population composed of
Native Americans and Alaska Natives (only), ranked from highest percentage (1st)
39
Ibid; represents the percentage of Native American/Alaska Native (only) individuals living below the
federal poverty level at any time in 1999
40
Ibid; represents the percentage of the state’s population composed of foreign-born individuals, ranked
from highest percentage (1st)
41
Ibid; represents the percentage of foreign-born individuals living below the federal poverty level at any
time in 1999

DEMOGRAPHICS

Geography

Arizona has a land area of 113,635 square miles, 42 making it the sixth-largest state in
the U.S. in size. It shares borders with Utah, Mexico, New Mexico, Nevada, and
California. Although there are several major rivers and lakes in the state, including the
Colorado River, Lake Mead, and Lake Havasu, Arizona has only 364 square miles of
water area, making it a relatively dry state. 43

Source: Infoplease.com

42
43

U.S. Census Bureau, Arizona QuickFacts, http://quickfacts.census.gov/qfd/.
Netstate.com, The Geography of Arizona, http://www.netstate.com/states/geography/az_geography.htm.

Population

Arizona has grown rapidly over the past decade, now ranking 18th in the U.S. for size
of population. 44 In 2003, the state’s population was 5,580,811, up 8.8% from 2000 (as
compared to a 3.3% increase in the U.S. overall). The increase during that time period
came on top of a 40% increase in state population between 1990 and 2000. 45 The
growth from 1990 to 2000 was led by Mohave County (66% increase) and Pinal County
(54% increase), although, as the table below indicates, all counties in the state saw an
increase in population during that time period. 46 Much of Arizona’s population growth
has been the result of in-migration from surrounding states, particularly California.
In the first six months of 2004, an average of 8,800 California residents migrated to
Arizona each month, and the monthly average number of migrants from California has
been steadily increasing since at least 2001. 47
1990 and 2000 Population by County
County
1990 Population
2000 Population
Statewide
3,665,228
5,130,632
Apache
61,591
69,423
Cochise
97,624
117,755
Coconino
96,591
116,320
Gila
40,216
51,335
Graham
26,554
33,489
Greenlee
8,008
8,547
La Paz
13,844
19,715
Maricopa
2,122,101
3,072,149
Mohave
93,497
155,032
Navajo
77,658
97,470
Pima
666,880
843,746
Pinal
116,379
179,727
Santa Cruz
29,676
38.381
Yavapai
107,714
167,517
Yuma
106,895
160,026
Sources: Arizona Department of Economic Security and U.S. Census Bureau.

% Change
40.0%
12.7%
20.6%
20.4%
27.7%
26.1%
6.7%
42.4%
44.8%
65.8%
25.5%
26.5%
54.4%
29.3%
55.5%
49.7%

The population of Arizona is slightly younger than that of the U.S. as a whole, with a
median age of 34.2, compared to 35.4 for the U.S. Individuals aged 0-14 account for
23.6% of Arizona’s population, compared to 21.4% of the U.S. overall. Despite
perceptions that Arizona is a haven for retirees, the proportion of Arizona’s population
that is 65 and over (13.2%) is only slightly higher than that of the U.S. (12.7%), meaning
that the bulk of Arizona’s population is in their working years. 48

U.S. Census Bureau, Statistical Abstract of the United States: 2003,
http://www.census.gov/statab/www/ranks.html.
45
U.S. Census Bureau, Arizona QuickFacts.
46
Arizona Department of Commerce, Arizona Population and Demographics,
http://www.commerce.state.az.us/prop/eir/popanddemo.asp.
47
Economy.com, Arizona State Profile, August 2004.
48
Arizona Department of Commerce, Arizona Population and Demographics.

Metropolitan Statistical Areas

Based on the federal guidelines published by the White House Office of Management and
Budget (OMB) in 2003, Arizona has five metropolitan statistical areas (MSAs).
MSAs are areas that are made up of one or more whole counties with at least one
urbanized area of 50,000 or more population. Arizona’s MSAs are now wholly
comprised of counties within the state, unlike the previously-defined MSAs, which had
Arizona sharing one MSA with Nevada and one with Utah. The only Arizona counties
that are not part of a metropolitan or micropolitan statistical area are Apache, La Paz, and
Navajo. 49
Arizona’s Metropolitan Statistical Areas
MSA
Counties Included
2003 Population
Phoenix-Mesa-Scottsdale
Maricopa & Pinal
3,593,000
Tucson
Pima
893,000
Prescott
Yavapai
184,000
Yuma
Yuma
171,000
Flagstaff
Coconino
121,000
Source: U.S. Census Bureau, Statistical Abstract of the United States: 2004-2005.

Race and Ethnicity

When it comes to the racial and ethic composition of its population, Arizona varies
substantially from the U.S. as a whole. Although the percentage of the population that
identifies as White is the same, Arizona has much lower proportions of Black/African
American residents and Asian residents, and much higher proportions of American
Indian residents and residents of Hispanic or Latino origin than the U.S., as shown
in the table below. While 12.8% of Arizona residents are foreign born, compared to
11.1% of U.S. residents, 25.9% speak a language other than English at home,
compared to only 17.9% in the U.S. as a whole. 50
Race and Ethnicity in Arizona
Number in
Arizona
Population
White (only)
3,873,611
Black/African American (only)
158,873
Asian (only)
92,236
American Indian/Native Alaskan (only)
255,879
Native Hawaiian/Pacific Islander (only)
6,733
Some other race (only)
596,774
Two or more races
146,526
Persons of Hispanic or Latino Origin*
1,295,617
Source: U.S. Census Bureau, Census 2000 Data.
*Persons of Hispanic or Latino Origin may be of any race
Race

% of Arizona
Population

% of U.S.
Population

75.5%
3.1%
1.8%
5.0%
0.1%
11.6%
2.9%
25.3%

75.1%
12.3%
3.6%
0.9%
0.1%
5.5%
2.4%
12.5%

Arizona Workforce Informer, Arizona's New Metropolitan and Micropolitan Statistical Areas,
http://www.workforce.az.gov/admin/uploadedPublications/1346_MSAarticle.pdf.
50
U.S. Census Bureau, Census 2000 Data, http://www.census.gov/main/www/cen2000.html.

Educational Attainment

Educational attainment for adults in Arizona is relatively average; 83.5% of state
residents aged 25 and over have completed high school and 24.3% have a bachelor’s
degree or higher, compared to 83.6% and 26.5%, respectively, for the U.S. as a whole.
Arizona ranks 33rd in the country in the percentage of adults who have completed high
school and 28th in the percentage of adults with a bachelor’s degree or higher (with first
being the highest). 51

U.S. Census Bureau, 2003 American Community Survey Data, http://www.census.gov/acs/www/.

II.

ECONOMY

ECONOMIC STRUCTURE

Major Industries

Gross state product (GSP) is one of the most-frequently used comprehensive measures of
an economy. It is defined as the value added in production by the labor and property
located in a state, and is derived as the sum of the GSP originating in all industries in the
state. The Bureau of Economic Analysis (BEA) reports GSP estimates approximately 18
months after the end of each year. Arizona’s GSP for 2003, the most recent year
available, was $182.2 billion, ranking the state 22nd in the nation. The state’s per
capita GSP for the same year was $32,649, less than the U.S. average of $36,376, ranking
the state only 36th highest in the U.S. on that measure. 52 The chart below shows the
breakdown of Arizona’s 2001 GSP by sector.
Arizona Gross State P roduct in 2001
Agri, Forest, Fish

Mining & Oil and

and Trap

Gas

Government
13%

Construc tion
6%
Manufac turing
14%

S ervic es

Transportation,

20%

Comm & Utilities
7%
Wholesale trade
7%
Retail trade
11%

Financ e and Real
Estate
19%
Source: Bureau of Economic Analysis

Leading sectors in Arizona’s economy include services, manufacturing, government,
tourism, and construction, each of which is explained in more detail in the following
pages.

Bureau of Economic Analysis, 2003 and 2001 Gross State Product,
http://www.bea.doc.gov/bea/regional/data.htm.

Services

Arizona’s single largest economic sector is services, which employed more than
883,000 people in 2003. 53 In its 2002 study of Arizona’s economy, consulting firm
Economy.com included three service sub-sectors (amusement and recreation services,
transportation services, and management and public relations services) among Arizona’s
most dynamic industries, indicating that these industries had employment growth
exceeding an 8% annualized rate between 1991 and 2001 and a location quotient (a
measure of concentration within the state relative to other states) that had risen by more
than 3%. 54
While services dominate many state economies, what stands out about services in
Arizona is the importance of administrative support services to the state’s economy.
This is partially because many call centers and other back-office operations are located in
Arizona, allowing the state to export business services, and partially because businesses
in the state are heavier-than-average users of temporary and contract workers, who are
included in the administrative services sector. In addition, the Arizona climate induces
businesses to spend above-average amounts on climate-related services such as pest
control and landscaping. 55
However, although administrative support services, and particularly call centers, are an
important part of Arizona’s service sector, they are also vulnerable to offshore
outsourcing. Predictions from Economy.com are that 600,000 U.S. jobs will be
outsourced internationally in 2005, a trend that could negatively impact this sector of
Arizona’s economy. The sector could also potentially be harmed by the federal do-notcall list. 56
b.

Manufacturing

In Arizona, manufacturing accounted for 7.6% of employment in 2003, below the
national average of 11.2%. 57 This is a substantial decline in manufacturing
employment for the state, which has historically relied on manufacturing to provide
almost 15% of wages and salaries. 58 However, because Arizona’s dominant
manufacturing sectors are relatively high value, manufacturing in Arizona accounts for
a proportion of GSP on par with the national average, despite lower-than-average
manufacturing employment. 59 Durable goods dominate manufacturing in the state,
53

Arizona Department of Commerce, Workforce and Labor Market Information,
http://www.commerce.state.az.us/prop/eir/workforceandemployment.asp.
54
Economy.com, Arizona’s Economic Future, August 2002,
http://www.commerce.state.az.us/pdf/prop/sesreports/AZEconFuture.pdf, pp. 7-8.
55
Arizona Department of Commerce, Arizona Economic Base Study 2002: Final Report, July 2002,
http://www.commerce.state.az.us/pdf/prop/sesreports/EBSfinal.pdf, p. 6.
56
Economy.com, Arizona State Profile, December 2003.
57
Economy.com, Arizona State Profile, August 2004.
58
Arizona Department of Commerce, Arizona Economy,
http://www.commerce.state.az.us/business/economy.asp.
59
Economy.com, Arizona’s Economic Future, p. 7.

accounting for 78.3% of manufacturing employment and 84.0% of manufacturing’s
contribution to the state’s GSP, compared to only 21.7% of employment and 16.0% of
GSP for non-durable manufacturing. Arizona’s concentration in durable manufacturing
is much higher than that of the U.S. as a whole. 60
Manufacturing in Arizona is driven by high-tech manufacturing activities, which
account for 56% of all manufacturing employment. 61 In 2003, Arizona’s manufacturing
outlook improved when the state saw increased demand both from Asia and the United
States for its technology products as a result of improvements in the national and
international tech sector and in national defense spending. However, more recently, in
the first quarter of 2004, high-tech exports fell sharply, suggesting that demand in Asia
and domestically was slowing and spelling potential trouble for Arizona’s manufacturing
sector. 62
As indicated above, defense manufacturing is also important in Arizona. In 2002,
defense dollars coming in to Arizona’s economy increased by 40%, with the state setting
a record of over $6 billion in defense orders. The defense sector is expected to continue
to grow at least in the near future, as Raytheon and Honeywell both announced large
contracts with the Pentagon in 2003 that will be fulfilled at least partly in Arizona. 63
c.

Government

Federal government employment in Arizona is relatively high, with Arizona ranking
20th in the nation in the number of federal jobs, 64 primarily due to the fact that the
state has a high proportion of federal lands and Indian-related federal programs. In
addition, some Indian tribal economic activity is classified as government activity, which
increases the employment count. 65 Federal government is considered to be a stable
industry for Arizona, meaning it has had employment growth of less than 6% annualized
and a stable location quotient (measuring the concentration of the industry within the
state). In addition, government employment and government procurement in
Arizona is particularly beneficial to the state’s economy because it can be considered
an inflow to the state of money from outside sources since federal government spending
is primarily financed by tax revenue collected outside of Arizona. 66
d.

Tourism

While tourism is not directly included as a part of GSP because it is divided into a
number of different sectors that are measured (e.g. trade, services, and transportation)
estimates by the U.S. Travel Data Center suggest that tourism in Arizona accounts for
60

Ibid.
Arizona Department of Commerce, Arizona Economy.
62
Economy.com, Arizona State Profile, December 2003.
63
Ibid.
64
U.S. Census Bureau, 2002 Census of Governments, Compendium of Public Employment: 2002, Table 9,
http://www.census.gov/prod/2004pubs/gc023x2.pdf.
65
Economy.com, Arizona’s Economic Future, p. 7.
66
Ibid, pp. 7-9.
61

between 6% and 7% of the Arizona economy. While this proportion is above the U.S.
average, 67 it indicates that tourism is in fact only a moderate portion of Arizona’s
economy. 68 In 2003, Arizona hosted 27.8 million domestic overnight visitors, who spent
an average of $106 per person per day, 69 and 544,000 international visitors, who spent an
average of $84 per day. 70 The top manmade and natural tourist attractions in 2003 were
BankOne Ball Park and Grand Canyon National Park, respectively. 71
The Arizona tourism industry was negatively impacted somewhat by the beginning of the
Iraq war, but visitation has picked up again. As of December 2003, improved tourism
numbers had increased revenues from tourism and sales tax collections by 4% through
the first three quarters of 2003. 72 Current indicators, including Arizona State
University’s seasonally adjusted measurement of the health of the tourism industry called
the Arizona Tourism Barometer, suggest that the improvement is continuing. 73 As of
September, the barometer was at 96.9, up from 90.8 in September 2003. 74
A 2002 report, The Tourism Industry in Arizona, written as part of the state’s Statewide
Economic Study, stresses the importance to the tourism industry of Arizona’s climate and
geography. Overall, Arizona’s most popular tourist activities are visits to national and
state parks, visits to historic sites, and outdoor activities, including hiking and biking.
The report concludes that in order for Arizona to continue to enjoy a strong tourism
industry, the state must ensure that it preserves its unique environment and local
cultures. 75
e.

Construction

The construction sector, which is also very important to Arizona’s economy, accounted
for 7.7% of the state’s employment in 2003. 76 The majority of these jobs (68%) were
with special-trade contractors, with the remainder in heavy construction (12%) and
building, development, and general contracting (19%). 77 Construction’s key role in
67

The BEA estimates that tourism accounted for approximately 4.7-5.6% of U.S. GDP in 1997, the last
year for which data is available. More detail can be found at
http://www.bea.gov/bea/about/AcctIntros/Industry_tourism.pdf.
68
Center for Business Research, L. William Seidman Research Institute, Arizona State University, Arizona
Economic Profile, November 2002, http://wpcarey.asu.edu/seidman/cbr/PDFs/econprofile.pdf, p. 20.
69
Arizona Office of Tourism (AOT), Total Domestic Overnight Visitors to Arizona, Year End 2003,
http://www.azot.com/research/data/AZ%20Visitor%20Profile%202003.pdf.
70
AOT, Overseas Visitors to Arizona Summary, July 2004,
http://www.azot.com/research/data/Total%20Overseas.pdf.
71
AOT, Arizona Tourism Statistical Report 2003,
http://www.azot.com/research/data/2003%20Statistical%20Report%20BlkWht.pdf, p. 3.
72
Economy.com, Arizona State Profile, December 2003.
73
Economy.com, Arizona State Profile, August 2004.
74
Bank One Economic Outlook Center at Arizona State University's W. P. Carey School of Business,
Arizona Tourism Barometer, http://wpcarey.asu.edu/seid/eoc/atb/.
75
Arizona Department of Commerce, The Tourism Industry in Arizona, July 2002,
http://www.commerce.state.az.us/pdf/prop/sesreports/Tourism.pdf.
76
Economy.com, Arizona State Profile, August 2004.
77
U.S. Census Bureau, Statistics of U.S. Businesses 2000, Arizona: Construction by Employment Size of
Enterprise, http://www.census.gov/epcd/susb/2000/az/AZ23.HTM.

Arizona’s economy stems from the fact that it is tied to growth in population and
businesses, both of which have been increasing in the state over the past decade. The
construction sector has picked up substantially in recent quarters, and continues to
be the main element driving the state’s improving economy. 78
2.

Labor Force and Employment

As of 2000, Arizona had approximately 2.4 million residents in its labor force, with 99%
of those in the civilian labor force and 1% in the armed services. Men outnumber women
in Arizona’s labor force, accounting for 55% of workers. Median earnings reported in
Census 2000 for male full-time, year-round workers were $35,184, and for female fulltime, year-round workers, $26,777. 79
No single industry dominates employment in Arizona, as shown in the table on the
following page. As of 2003, the industry with the largest percent of total employment
was government (17.2%), followed fairly closely by professional and business services
(14.0%), retail trade (12.0%), education and health services (10.8%), and leisure and
hospitality services (10.1%). Arizona’s largest employers include Wal-Mart Stores, Inc.,
Banner Health System, Honeywell, Inc., the Kroger Company, and U.S. Army Fort
Huachuca. 80
Industry Employment (% of total employment, 2003)
Sector
% of AZ Employment
Construction
7.7%
Manufacturing
7.6%
Transport/Utilities
3.3%
Wholesale Trade
4.1%
Retail Trade
12.0%
Information
2.2%
Financial Activities
7.0%
Professional & Business Services
14.0%
Education & Health Services
10.8%
Leisure & Hospitality Services
10.1%
Other Services
3.8%
Government
17.2%
Source: Economy.com, Arizona State Profile, August 2004.

% of U.S. Employment
5.2%
11.2%
3.7%
4.3%
11.5%
2.5%
6.1%
12.3%
12.8%
9.3%
4.2%
16.6%

Economic Diversity

In 2002, the Arizona Department of Commerce commissioned consulting firm
Economy.com to analyze the state’s economy and provide a summary of growth
opportunities for the state. One of the key conclusions from the report was that
Arizona’s economy was lacking in diversity. On its index of industrial diversity,
Economy.com ranked Arizona’s economy 11th-least diverse in the nation and last among
those states considered to be its competitors. Although the state has diversified its
78

Economy.com, Arizona State Profile, December 2003.
U.S. Census Bureau, Census 2000 Data.
80
Economy.com, Arizona State Profile, August 2004.
79

economy somewhat over the past 15 years, it has not kept up with the increasingly
diversified U.S. economy, and so its economic diversity has not improved relative to the
rest of the country. The report concludes that the lack of relative diversity could leave
Arizona in a situation where the state is unable to take advantage of emerging
trends in the U.S. economy that would otherwise allow it to improve its own economy. 81
4.

Trade

In 2003, Arizona exported $13.3 billion worth of goods outside of the U.S.,
accounting for 1.84% of U.S. total exports. Arizona’s top export was digital
monolithic integrated circuits (comprising 29.8% of the state’s exports), followed in
importance by airplanes and airplane parts and non-digital monolithic integrated
circuits. 82 Mexico was the top destination for Arizona’s exports in 2003, accounting for
24.2% of the state’s exports. Rounding out the top five export countries for Arizona were
Malaysia (12.2%), Canada (8.5%), the United Kingdom (5.6%), and China (5.6%). Since
2000, Mexico’s share of exports has dropped from 32.5% to 24.2%, while China’s has
increased more than five-fold, from 1.1% to 5.6%.83
Although Arizona and Mexico have a substantial trade relationship, Arizona has not
taken advantage of its border relationship to the same degree as have Texas and
California, its competitors. The state’s trade position should be enhanced somewhat by
the initiation of the Central American Free Trade Agreement (CAFTA) and the Free
Trade Area of the Americas (FTAA), but Arizona will also need to improve the
infrastructure at its border crossings if it wants to substantially improve its trade position
with Mexico. 84
B.

ECONOMIC PERFORMANCE

Historic Economic Performance

Arizona’s economy has traditionally been structured around the “Five C’s” –
cotton, cattle, citrus, copper, and climate. However, while these industries still play a
role in the state’s economy, they no longer drive it, and their slow growth rates suggest
that they will continue to decline in importance. 85 In the state as a whole, mining and
agriculture together now account for only 3% of the economy, a share roughly equivalent
to their average share nationwide. The dominance of agriculture and mining began to
decline during the 1930s, and the decline continued through World War II, when
government’s share of the state’s economy increased substantially, accounting for more
81

Economy.com, Arizona’s Economic Future, pp. 5-6.
U.S. Census Bureau, Foreign Trade Division, Total U.S. Exports (Origin of Movement) via Arizona
Top 25 Commodities Based on 2003 Dollar Value, http://www.census.gov/foreigntrade/statistics/state/hs/2003/az.pdf.
83
U.S. Census Bureau, Foreign Trade Division, Total U.S. Exports (Origin of Movement) via Arizona
Top 25 Countries Based on 2003 Dollar Value, http://www.census.gov/foreigntrade/statistics/state/country/2003/az.pdf.
84
Economy.com, Arizona State Profile, December 2003.
85
Economy.com, Arizona’s Economic Future, p. 5.
82

than 33% at its peak. After the war, government’s share dropped drastically, and
Arizona’s economy became increasingly industrialized. Between the 1950s and 1980s,
manufacturing, construction, government, and finance, real estate, and insurance all
played important roles in the economy. Starting in the late 1980s, services’ share of the
economy grew considerably until 2000, mirroring the growth of services nationwide. 86
Arizona’s economy flourished up until the mid 1980s, when a crash in the real estate
market and events in other sectors cause a recession that resulted in layoffs due to
decreased government contracting and overbuilding. Poor economic conditions lasted
through the mid-1990s, when the economy again began to improve. 87
2.

Recent Economic Performance

Arizona was particularly hard hit by the recession of 2001-2002. Between spring
2001 and summer 2002, the state lost approximately 38,000 jobs and its unemployment
rate rose by two percentage points, 88 as compared to an increase of approximately 1.5
percentage points nationally during the same time period. 89 The state’s reliance on
tourism made it particularly vulnerable in the months after September 11th, when areas in
the state that relied on visitors arriving by air saw a sharp decline in visitor traffic.
Additionally, the state was hurt by its reliance on high-tech manufacturing when demand
for high-tech products fell substantially during 2001. 90 More recently, however,
Arizona’s economy has picked up steam. Much of the state’s economic growth has
been driven by its dramatic increase in population, with demographic-based industries
such as construction, retail, and real estate playing an important role revitalizing in the
state’s economy. 91
By late 2003, employment levels in Arizona had surpassed their previous peak in 2001,
and they have continued to increase since that time. 92 In the second quarter of 2004,
Arizona ranked third among all states in job growth, with the Phoenix and Tucson
MSAs ranking 18th and 76th, respectively, among the 281 MSAs. Jobs were added in the
construction, education and health services, professional and business services, and retail
trade sectors, while jobs were lost in the information, manufacturing, and wholesale trade
industries. 93 In October 2004, unemployment in Arizona was reported to be 4.8%, better
than the national average of 5.5%. 94
86

Center for Business Research, Arizona State University, Arizona Economic Profile, p. 99.
Arizona Department of Commerce, ASPED to GSPED,
http://www.commerce.state.az.us/pdf/miss/aspedGSPED.pdf.
88
Economy.com, Arizona’s Economic Future, p. 3.
89
U.S. Bureau of Labor Statistics, Archived Unemployment Data,
http://www.bls.gov/schedule/archives/laus_nr.htm.
90
Economy.com, Arizona’s Economic Future, p. 3.
91
Arizona Department of Commerce, Arizona Economic Base Study 2002, p. 2.
92
Economy.com, Arizona State Profile, December 2003.
93
FDIC, Arizona State Profile, Fall 2004, http://www.fdic.gov/bank/analytical/stateprofile/.
94
The Federal Reserve Bank of San Francisco, Twelfth Federal Reserve District Regional Economic
Briefing, December 2004, http://www.frbsf.org/publications/economics/briefing/reb.pdf, p. 8. For up-todate unemployment data in Arizona, please visit the Federal Reserve Bank of San Francisco’s Economic
Research website at http://www.frbsf.org/economics/index.html.
87

Growth in number of businesses is also on the upswing in Arizona. The state ranked
11th highest in the country in 2003 in business growth, with the number of firms
increasing by 1.7%. At the same time, the number of business bankruptcies in
Arizona has been falling since 1990. The state had about 700 firms file for bankruptcy
in 2003, down nearly 30% from the number that filed for bankruptcy in 1990. 95
Increases in commercial lending suggest that business growth is likely to continue; the
median annual commercial and industrial loan growth rate and the rate of small business
lending in Arizona had both increased on a year-over-year basis as of September 2004. 96
However, despite impressive job growth in Arizona, the poverty rate continues to be
high and per capita income growth continues to be below the national average. This
disparity suggests that the jobs being created in Arizona are not the well-paying jobs the
state may desire and that it will need to continue to work to attract better-paying jobs in
healthcare, technology, and defense in order to translate job growth into per capita
income growth. 97
3.

Economic Outlook

The outlook for Arizona’s economy going forward is generally positive. The state is
expected to continue to capitalize on its strong population growth and the resulting
boom in the finance, retail, and construction sectors, and on the increase in federal
defense spending in order to expand its economy. There is also potential for the state to
attract substantial biotechnology-related companies and economic activity in the future. 98
Not surprisingly, job growth is expected to come through increases in employment in
population-related industries, such as education and health services, retail trade, financial
activities, and construction. 99 Economy.com reported in August 2004 that it expects
Arizona to be one of the top three performers in the U.S. in the long term.
However, according to Economy.com’s 2002 analysis in Arizona’s Economic Future,
there are significant challenges that Arizona must address if it wishes to continue
growing its economy. For example, the state will likely need to invest in its workforce
more substantially in the future in order to continue attracting employers. Arizona
spending on education ranks near the very bottom for K-12 and post-secondary
education, and its lack of emphasis on education is evident in its low academic
achievement results as early as eighth grade. Arizona also will need to address its
relatively high crime rate, poor-quality water and telecommunications infrastructure, lack
of venture capital, and business tax structure in order to attract businesses. 100

FDIC, Arizona State Profile, Fall 2004.
Ibid.
97
Economy.com, Arizona State Profile, December 2003.
98
Economy.com, Arizona State Profile, August 2004.
99
Eller College of Business and Public Administration, The University of Arizona, 2004-2005 Annual
Forecast, http://ebr.eller.arizona.edu/Publications/Outlook/Outlook4-5.pdf, p. 6.
100
Economy.com, Arizona’s Economic Future, p. 1.
96

III.

STATE AND LOCAL GOVERNMENT

STRUCTURE

State and Local Governments

As of June 2002, Arizona had 638 active local governments, ranking it 39th among all
states in the number of local governments (with first being the highest number of local
governments). Arizona is subdivided into 15 counties, each of which elects a board of
supervisors to carry out a variety of state-mandated functions. The state also has 87
municipal governments that provide direct services to city or town residents. In addition,
the Arizona State Constitution provides for special purpose governments, which provide
a specific service to a designated area or population. Among these special purpose
governments are 245 public school systems, governed by elected boards, and 305 special
district governments, including such agencies as active management area water districts
and community park maintenance districts, among many others. Arizona also has
numerous subordinate agencies and special areas, which possess some governmental
features but are not counted as separate government agencies, such as natural resource
conservation districts, housing authorities, and municipal airport authorities. 101
Further, Arizona has regional government in the form of six Council of Governments
(COG) associations. The functions of the COGs vary by location, but generally the
organizations provide a way for regions to address cross-cutting issues such as
intercommunity disparities, regional economic development, and balanced growth. In
some rural areas, COGs also perform direct services such as operating housing programs
and programs for seniors. 102
2.

Educational System

Arizona’s public primary and secondary education system is divided into 221 school
districts, which together serve 762,000 students. 103 Additionally, there are 495 charter
schools in Arizona, which combined serve 73,542 students. Arizona has the second
highest number of charter schools nationally, behind only California. 104 Arizona also has
a wide range of post-secondary educational offerings. The state is home to nearly 250
post-secondary institutions, including three state universities, 19 community colleges,
approximately 20 accredited degree-granting private colleges and universities, and about
180 trade and technical schools. 105 Arizona’s largest universities include Arizona State
University (enrolling more than 57,000 students), the University of Arizona (enrolling
101

U.S. Census Bureau, 2002 Census of Governments, Preliminary Profile of Arizona,
http://ftp2.census.gov/govs/cog/gc0212az.pdf.
102
Northern Arizona Council of Governments, The COGs, http://www.nacog.org/cogs/default.htm.
103
Arizona Department of Commerce, Quality of Life,
http://www.commerce.state.az.us/business/quality.asp.
104
U.S. Charter Schools, State by State Numbers, http://www.uscharterschools.org/cs/sp/query/q/1595.
105
Arizona Department of Commerce, Quality of Life.

more than 34,000 students), and Northern Arizona University (enrolling more than
18,000 students). 106
B.

GOVERNMENT FINANCES

State revenue receipts in Arizona derive primarily from taxes (49%), grants and
contributions (38%), and charges for services (10%). Breaking down taxes further, sales
tax accounts for the largest proportion of tax revenues (50%), with the other taxes
contributing substantially small proportions as follows: income tax (26%), motor vehicle
and fuel taxes (17%), and other taxes (7%). 107 Arizona is tied for having the 17th-highest
state and local tax burden, with its average state and local tax burden equal to the national
average of 10%. 108
Arizona has relatively low state debt levels, with a total debt burden of only $324 per
capita (including state certifications of participation (COPs), school board COPs, and
sales tax bonds). 109 In 2002, Arizona ranked 39th (with 50th being the lowest) in state
and local government debt per capita. 110 Arizona’s constitution does not allow it to
issue General Obligation Bonds, so the state debt consists of $350 million in state COPs,
$800 million in certificates of deposit used for new school construction, $250 million
worth of state school trust revenue bonds, and $700 million in school improvement
revenue bonds. Standard & Poor’s has given Arizona a strong issuer credit rating of
“AA,” which reflects the state’s growing economy, improving financial position, and low
debt burden. 111
After two years of relatively weak revenue collections in FY 2002 and 2003, Arizona
saw its financial position improve in FY 2004. Recurring revenues, including sales tax
and individual and corporate income taxes, increased 11.9% over FY 2003, and Standard
& Poor’s estimated that the state would end FY 2004 with twice the balance in its general
fund operations that it had at the beginning of the year. Standard & Poor’s prediction for
FY 2005 is that recurring general fund revenue collections in Arizona will increase by
8.3% over FY 2004 levels, further improving the state’s financial position. 112
C.

MAJOR GOVERNMENT AGENCIES INVOLVED IN COMMUNITY
DEVELOPMENT

The Community Development Division at the Arizona Department of Commerce
takes the lead on statewide community development issues in Arizona. The division’s
responsibilities include working with cities, towns, counties, and tribal communities on
106

Data obtained from university websites in November 2004.
Arizona Department of Administration, General Accounting Office, Arizona Financial Highlights for
FY 2003, April 2004, http://www.gao.state.az.us/financials/highlights/FinHighLight03.pdf, p. 4.
108
The Tax Foundation, Tax Burdens by State in 2004, http://www.taxfoundation.org/statelocal04.html.
109
Standard and Poor’s, Arizona Tax Secured, General Obligation Credit Profile, August 2004.
110
The Public Policy Institute of New York State, Inc., State and Local Government Debt Per Capita:
2002, http://www.ppinys.org/reports/jtf2004/stlocaldebt.htm.
111
Standard and Poor’s, Arizona Credit Profile.
112
Ibid.
107

community planning, encouraging efficient use of energy in Arizona, assisting local
communities with the development and financing of public infrastructure projects, and
advising rural communities on matters of sustainable economic development. Some state
and local government agencies are also members of the Community Development
Coalition of Arizona, a membership organization that seeks to educate legislators and
the public about community and economic development issues and advocates for
increased funding for affordable housing programs.
The Arizona Department of Housing (ADOH) is responsible for establishing policies,
procedures and programs to address affordable housing issues confronting this state.
Among other things, the Department is required to provide financial, advisory,
consultative, planning, training and educational assistance for the development of safe,
decent and affordable housing for low-and-moderate income households. ADOH does
not directly own, construct, operate, or rehabilitate any housing units. The primary
function of the Department is to facilitate the development of housing through financial
and technical assistance. ADOH is a non-general fund agency, whose state funding
comes from a portion of unclaimed property proceeds. Funding received from unclaimed
property is placed into the Housing Trust Fund administered by ADOH. In addition to
state programs, ADOH oversees and administers many federal housing programs from
the U.S. Department of Housing and Urban Development (HUD). These include the
Home Investment Partnership Program (HOME), the Community Development Block
Grant (CDBG), Section 8 Housing Choice Voucher Program for Graham and Yavapai
counties, Housing Opportunities for People with AIDS (HOPWA), Shelter Plus Care and
Supportive Housing Programs. Communities in Maricopa and Pima Counties receive
federal housing funds directly from HUD, as do the cities of Yuma, Flagstaff and Prescott
in the case of CDBG. ADOH is also the statutorily designated federal housing credit
agency and is responsible for allocating federal Low Income Housing Tax Credits
(LIHTC) throughout the state.
ADOH also provides staff support to the Arizona Housing Commission (AHC) and the
Arizona Housing Finance Authority (AzHFA). The AHC is a statutorily created body
comprised of representatives from private industry, community-based nonprofit housing
organizations, and state, local and tribal governments. It is charged with recommending
affordable housing strategic planning and policy and advising the governor, the
legislature, state agencies and city, county and tribal governmental bodies on the public
and private actions that affect the cost or supply of housing.
The AzHFA promotes affordable housing opportunities in the 13 rural counties (outside
of Maricopa and Pima counties) of the state through the issuance of private activity
bonds. The issuance of private activity bonds allows the AzHFA to provide financing for
reduced interest mortgages (through the Mortgage Revenue Bond program) for first-time
homebuyers and Mortgage Credit Certificates (MCCs) that reduces the federal tax
liability for first-time homebuyers, thereby qualifying them for an increased mortgage
amount. Both programs have down payment and closing cost assistance available
(maximum $20,000) through the Homes for Arizonans Initiative. The AzHFA also issues
private activity bonds for affordable multifamily development in rural Arizona.

The Office of Small Business Services, housed in the Global Business Development
Division at the Arizona Department of Commerce, is the primary government agency
responsible for supporting small business in Arizona. The office positions itself as a onestop center for information about Arizona small business resources. Other divisions
within the Department of Commerce also provide small business-related resources,
including the Business Attraction and Development Division, which is responsible for
marketing Arizona nationally and internationally and for promoting other economic
development initiatives, and the International Trade Division, which is responsible for
helping Arizona’s businesses navigate the international marketplace. Additionally, the
Governor’s Council on Small Business, an appointed group of 25 small business
owners and advocates, addresses topics of particular concern to small businesses, such as
health insurance, licensing issues, and supply chain issues, and makes recommendations
to the Governor on these issues.
The Arizona Department of Economic Security handles poverty and income support
activities for the state. Services provided by the agency include administering financial
assistance, food stamp benefits, and medical benefits to those who qualify, determining
eligibility for SSDI and SSI programs, administering unemployment and job
rehabilitation programs, providing administrative support for child and family services
throughout the state, enforcing child support laws, administering programs for aging and
vulnerable adults (including homeless and refugee programs), and providing services to
those with developmental disabilities.
The Arizona Commission on Indian Affairs (ACIA) is the state’s liaison with its 22
federally-recognized Indian Tribes/Nations. ACIA is tasked with a variety of activities,
including making recommendations to the Governor and Legislature on issues of
importance to the Native American community, creating an awareness of the needs of
Indians in Arizona, assisting in the development of more effective tribal governments,
and promoting increased participation by Indians in state and local government.

IV.

NONPROFITS AND FINANCIAL INSTITUTIONS

NONPROFITS

As of November 2002, the Arizona State University Center for Nonprofit Leadership and
Management estimated that Arizona had approximately 18,950 nonprofit
organizations operating within the state. At the time of the last published U.S.
Economic Census, the Arizona nonprofit sector paid annual wages of $2.7 billion,
representing approximately 6% of the total wages paid in the state. The vast majority
of these wages were paid by nonprofit health care organizations. 113
The Center looked in depth at charitable nonprofits (those designated as 501(c)3
nonprofits) in a study released in May 2003 and found that these nonprofits account for
61% of all nonprofits in Arizona. Although most of Arizona’s nonprofits are small in
terms of revenue size, all together, Arizona’s 501(c)3 organizations raised almost $9
billion in revenue and maintained assets of nearly $8 billion in 2000. Of those that file
tax returns—which many small nonprofits are not required to do—more than half
indicated that they had revenues of less than $200,000 per year. 114
The Center also studied foundations in Arizona. It estimated that as of 2000, there were
151 public foundations and 535 private foundations operating within the state, an
increase of 57% since 1993. Assets of private foundations totaled approximately $1.5
billion, while assets of public foundations totaled slightly more than $489 million. The
state’s largest foundations include the Virginia C. Piper Charitable Trust, the Arizona
Community Foundation, the Nina Mason Pulliam Charitable Trust, and the Flinn
Foundation. 115
Nonprofits and foundations serving charitable purposes in Arizona are also aided by
charitable donations and volunteer participation by Arizona residents. A June 2002
survey conducted by the Center found that 87.3% of Arizona households had made a
financial contribution to a charitable organization in the past year, donating an average of
$1,572 annually. In addition, Arizona residents participated heavily in informal giving,
with 69.1% of respondents reporting they had given money directly to someone in need.
The survey also found that 55.5% of Arizona residents had volunteered time with a
charitable organization in the past year, averaging 3.74 hours per week. 116

113

William A. Brown, Arizona State University, Center for Nonprofit Leadership and Management,
Arizona Nonprofits: Scope of the Sector in Brief – Edition III, May 2003,
http://www.asu.edu/copp/nonprofit/res/Scope503.pdf.
114
Ibid.
115
William A. Brown, Arizona State University, Center for Nonprofit Leadership and Management, Profile
of Charitable Foundations in Arizona, October 2003,
http://www.asu.edu/copp/nonprofit/res/foundationprofile_ver6.2.pdf.
116
Arizona State University, Center for Nonprofit Leadership and Management, Arizona Giving and
Volunteering, 2003,
http://www.asu.edu/copp/nonprofit/res/Arizona%20Giving%20and%20Volunteering.pdf.

FINANCIAL INSTITUTIONS

CFED’s data on bank access reveals a relatively weak position for Arizona. Specifically,
only about one third of the state’s households have a checking account and only 55% of
households have a savings account. These percentages yield national rankings on these
measures of 31st and 40th lowest, respectively. 117
The number of banks in Arizona has decreased over the last several years. 118 As of
June 2004, the state was served by 78 FDIC-insured banks and thrifts, which together
held $61.8 billion in deposits in the state. 119 As of the third quarter of 2004, the year-todate industry-wide median return on assets (ROA) for banks headquartered in Arizona
was 0.86%, well below the 1.03% national median ROA. 120
As of June 2004, more than two thirds of the deposits in Arizona were controlled by
three banks: Bank One (27%), Bank of America (21%), and Wells Fargo (20%). 121
There are also 65 credit unions active in Arizona, which together control 13.7% of
total credit union/bank assets in the state, more than twice the market share of all U.S.
credit unions (6.5% of total assets). 122
C.

CDFIs

Eleven Arizona organizations have been certified by the Community Development
Financial Institutions (CDFI) Fund as of November 2004. To achieve certification, an
entity must have a primary mission of promoting community development, principally
serve and maintain accountability to an eligible target market, be a financing entity,
provide development services, and not be either a government entity or controlled by a
government entity. 123 CDFIs in Arizona serve primarily low-income and minority
individuals, and provide much-needed funding to rural areas. At the end of FY 2002,
CDFIs in Arizona had $32.3 million in financing outstanding to more than 12,000
customers in the state. 124
The 11 certified CDFIs in Arizona as of November 2004 are: 125
•
•
117

Hopi Credit Association
Neighborhood Economic Development Corporation

CFED, State Asset Development Report Card (SADRC), 2002, pp. 114-115.
U.S Small Business Administration, 2003 State Small Business Profile: Arizona,
http://www.sba.gov/advo/stats/profiles/03az.pdf.
119
FDIC, Deposit Market Share Report: Arizona, June 2004.
120
FDIC, Arizona State Profile, Fall 2004.
121
FDIC, Deposit Market Share Report.
122
Arizona Credit Union League, Credit Union Fact Sheet, http://www.cuna.org/download/arizona_fs.pdf.
123
CDFI Fund, U.S. Department of the Treasury, CDFI Fund Overview,
http://www.cdfifund.gov/overview/index.asp.
124
CDFI Coalition, CDFIs in Arizona: 2004 Fact Sheet, http://www.cdfi.org/states/Arizona2004.pdf.
125
CDFI Fund, U.S. Department of the Treasury, Certified CDFI’s – Alphabetical by State and County,
November 2004.
118

•
•
•
•
•
•
•
•
•

Arizona Multibank, CDC
Neighborhood Housing Services of Phoenix, Inc.
Prestamos CDFI, LLC
Raza Development Fund, Inc.
Self-Employment Loan Fund, Inc. (SELF)
Arizona Family Housing Fund
Navajo Partnership for Housing, Inc.
PPEP Microbusiness and Housing Development Corporation
Rural Community Assistance Corporation

Certification as a CDFI also enables entities to apply for various awards from the CDFI
Fund. Recent awardees in Arizona include the following: 126
•
•
•
•

•
•
•
•

126

The Hopi Credit Association has received three awards. Most recently, in 2000,
the institution was awarded a $500,000 loan to expand housing-related lending
and to increase its work with small business borrowers.
The Arizona MultiBank Community Development Corporation won a 2002
Core grant to enable it to enlarge its Affordable Housing Loan Pool.
Northern Trust Bank of Arizona received awards through the BEA program in
1999, 2000, 2001, and 2003. Its most recent award was to allow it to increase
financing activities in economically-distressed areas in Arizona and Colorado.
Wells Fargo Bank Arizona received an award in 2001 through the BEA program
for its support of three Arizona CDFIs: the Local Initiatives Support Corporation,
Neighborhood Economic Development Corporation of Mesa, and the Self
Employment Loan Fund of Phoenix.
Economic Development Authority of the Tohono O’odham Nation received
an award in 2002 to help it develop a new CDFI to address the financial distress
in the Tohono O’odham Nation of Sells, AZ.
Navajo Partnership for Housing received a technical assistance award in 2002
to develop a capitalization strategy and improve organizational efficiency, as well
as to educate other lenders about lending on or near the Navajo Nation.
PPEP Microbusiness and Housing Development Corporation received a
technical assistance grant in 2000 to improve the design and delivery of its loan
products and development services.
The Neighborhood Economic Development Corporation received its first
CDFI award in 2001, and was most recently funded again for $199,950 in
September 2004.

CDFI Fund, U.S. Department of the Treasury, Awardee Profiles by State – Arizona,
http://www.cdfifund.gov/awardees/pdf/states/arizona.pdf.

AFFORDABLE HOUSING

Arizona faces a shortage of affordable housing. The state is ranked relatively poorly
in the affordability of its rental housing and in its homeownership rate. An estimated
44% of renters and 20% of homeowners are experiencing either housing affordability or
quality problems, and the growth in the number of housing units in the state,
particularly affordable units, is constrained by the limited availability of private
land available for development. 127 The degree of affordability problems varies by
region, and in the most expensive areas, including the Flagstaff MSA and Coconino,
Pinal, and Mohave Counties, nearly 60% of renters are unable to afford the two-bedroom
fair market rent. 128 However, despite its low housing affordability, the state can be
credited for a number of homeownership assistance programs, including a state housing
trust fund, property tax circuit breaker programs, and first-time homebuyer assistance
programs. 129 Overall, the availability of affordable housing has clearly not kept pace
with the state’s rapid growth and needs additional support.
A.

AFFORDABLE HOUSING NEEDS

Overall Housing Market

As of 2003, Arizona had a total of 2.4 million housing units, of which 14.4% were
vacant. Arizona’s 2003 vacancy rate was high compared to that of the U.S. as a whole,
where only 10.3% of housing units were vacant. The majority of Arizona’s housing
units (65%) are single-unit structures, although 22% are located in multi-unit
structures and 13% are mobile homes. Perhaps not surprisingly, given Arizona’s rapid
population increases over the past decade, slightly more than one third of the state’s
housing units were built since 1990. 130
As of 2003, the median value of owner-occupied units with a mortgage in Arizona
was $146,124, the 20th-highest value nationally. The median monthly housing cost for
mortgaged owners was $1,146, nonmortgaged owners, $284, and renters, $662. A
substantial portion of Arizona residents, renters in particular, spend more than
30% of their monthly household income on housing—as of 2003, 31% of owners with
mortgages, 9% of owners without mortgages, and 49% of renters in the state fell into this
category. 131
Arizona’s Department of Economic Security estimates that there may be as many as
22,000 homeless people in Arizona on any given day and cautions that the state’s

127

Arizona Housing Commission (AHC), Arizona Department of Commerce, Office of Housing and
Infrastructure Department, The State of Housing in Arizona 2000,
http://www.housingaz.com/UPLOAD/HsgReprt.pdf, pp. 4-5.
128
National Low Income Housing Coalition (NLIHC), Out of Reach 2003, http://nlihc.org/oor2003/.
129
CFED, SADRC, 2002, p. 34.
130
U.S. Census Bureau, 2003 American Community Survey Data.
131
Ibid.

relatively high poverty rate means that there is sizable part of the non-homeless
population that may be at risk of homelessness in the future. 132
2.

National Low Income Housing Coalition’s Analyses of Rental Housing
Affordability

The National Low Income Housing Coalition (NLIHC) has for several years produced a
report entitled Out of Reach that analyzes the country’s wage-rent disparity. Specifically,
the NLIHC calculates the amount of money a household must earn in order to afford a
rental unit in a range of sizes at the area’s Fair Market Rent (FMR), based on the
generally-accepted limit of paying no more than 30% of income for housing costs. The
required income is then compared to the Area Median Income (AMI), the minimum
wage, and the incomes of extremely low-income households (less than 30% of AMI). In
addition, in 2004, the NLIHC released a report entitled Up Against a Wall: Housing
Affordability for Renters, analyzing rental-housing related data from the 2003 American
Community Survey.
Taken together, the reports indicate that Arizona suffers from a serious lack of
affordable rental housing. Using an index that takes into account the state’s median
gross rent, a ratio of rental costs to incomes, and the percentage of renter households in
the state spending more than 50% of income on rent, the NLIHC ranked Arizona as
having the eight-least affordable rental housing in the country. Looking at the
individual measures, Arizona’s median gross rent in 2003 was $662, ranking the state as
only the 19th-most expensive state, but its renter affordability ratio rank was lower, at
11th-least affordable. And, nearly one quarter of renters in the state spend more than 50%
of their income on rent, ranking the state 11th worst on that measure as well. 133
In Arizona, the “housing wage,” which is the amount a full-time (40 hours per week)
worker must earn in order to afford a two-bedroom unit at the area’s FMR, is
$14.93. This wage is nearly triple the state’s minimum wage of $5.15 per hour. Put
differently, based on the FMR, a minimum-wage worker must work 116 hours per
week in order to afford the rent on the average two-bedroom unit in Arizona. 134
Comparing the FMR to the wages of renters in Arizona, an estimated 50% of renters
were unable to afford the two-bedroom FMR as of 2003. In the most expensive
locations in the state, this figure rises even higher, coming in at 58% in the Flagstaff
MSA, and Coconino and Pinal Counties, and at 59% in Mohave County. 135

132

Arizona Department of Economic Security (DES), The Current Status of Homelessness in Arizona and
Efforts to Prevent and Alleviate Homelessness, December 2003,
http://www.de.state.az.us/csa/pdf/FinalAnnualReport2003.pdf.
133
NLIHC, Up Against A Wall: Housing Affordability for Renters, Ranking Tables, 2003 ACS Renter
Affordability Measures, November 2004, http://nlihc.org/pubs/uaw04/newrankingtables.pdf.
134
NLIHC, Out of Reach 2004, http://nlihc.org/oor2004/.
135
NLIHC, Out of Reach 2003.

Homeownership Statistics

Arizona ranks somewhat below average in its rate of homeownership. As of 2002,
65.9% of Arizona households owned their own homes, down from 68.0% in 2000. 136
Arizona’s current homeownership rate places it eighth worst in the nation. 137
Arizona fares somewhat better in rankings of disparity of homeownership rates among
race, gender, and income. Specifically, Arizona has the 11th-smallest gap between rates
of homeownership among white-headed households and non-white-headed
households in the nation. However, the state ranks only in the middle in terms of
homeownership gaps by gender and income, with the 27th and 28th smallest gaps in
these categories, respectively. 138
The State of Housing in Arizona 2000 Report
4.
In 2000, the Arizona Housing Commission (AHC) and the Arizona Department of
Commerce, Office of Housing and Infrastructure Department, released their report
entitled The State of Housing in Arizona 2000, which analyzed housing data and policies
in Arizona and provided policy recommendations for easing the state’s affordable
housing crisis. The study found that the problem of affordable housing in Arizona
was worsening as a result of the combination of Arizona’s continued population
growth and stagnant income levels.
Specifically, the study reported that the number of households grew by 31% between
1990 and 1998, and was predicted to grow another 14.5% between 1998 and 2003.
Between 1990 and 1998, the number of new housing units grew at a rate of 22.5%, but
this growth tended to be in the high-income household category. In the third quarter of
1998, fewer than 6% of new homes sold for less than $95,000, while nearly 20% sold for
$200,000 or more. The impact of this increase in prices on the ability of Arizona
residents to own their home is demonstrated by the fact that in 1970, 64% of Arizona
households could afford to purchase the median-value home, while by 1999, only 43% of
households could afford the same. Similarly, 73% of Arizona households could afford
the median rent in 1970, while by 1999, only 62% could afford the same.
The report also highlights the fact that growth in the number of housing units,
particularly affordable units, is constrained by the limited availability of land for
development in the state. Private land is estimated to account for between 13% and
17% of land in the state, with the remainder owned by city, state, tribal, and federal
government entities. The AHC noted that the small proportion of private land increases
land and development costs and makes affordable housing less attractive from a tax-base
perspective.
The study estimated that, as of 2000, there were then 70,000 rental units subsidized by
the government (including units located on Native American reservations), but that these
units were not nearly enough to meet the needs of Arizona’s low-income population. An
136

U.S. Census Bureau, Census 2000 Data and Statistical Abstract of the United States: 2003.
U.S. Census Bureau, Statistical Abstract of the United States: 2003.
138
CFED, SADRC, pp. 93-97.
137

estimated 44% of renters and 20% of homeowners in Arizona met the definition of
experiencing a “housing problem” in 2000, meaning that they either paid more than 30%
of their income for housing or lived in overcrowded or substandard housing. 139
5.

Arizona Affordable Housing Profile 2002 Report

As a follow up to the State of Housing in Arizona report, the Arizona Department of
Housing requested additional research to examine the housing needs of individual
communities. The Arizona Affordable Housing Profile was the fulfillment of that
request, providing data on the housing inventory in the state’s incorporated communities
and counties, the affordability of that housing, and each community’s efforts to address
its housing challenges.
One of the study’s goals was to assess the state’s “affordability gap,” defined as the
difference between the number of households within each income range and the number
of housing units affordable to those households. The study estimates the affordability
gap in the state overall at 10.3% of all households (including those on Native
American reservations). The table below presents the breakdown by region:
Households in Each Region in the “Affordability Gap”
County
Number of Households
Percent of Households
Maricopa
108,500
9.6%
Pima
25,100
7.6%
Non-Metro
37,400
9.5%
Native American Reservations
23,700
56.7%
Source: AHC, Arizona Department of Housing, and the U.S. Department of Housing and Urban
Development, Arizona Affordable Housing Profile: Findings and Conclusions 2002, p. 1.

The study also presented three primary findings about the state of housing in Arizona.
First, the income levels of households in the affordability gap differ in different
regions of the state. In larger, more established communities, the gap tends to occur at
income ranges less than 50% of median income. This results from a stock of older
housing that is generally more affordable than newer housing. Conversely, in newer
communities, where older, more affordable housing is not available, there is not a
predictable income range for the affordability gap, and the authors suggest that the needs
of every community be considered individually in order to devise the most effective
strategy to improve affordability of low-income housing.
Second, mobile homes and manufactured housing are very important sources of
affordable housing in non-metro areas of the state. Census 2000 figures reveal that
mobile homes account for 13.8% of housing units in Arizona and 28.8% of housing units
outside of Maricopa and Pima counties.
Third, the state should pay particular attention to the lack of housing available for
the lowest-income residents in Arizona, in part because of its effect on the
139

AHC, Arizona Department of Commerce, Office of Housing and Infrastructure Department, The State of
Housing in Arizona: 2000, pp. 5-6.

affordability gap for moderate-income residents. The study found that the lowestincome residents occupy housing that is out of their affordability range that would
otherwise be occupied by higher-income residents, exacerbating the shortage of
affordable homes for moderate-income, working families in Arizona.
The study also included a survey of public officials, city staff members, and real estate
and housing professionals regarding their perceptions of barriers to affordable housing.
The top barriers mentioned by those surveyed were high land cost/limited land
affordability (47.5%), lack of infrastructure (29.4%), wage gap (28.6%), lack of
employment opportunities (27.0%), and zoning (20.0%). 140
B.

AFFORDABLE HOUSING RESOURCES

CFED’s Affordable Homeownership Program Rankings

Arizona received recognition from CFED for its recent efforts to put in place
homeownership assistance programs. The state has a state housing trust fund, which
provides it with a dedicated source of funds for housing activities. It also has a
property-tax circuit breaker program to provide property tax relief to elderly
homeowners and renters, and a variety of first-time homebuyer assistance programs,
including: direct lending for homeownership, homeownership counseling, funds for
second mortgages, and direct grants for down payments. Arizona also ranks fairly high
(16th) among states on its percentage of state allocations of private activity bonds for
mortgage revenue bonds. 141
2.

Supply of Public and Affordable Housing

The table below provides a breakdown by type of the available affordable housing units
in Arizona as of 1998.
Affordable Housing Units in Arizona by Type
Program
Number of Units
HUD Section 8 Certificates and Vouchers
16,079
HUD Public Housing
6,944
HUD Project Based Section 8
9,847
USDA Rural Development Section 515
3,722
Arizona Low-Income Housing Tax Credit
10,615
Program
Other
8,000
HUD-Assisted Low Rent Indian Housing
15,214
Total
70,421
Source: AHC, Arizona Department of Commerce, Office of Housing and Infrastructure Department, The
State of Housing in Arizona 2000, p. 29.

140

AHC, the Arizona Department of Housing, and the U.S. Department of Housing and Urban
Development, Arizona Affordable Housing Profile: Findings and Conclusions 2002, pp. 1-2, 43.
141
CFED, SADRC, pp. 129-133.

HUD’s Resident Characteristics Report summarizes general information about
households in the state that reside in Public Housing, Indian Housing, or who receive
Section 8 assistance. According to the report, Arizona has 27,340 units that fit this
description, of which 25,676 were occupied. The average annual income for residents in
these units is $10,253, with 66% of occupants qualifying as “extremely low income”
(below 30% of median income). The majority of units are occupied by people who
identify as White (77%), with the remainder of units occupied by individuals who
identify as Black/African American or American Indian/Alaska Native. Forty-five
percent of residents reported Hispanic/Latino origin. 142
The Arizona Department of Housing (ADOH) reports in its 2003 Consolidated Annual
Performance and Evaluation Report (CAPER), that in 2003, all sources combined in
Arizona increased the supply of affordable housing by:
•
•
•
•
•
•
•
3.

constructing 2,765 new affordable rental homes;
rehabilitating 2,289 existing rental homes and making them available to low-income
households;
constructing 36 units of permanent housing for seriously mental ill patients;
constructing 139 transitional SRO’s for homeless individuals;
constructing 40 units of transitional housing for pregnant women;
constructing emergency shelter space for 100 homeless victims of domestic violence;
and
constructing nine units of transitional housing for victims of domestic violence. 143
Arizona Department of Housing Five-Year Strategic Plan

ADOH acknowledges that Arizona has a lack of affordable housing, and pledges in its
Five-Year Strategic Plan for 2000-2004 to increase the supply of affordable housing by
“providing leadership and seeking new resources.” Specifically, its objectives for rental
and homeownership housing are to:
•
•
•
•
•
•
•

142

augment rental affordability;
increase the number of affordable rental units to meet demand;
increase rehabilitation of affordable rental stock;
promote homeownership affordability;
increase the number of for-sale affordable units to meet demand;
promote rehabilitation of existing owner-occupied stock; and
implement a homebuyer assistance program that provides down-payment and closing
cost assistance using American Dreams Downpayment Initiative funds and other
resources. 144

HUD, Resident Characteristics Report for Arizona, as of December 31, 2004,
http://www.hud.gov/offices/pih/systems/pic/50058/rcr/index.cfm.
143
ADOH and DES, Consolidated Annual Performance and Evaluation Report (CAPER), 2003,
http://www.housingaz.com/UPLOAD/Final_2003_CAPER%20.pdf, p. 9.
144
ADOH and DES, FY 2004 State of Arizona Annual Action Plan, May 2004,
http://www.housingaz.com/UPLOAD/2004_Con_Plan.pdf, p. 5.

By actual unit numbers, ADOH indicates in its five-year plan that between FY 2000 and
FY 2004, it will augment rental affordability for 1,700 households, increase the
number of affordable rental units by 1,500, rehabilitate 200 units of rental stock,
promote homeownership affordability for 1,000 households, increase the number of
for-sale affordable units by 150, and promote the rehabilitation of 750 existing ownoccupied units. 145
The state also has a series of goals to increase housing for homeless individuals and
individuals with special needs during the same five-year period, including providing
emergency shelter for 14,000 families and individuals, developing 4,500 units/beds of
transitional and supportive housing, promoting 950 units of permanent housing, and
increasing housing opportunities for persons with a wide range of special needs. 146
4.

Affordable Housing Programs Using Federal Funds

ADOH administers a wide range of federal and state affordable housing programs in
conjunction with the state’s Department of Economic Security and Public and Indian
Housing Authorities, which directly manage the state’s public housing units.
The ADOH and Public and Indian Housing Authorities administer the tenant-based
rental assistance (Housing Choice Voucher) programs and oversee the 111 federallysubsidized properties that make up the state’s project-based Section 8 affordable
housing.
ADOH also applies for and distributes federal housing grants for most of the state’s
rural areas. For these areas, ADOH expected to receive $23.4 million in funding from
HUD in FY 2004, including funding for the following programs: CDBG ($13.6 million),
HOME ($8.9 million), Emergency Shelter Grant (ESG) ($711,000) and Housing
Opportunities for Persons with AIDS (HOPWA) ($128,000) program funds. 147
The state expected to distribute the funds as follows:
•

•

145

HOME funds were to be distributed statewide through a competitive application
process, with the exception of about $540,000 set aide for its American Dream
Downpayment Initiative. At least 25% of the HOME funds received were to be
set aside for projects and programs that serve special needs populations.
ESG funds are administered through the Department of Economic Security, and
the state planned to use these funds in FY 2004 to continue its existing contracts
with grantees from FY 2003. The bulk of these funds (70%) were to go to
Maricopa County.
CDBG funds were to be made available to units of local government for a wide
range of activities, including public improvements, housing, and public services.

Ibid, pp. 12-15.
Ibid, pp. 19-20.
147
ADOH and DES, FY 2004 State of Arizona Annual Action Plan, p. 12.
146

•

Each regional Council of Governments (COGs) has its own method of
distribution for the funds, which is detailed in the State’s FY 2004 Annual Plan.
HOPWA funds were to be distributed by a competitive application process on an
on-going basis until all funds are distributed. 148

In addition to federal funds received by the State of Arizona, there are also entitlement
areas in the state that receive HUD funding directly based on their population size,
including the counties of Maricopa and Pima and the cities of Chandler, Flagstaff,
Gilbert, Glendale, Mesa, Peoria, Phoenix, Scottsdale, Tempe, Tucson, and Yuma. 149
In addition to federal HOME, ESG, CDBG, and HOPWA funds, Arizona utilizes a
variety of other federal funds to address the need for affordable housing including
Section 184 loans, Section 8 Vouchers, and Section 202/811 Capital grants, among
others. The state also benefits from the federally-funded Low-Income Housing Tax
Credit (LIHTC) Program, which provides an incentive for the production of affordable
housing by providing federal income tax credits to owners of qualifying residential rental
projects. Since its inception in Arizona in 1987 to the end of FY 2003, the program has
assisted in the development of more than 20,000 units of low-income housing and
allocated more than $100 million in annual tax credits. 150
Arizona also receives funds through USDA Rural Development, a branch of the U.S.
Department of Agriculture dedicated to serving the needs of rural America. USDA Rural
Development administers a variety of programs, including those aimed at improving
conditions for housing, businesses, community facilities, and utility systems. 151 Within
the housing arena, most of the USDA’s rural housing programs including direct
assistance by USDA, while others work through local partnerships. Housing loans and
grants offered by USDA Rural Development in Arizona include the following:
•
•
•
•
•
•
•
•
•

5.
148

single family housing direct loans;
single family housing participation loans;
single family housing guaranteed loans;
single family housing repair loans & grants;
self-help technical assistance grants;
multi family housing direct loans;
multi family housing guaranteed loans;
farm labor housing direct loans & grants; and
housing preservation grants. 152
State-Funded Affordable Housing Programs

Ibid, pp. 32-60.
ADOH and DES, CAPER, p. 10.
150
ADOH and DES, FY 2004 State of Arizona Annual Action Plan, p. 64.
151
Arizona Rural Development, U.S. Department of Agriculture, Creating New Opportunity for Rural
Arizona, http://www.rurdev.usda.gov/az/.
152
Arizona Rural Development, U.S. Department of Agriculture, Rural Housing Programs,
http://www.rurdev.usda.gov/az/RHousing.htm.
149

Non-federal affordable housing programs in Arizona include the state’s Housing
Trust Fund, the Homes for Arizonans Initiative, and the Governor’s Tribal Housing
Initiative. Arizona’s State Housing Trust Fund is funded through the state’s Unclaimed
Property Fund, and provides resources for a variety of activities throughout the state. In
FY 2004, the bulk of planned distribution was to go to rental housing ($6.4 million), the
Homes for Arizonans Program ($3.0 million), HFA Special Initiatives ($3.0 million), the
Governor’s Tribal Housing Initiative ($2.5 million), and Owner-Occupied Housing
Rehabilitation ($2.1 million). 153
The Arizona Housing Finance Authority (AzHFA) and the ADOH have established
the Homes for Arizonans Initiative, which is intended to increase the number of
first-time homebuyers in Arizona. The Initiative combines several sources of funding
to assist homebuyers, including a Mortgage Revenue Bond program with a low interest
rate for qualifying buyers, down payment and closing cost assistance, and a Mortgage
Credit Certificate program to provide a federal tax credit for first-time homebuyers equal
to 20% of their annual mortgage interest. 154
6.

Other Sources

The Federal Home Loan Bank of San Francisco (FHLB) also contributes to affordable
housing in Arizona through several programs, including its Access to Housing and
Economic Assistance for Development Program (AHEAD), Community Investment
Program (CIP), and Affordable Housing Program (AHP).
The AHEAD Program provides grants to support economic development and housing
projects during the conception and early development stages. The new recoverable grant
program will fund projects that provide housing, services, or other benefits to low- to
moderate-income households, that result in the creation or retention of jobs in the
community, or that facilitate public or private infrastructure projects. Lists of recent
grant recipients are at http://www.fhlbsf.com/ci/grant/ahead/gp_recipients.asp.
The CIP provides FHLB members with lower-cost funding for a variety of uses,
including first-time homebuyer programs, small business loans, community and
economic development loans, and affordable housing. CIP is designed to support FHLB
members' efforts to undertake community-oriented mortgage lending and economic
development in the communities they serve.
The AHP provides competitive grants and subsidized loans to create affordable rental and
homeownership opportunities. The Bank holds AHP funding competitions twice a year,
with deadlines in April and October. Grants are often used to fill a gap in available
financing. AHP funds may also be used to provide downpayment or closing cost

153
154

ADOH and DES, FY 2004 State of Arizona Annual Action Plan, p. 62.
ADOH, Homes for Arizonans, http://www.housingaz.com/homes/default.asp.

assistance or to cover the cost of homebuyer pre- or post-purchase counseling. Lists of
recent grant recipients are at http://www.fhlbsf.com/ci/grant/ahp/grantrecipients.asp.155

155

The Federal Home Loan Bank of San Francisco, Community Investment,
http://www.fhlbsf.com/ci/default.asp.

VI.

SMALL BUSINESS

Small business in Arizona lags somewhat behind the rest of the nation. Businesses
with fewer than 10 employees account for only 10% of employment in the state, the
seventh smallest share in the country. In addition, Arizona has a relatively low
entrepreneurship level, and also ranks very low in the level of private loans to small
businesses. The state is seen as having below-average overall business development
capacity and business vitality, 156 but has been praised for its transformation toward a
“new economy.” 157 While a number of small business assistance programs are available
from both governmental and nonprofit sources, local entrepreneurs assert that the state
lacks many of the elements necessary for the success of small businesses, such as
early-stage venture capital and small business-related educational opportunities. 158
A.

SMALL BUSINESS NEEDS

General Background

As of 2001, Arizona was estimated to be home to 67,928 firms that employed fewer than
10 workers, accounting for 74% of all firms in the state. This proportion is lower than
the national average of 78%, with Arizona having the 12th-smallest proportion of
small firms in the country. Businesses with fewer than 10 employees employed
9.8% of Arizona’s employees in 2001, also below the national average for small firms,
ranking Arizona seventh-lowest nationally on this measure. 159 However, this is not to
imply that small business is not important in Arizona; between 1999 and 2000,
businesses with fewer than 500 employees were responsible for 61% of the increase
in net non-farm employment in the state, hiring a net total of 49,746 employees. 160
Small businesses are also an important source of income for minorities and women in
Arizona, as minority and women-owned businesses account for more than 50% of
small business activity within Arizona. 161 Additionally, non-employer businesses and
self-employment account for a substantial and growing portion of wages in the state; as
of 2003, Arizona had 161,000 self-employed individuals, up 2.9% from the prior year. 162
In 2003, Arizona had 13,322 formations of new employer firms, down 6.8% from 2002,
but at the same time, it had only 15,488 employer firm terminations during 2003, down
12.2% from 2002. Business bankruptcies in the state were also down in 2003; the
state had 701 business bankruptcies in 2003, a 7.3% drop from 2002. 163
156

CFED, 2004 Development Report Card for the States, http://drc.cfed.org/grades/arizona.html.
Robert Atkinson, Progressive Policy Institute, The 2002 State New Economy Index, June 2002,
http://www.neweconomyindex.org/states/2002/index.html.
158
Dee Power and Brian Hill, Arizona Entrepreneurs: Critical Factors to Success, April 2002,
http://www.capital-connection.com/azsurveyprinter.html.
159
U.S. Census Bureau, County Business Patterns 2001, http://censtats.census.gov/cbpnaic/cbpnaic.shtml.
160
SBA, 2003 State Small Business Profile: Arizona, http://www.sba.gov/advo/stats/profiles/03az.pdf.
161
Arizona Department of Commerce, Minority-, Women-Owned, and Small Businesses,
http://www.azcommerce.com/mwbedir/default02.asp.
162
SBA, Small Business Economic Indicators for 2003, August 2004,
http://www.sba.gov/advo/stats/sbei03.pdf, p. 16.
163
Ibid, pp. 18-20.
157

CFED’s Entrepreneurship Data from their Asset Development Report Card

Arizona ranks relatively low in its entrepreneurship rate, at 35th in the nation; only
11% of the labor force in Arizona owns employer and non-employer firms, compared to
20% in Montana, the highest-ranked state. When the entrepreneurship data is cut by race
and gender, the state ranks near the top, at 13th, in its minority entrepreneurship
rate, but ranks much lower, at 37th, in its women’s business ownership rate.
However, businesses owned by minorities and women in Arizona are on average
relatively small, as the state ranks 42nd and 30th in the nation, respectively, in average
sales for these businesses. These relatively lackluster entrepreneurship statistics are
perhaps not surprising in light of the fact that Arizona ranks 46th in the nation in the
level of private loans to small businesses, indicating comparatively poor access to credit
through private loans. 164
3.

CFED’s Data from the 2004 Development Report Card for the States

CFED’s other report that ranks the 50 states, the 2004 Development Report Card for the
States, examines each state’s “Performance,” “Business Vitality,” and “Development
Capacity.” While not explicitly focused on small business, this CFED report does
provide insight into the health and vitality of the overall business sector in the state. In
2004, Arizona received below-average marks on the Report Card, earning a “D” in
all three categories. Notable in the 2004 rankings were Arizona’s declines from “C”s
to “D”s in the Performance and Development Capacity categories. The drop in
Performance was a result of several factors, including the state’s large number of working
poor residents, inadequate employer health insurance coverage, high crime rate, and low
homeownership rate. The drop in Development Capacity resulted from poor marks in
human resources, financial resources, and amenity resources. On a positive note, the
Report Card indicates that Arizona has several strengths, including solid employment
growth potential in the long term, low per capita energy consumption, and positive net
migration. 165
4.

Progressive Policy Institute’s 2002 State New Economy Index

Another report, The 2002 State New Economy Index, released by the Progressive Policy
Institute, attempts to use a relatively new set of economic indicators to measure the
transformation of a state from a traditional manufacturing economy to a newly emerging
economy based on ideas, innovation, and technology. The index is composed of 17
economic indicators summarized under five primary categories: Knowledge Jobs,
Globalization, Economic Dynamism and Competition, the Transformation to a Digital
Economy, and Technological Innovation Capacity. In the Progressive Policy Institute’s
index, Arizona ranks relatively highly at 16th best overall, earning a score of 67.22,
compared to a U.S. average score of 60.32. Among the specific rankings which
contributed to Arizona’s relatively high overall ranking were Arizona’s top five ranking
164
165

CFED, SADRC, pp. 107-112.
CFED, 2004 Development Report Card for the States.

in the following categories: jobs in “gazelle companies” (companies with annual sales
revenue that has grown 20% or more for four straight years) as a share of total
employment, job churning, online agriculture, and commercial internet domain
names. However, Arizona ranks in the bottom quintile (42nd) in both workforce
education and foreign direct investment. 166
5.

Arizona Entrepreneurs: Critical Factors to Success Survey

In 2002, 403 entrepreneurs throughout Arizona were surveyed to determine their
satisfaction with resources for small business development in Arizona. Resources
evaluated in the survey included media, availability of funding, and local and statesponsored assistance programs. Overall, the survey indicated that Arizona
entrepreneurs believe the state lacks many of the elements necessary for the success
of small business. Access to early-stage venture capital was ranked the most important
factor for success of small businesses in the survey, yet 71% of those who had looked for
capital said finding it was “very difficult” or “difficult,” and only 2% of respondents
believed that there was substantial capital available in Arizona. Another critical factor
for success listed was small business-related educational opportunities. While there are
many educational resources for small businesses in Arizona, it appears from the survey
that they are not being utilized. Only 26% of those surveyed said they had used any
state- or city-supported program targeted to entrepreneurs, with 47% saying that it was
not worth the effort to participate, and 41% saying they were unaware of the programs.
Participants also expressed some dissatisfaction with Arizona’s media coverage of
entrepreneurs, with almost half responding that the media was “not at all” or “not very”
supportive of entrepreneurs.
When asked what Arizona state government could do to improve conditions for
entrepreneurs in the state, the top responses (in order of frequency) were: 167
•
•
•
•
•
•
•

bring more corporate headquarters to the state;
provide more information and assistance to entrepreneurs;
implement changes to the taxation system and simplify business regulations;
offer incentives for starting and investing in companies;
change the focus of economic development efforts;
step up public relations/media activity; and
improve the educational system.
Small Business Survival Index

Each year, the Small Business & Entrepreneurship Council publishes its Small Business
Survival Index, which ranks each state on its policy environment for entrepreneurship.
In the most recent report, released in October 2004, Arizona ranked 17th best among
the states, meaning it was judged to have the 17th most entrepreneur-friendly policy

166
167

Robert Atkinson, Progressive Policy Institute, The 2002 State New Economy Index.
Profit Dynamics, Inc., Dee Power and Brian Hill, Arizona Entrepreneurs: Critical Factors to Success.

environment. On individual categories provided in the appendices to the report,
Arizona’s rankings were as follows: 168
•
•
•
•
•
•
•
•
•
•
•
•

B.
1.

Top personal income tax rate: 20th lowest (best)
Top capital gains tax rate: 23rd lowest (best)
Top corporate income tax rate: 25th lowest (best)
Property tax as a share of personal income: 25th lowest best
Sales, gross receipts, and excise tax: 6th highest (worst)
Adjusted unemployment tax rate: 2nd lowest (best)
Per capita health care spending: 3rd lowest (best)
Electric utility costs: 16th highest (worst)
Workers compensation premiums: 6th lowest (best)
Crime rate: highest (worst)
Number of state and local government employees: 4th lowest (best)
State gas tax: 13th lowest (best)
SMALL BUSINESS RESOURCES
CFED’s Small Business Development Policy Rankings

On the policy side of small business development, Arizona received mixed ratings from
CFED. The state ranks very highly at 10th in the amount of small business
investment company (SBIC) financing provided to business. However, it is criticized
for not having in place several key programs and policies to encourage the
development of small businesses, including: a) a capital access program; b) a state
microenterprise policy; c) a state CDFI program; d) a self-employment option for
unemployment insurance; or e) an employee ownership policy. 169
2.

The Small Business Development Center (SBDC) Network

Arizona’s Small Business Development Center (SBDC) Network is a partnership
between the state’s community college districts and the U.S. Small Business
Administration (SBA). It provides services to businesses around the state with fewer
than 200 employees through 11 geographically-dispersed locations. These services
include one-on-one counseling, trainings and seminars on various business-related topics,
and assistance in areas such as accounting, marketing, business startup, and cash flow
management. The organization served 3,641 clients in 2003. Arizona’s SBDC network
is funded through the U.S. SBA and the community college districts, and is one of the
few SBDC networks nationwide that does not receive direct state funding. 170

168

Small Business & Entrepreneurship Council, Small Business Survival Index 2004,
http://www.sbsc.org/Media/pdf/SBSI_2004.pdf.
169
CFED, SADRC, pp. 143-149
170
Arizona Small Business Development Center Network, Maricopa Community Colleges,
http://www.dist.maricopa.edu/sbdc/.

The Arizona Department of Commerce

Service Corps of Retired Executives (SCORE)

The SCORE Association is a nonprofit organization dedicated to providing counseling to
individuals interested in starting a small business. The organization partners with the
SBA to provide its services. The Arizona SCORE district has approximately 200
volunteer counselors organized into five chapters around the state (Phoenix, Tucson,
Mesa/East Valley, Lake Havasu City, and Northern Arizona). Services provided include
seminars and workshops on various business topics, as well as free one-on-one
counseling with business professionals. 172 Some chapters of SCORE in Arizona have
also been designated by the SBA as the local technical assistance organization for
providing pre-qualification for SBA loan guarantees. 173
5.

Self Employment Loan Fund (SELF)

The Self Employment Loan Fund (SELF) is a nonprofit organization dedicated to
providing services to low-income women and minorities who are interested in starting
their own businesses but who would most likely not receive funding through traditional
channels. The organization assists individuals by providing training, technical assistance,
and lending. SELF has been designated by the SBA as an SBA Women’s Business
Center, and is funded through the SBA’s Office of Women’s Business Ownership. 174
6.

The Center for the Advancement of Small Business

The Center for the Advancement of Small Business (CASB) is housed at Arizona State
University’s W.P. Carey School of Business and provides one-on-one counseling and
advice to students and other entrepreneurs within the community. It also partners with
Chambers of Commerce throughout Arizona to help those interested in starting a business
find the resources they need, and conducts research specifically focused on Hispanic and

171

Arizona Department of Commerce, Small Business Services, Entrepreneur’s Edge 2004,
http://www.commerce.state.az.us/doclib/ABC/2004EntrprnrEdgeEng.pdf.
172
Arizona SCORE District, Frequently Asked Questions, http://www.scorearizona.org/index.html.
173
Phoenix SCORE Chapter, http://www.scorearizona.org/phoenix/index.html.
174
Self Employment Loan Fund, http://www.selfloanfund.org/.

family-owned businesses. The Center provides services to approximately 1,000 people
annually. 175
7.

The Microbusiness Advancement Center of Southern Arizona

The Microbusiness Advancement Center of Southern Arizona is a nonprofit organization
that provides training, resources, referrals, support, and advocacy to those seeking to
create, sustain, or grow microbusinesses in Southern Arizona. The Center particularly
targets its services to individuals from groups that have specialized needs or face
particular barriers to microbusiness success, including women, low-income clients, and
non-English speakers. 176
8.

U.S. Small Business Administration

Within Arizona, the SBA maintains a District office that provides startup and operational
assistance through services such as small business training and counseling, financial
assistance for startups, and operational and disaster help. The District office also helps
small businesses in Arizona take advantage of government-related business opportunities
such as government contracting, subcontracting, and procurement. The SBA also
partners with the SCORE Association, the SBDC Network, and SELF, among other
organizations, to reach entrepreneurs throughout the state. 177

175

W.P. Carey School of Business, Arizona State University, Center for the Advancement of Small
Business, http://wpcarey.asu.edu/seid/casb/sig_programs.cfm.
176
Microbusiness Advancement Center of Southern Arizona,
http://www.charityfinders.com/cf/servlet/SlGenerateSite?action=home.jsp&charity_id=122903CHA001.
177
SBA Arizona District, About Us, http://www.sba.gov/az/aboutus.html.

VII.

POVERTY AND ASSET ACCUMULATION

Approximately 14% of Arizona’s population lives in poverty, making the state’s poverty
rate 14th worst among all the states. Even more significantly, the state has low
rankings in the area of asset accumulation, with large percentages of its households
having zero net worth or otherwise considered asset poor. 178 However, Arizona ranks
first in the country in terms of having the smallest difference between asset poverty of
male- and female-headed households, and fourth in terms of the difference between
white- and non-white headed households. The state also can be credited with a
number of supportive asset accumulation and preservation policies, especially in the
areas of workers’ compensation and health insurance. 179 In addition, IDA programs are
supported by both state policy 180 and a statewide alliance, which has set a goal of
opening 10,000 IDA accounts in the state over the next five years. 181
A.

POVERTY AND ASSET ACCUMULATION NEEDS

Poverty Statistics

Approximately 14% of Arizona’s population lived in poverty during the years of
2001 to 2003, a higher percentage than the U.S. average of 12.1%. Using the three-year
average for 2001-2003, Arizona had the 14th-highest percentage of residents at or
below the poverty level in the U.S. Additionally, 17.3% of Arizona residents, on
average, lacked health insurance during the same time period, compared to 15.1% of
the U.S. population. Based on the 2001-2003 three-year average, Arizona had the 10thhighest percentage of residents with no health insurance coverage. 182
As illustrated by the table on the following page, poverty levels vary widely between
counties in Arizona, ranging from 37.8% of individuals living below the federal poverty
level in Apache County to just 9.9% living below the federal poverty level in Greenlee
County.
If low-income individuals are defined as those living below 200% of the Federal Poverty
Level (FPL), estimates by the Urban Institute and Kaiser Commission on Medicaid and
the Uninsured suggest that an additional 20% of Arizona’s population would have
qualified as low income during 2002-2003. 183

178

CFED, SADRC, p. 34.
Ibid.
180
Ibid, p. 121.
181
Assets for Arizona Alliance, IDAs in Arizona: A Case Statement, September 2003,
http://www.assetsaz.org/PDF/IDA%20Case%20Statement.pdf, p. 1.
182
U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2003, pp.
23, 25, 68-69.
183
Henry J. Kaiser Family Foundation. Distribution of Total Population by Federal Poverty Level, State
Data 2002-2003, U.S. 2003, http://www.statehealthfacts.kff.org.
179

Poverty Levels by County in Arizona During 1999
County

% of Individuals

% of Families

Apache County

37.8%

33.5%

Cochise County

17.7%

13.5%

Coconino County

18.2%

13.1%

Gila County

17.4%

12.6%

Graham County

23.0%

17.7%

Greenlee County

9.9%

8.0%

La Paz County

19.6%

13.6%

Maricopa County

11.7%

8.0%

Mohave County

13.9%

9.8%

Navajo County

29.5%

23.4%

Pima County

14.7%

10.5%

Pinal County

16.9%

12.1%

Santa Cruz County

24.5%

21.4%

Yavapai County

11.9%

7.9%

Yuma County

19.2%

15.5%

Source: U.S. Census Bureau, Census 2000 Data.

Personal Bankruptcy Filings

On measures of personal bankruptcy, Arizona ranks slightly worse than average
nationally. For the 12-month period ended March 31st 2004, the state’s personal
bankruptcy rate was 14.2 filings per thousand households, compared to a national average
rate of 13.7 filings per thousand households. During this time period, Arizona had the
23rd-highest rate of filings. 184
3.

CFED Asset Outcome Ranking

In CFED’s State Asset Development Report Card, Arizona ranked extremely poorly in
asset outcomes, receiving a grade of “F” and a rank of 49th overall in the U.S. While
CFED looked at a variety of data in reaching its “F” grade for Arizona, including the
homeownership and small business indicators detailed in the previous chapters, the
state’s grade is primarily brought down by a particularly high level of asset poverty

184

American Bankruptcy Institute, Households Per Filing, Rank During the 12-Month Period Ended
March 31, 2004, http://www.abiworld.org/statcharts/HouseRank.htm.

and a large number of households with zero or negative net worth, as detailed
below. 185
a.

CFED’s Net Worth and Asset Poverty Statistics

Arizona has particular trouble in comparison to the rest of nation on two important
indicators of asset poverty, the specific level of asset poverty and the percentage of
households with zero net worth. Arizona’s asset poverty level (i.e., the percentage of the
population without sufficient net worth to subsist at the poverty level for three months
without other support) is 28.8%, which gives the state a ranking of 48th, or third worst,
in the nation. Similarly, the percentage of households in the state with zero net
worth, 16.3%, gives Arizona a ranking of 42nd in the nation. Relative to most other
states, this means that Arizona has a high share of vulnerable households. Additionally,
Arizona does not fare much better on the broader measure of mean net worth, with its
level of $98,641 giving it a ranking of only 34th highest in the nation. 186
However, it is important to highlight that in comparing the gaps in asset poverty between
race and gender groups, Arizona has the smallest asset poverty gap in the nation
between male- and female-headed households, and the fourth smallest gap between
white- and non-white-headed households. 187
b.

CFED’s Human Capital and Insurance-Related Statistics

Overall, Arizona’s performance on human capital and insurance-related measures is
mixed. Most positively, the state’s college attainment rates are in the top half in the
nation, with Arizona ranking 22nd-highest in the percentage of the population with
associate’s degrees (6.9%), and 25th-highest in the percentage of the population with at
least four years of college (23.3%). Breaking the college attainment data down by
income, race, and gender, the state has the 11th smallest gap by income, but ranks only
38th in terms of the gap by race and 37th by gender. Arizona also ranks close to the
bottom in the nation (43rd) in the percentage of children in poverty that are served by a
Head Start program. 188
Arizona has very low rankings in insurance-related comparatives. The state is
ranked fourth worst in the percentage of non-elderly covered by employer-based health
plans. It is also ranked third worst in both the percentage of low-income children without
health insurance and in the percentage of low-income parents without health insurance. 189

185

CFED, SADRC, p. 34.
Ibid, pp. 85, 88, 91.
187
Ibid, pp. 89-90.
188
Ibid, pp. 99-105.
189
Ibid, pp. 117-119.
186

The Asset Development Institute’s Asset Index

In September 2002, the Asset Development Institute at Brandeis University published a
report entitled The Asset Index: Measuring The Progress Of States In Promoting
Economic Security And Opportunity. The report presents state-by-state data on
individual outcomes for job-based and related income assets, human capital, and financial
assets. These outcomes are the primary indicators of the economic security people have
and the opportunity they enjoy. For each of these three categories, the report presents a
cluster of indicators that point to important related asset-based outcomes and provides the
numerical outcome for residents on each indicator as well as a national rank on each
indicator (for all indicators, 1st is “best” and 50th is “worst”).
For Arizona, the research indicates that the state ranks among the top 10 best states for
none of the 39 measured indicators, but ranks among the worst 10 states on 11 of
the indicators, representing more than one quarter of indicators. The state’s worst
rankings are in the areas of asset inequality, housing insecurity, and education
(dropping out of high school). The study’s authors conclude that “residents of Arizona,
compared to those of other states, have had relatively much less success in gaining jobbased and related income assets, building human capital, and accumulating financial
assets.” 190
B.

POVERTY AND ASSET ACCUMULATION RESOURCES

State Income Support Program

The poor in Arizona are served primarily by the Temporary Assistance to Needy
Families (TANF) program, known in the state as EMPOWER (Encouraging and
Moving People Off Welfare and Encouraging Responsibility). During 2002-2003,
Arizona’s TANF caseload rose substantially, increasing more than 20% from
December 2001 through December 2003. 191 During 2004, however, caseloads began to
drop. As of July 2004, 50,696 families were receiving assistance, down 5% from the
level six months prior and 3.7% from the level 12 months prior. Among the states,
Arizona has had one of the smallest decreases in caseloads since 1994, with its caseload
decreasing only 29% between March 1994 and March 2004. Additionally, Arizona has
had the largest increase in caseloads since its lowest caseload month, with levels
rebounding 55% over its lowest month in the past ten years. 192

190

The Asset Development Institute, The Asset Index: Measuring The Progress Of States In Promoting
Economic Security And Opportunity, September 2002,
http://www.centeronhunger.org/pdf/ASSETINDEX.pdf, pp. 22-23.
191
U.S. Department of Health & Human Services, Administration for Children & Families, Change in
Numbers of TANF Families and Recipients from December 2002 to 2003,
http://www.acf.hhs.gov/TANF_data.htm; and Total Number of Families and Recipients for 1st Quarter FY
2002, http://www.acf.dhhs.gov/news/stats/tanf.htm.
192
National Conference of State Legislatures, Welfare Caseload Watch, October 2004,
http://www.ncsl.org/statefed/welfare/caseloadwatch1004.htm.

MesaCAN’s Assets for Arizona Institute and Assets for Arizona Alliance

MesaCAN’s Assets for Arizona Institute was founded as a joint venture of Mesa
Community Action Network, Inc. (MesaCAN), Neighborhood Economic Development
Corporation (NEDCO), and NewTowN Community Development Corporation of Tempe
(NewTowN) to expand Individual Development Accounts (IDAs) and to establish IDA
programs and collaborations in Arizona and the Southwest. The Institute works in
collaboration with the Assets for Arizona Alliance, an informal, statewide association
whose members are IDA program operators, representatives of banks, credit unions,
foundations, and businesses interested in expanding IDA opportunities in Arizona.
The Institute’s technical assistance initiatives support the creation and expansion of
infrastructure in organizations, employers, and agencies that operate IDA programs, and
the development of regional capacity for the growth of IDAs. Currently, the Institute
provides training and data management to 21 of the 25 IDA programs and collaborations
in Arizona, including the first two employer IDA programs in the state.
As of August 2004, there were 407 active IDA accounts and 392 cumulative asset
purchases with a market value of over $15 million, including 125 homes, 231 vehicles,
27 education-related purchases, and nine small business-related purchases. As shown in
the following table, as of December 2004, there were 24 active IDA programs in the
state, with three operating statewide and the remainder operating in various regions of the
state. 193
IDA Programs in Arizona as of December 2004
Program
Arizona Quest for Kids
Both Hands
Catholic Social Services of Southern Arizona
Central City South Partnership – Phoenix
Revitalization Corporation and Hope VI
Chicanos Por La Causa
City of Avondale/Neighborhood Housing Services
Southwestern Maricopa County
Comite de Bienestar, Inc.
Community Services of Arizona
FIBCO Family Services
Homeward Bound
Hualapai Tribe
Indigenous Community Enterprises
International Rescue Committee
John C. Lincoln Hospital
Mesa Community Action Network (MesaCAN)
Native American Connections
193

Geography Served
Phoenix
Flagstaff
Southern Arizona
South Phoenix
Tucson
Avondale
San Luis/Yuma County
Statewide
Phoenix
Phoenix
Peach Springs
Northern Arizona/Native American Communities
Statewide
Phoenix
East Valley
Phoenix

Assets for Arizona, http://www.assetsaz.org/Institute.htm.

Navajo Partnership for Housing
Neighborhood Economic Development Corporation
New TowN Community Development Corporation
Safe Haven, Inc.
Salt River Pima Indian Community
Southern Arizona Community Land Trust
The Centers for Habilitation
Tucson Learn2$ave Program
Source: The Assets for Arizona Alliance

St. Michaels
Mesa
Tempe
Phoenix
SRPMIC
Southern Arizona
Statewide
Tucson/South Tucson

CFED’s Asset Policy Rankings

In contrast to its failing grade for asset outcomes, CFED gives an overall grade of “B”
to Arizona for asset policies, ranking the state 19th best in the U.S. In assigning a
relatively high grade to Arizona’s asset policies, CFED noted in particular the state’s
efforts to improve its homeownership rates and to ensure that all state residents have
access to health insurance. 194
a.

IDA Policy

CFED credits Arizona with providing both a state IDA program and an IDA program
within the state TANF plan. However, as of 2002, Arizona had not appropriated at
least $1 million dollars for IDAs, CFED’s third measure of a strong state IDA policy. 195
b.

Other CFED Financial Asset Building Policy Rankings

In other financial asset building policies, Arizona is criticized for not having a state
minimum wage higher than the federal level. In the area of public assistance, the
state receives mixed ratings. Arizona is praised for excluding the value of one vehicle
for TANF and having no asset test for Medicaid, but CFED notes that, more negatively,
the state has a low countable asset limit for TANF and does not exclude the value of all
vehicles in determining the countable asset limit for food stamps. 196
c.

CFED’s Human Capital Development Policy Rankings

Arizona’s rankings in the CFED report for its human capital development policies
are generally low. Most negatively, the state is ranked fourth lowest in per-pupil
expenditures for K-12 education and 10th lowest in need-based aid to
undergraduates. Arizona ranks in the middle of the nation in school spending
equalization (31st) and in its funding for customized job training (33rd). Arizona, along
with 35 other states, does not provide supplemental funding for Head Start programs.
However, Arizona does provide state funding for pre-kindergarten.197
194

CFED, SADRC, p. 34.
Ibid, p. 121.
196
Ibid, pp. 125-126.
197
Ibid, pp. 135-141.
195

CFED’s Wage Protection Policy Rankings

Arizona received mixed rankings in wage protection policies. The state stands out in
workers’ compensation-related areas, ranking ninth best in the nation in its workers’
compensation coverage and 10th best in its workers’ compensation benefits. However, in
contrast, Arizona is ranked third worst in its unemployment insurance benefit levels
and has made only one of three possible reforms made in other states to its
unemployment insurance scheme (eliminating the restriction on part-time work).
Finally, the state has only one of four family leave benefits provided in certain other
states (allowing public employees to use sick leave to care for sick family members). 198
e.

CFED’s Health Insurance Policy Rankings

In contrast to Arizona’s low rankings in health insurance outcomes, CFED credits the
state with having sound health insurance policies. Arizona ranks 11th best for its
eligibility level for publicly-provided health insurance. The state has also expanded
Medicaid for low-income adults without children, provides extra time for transitional
medical assistance, and has a state subsidy for small business health care coverage. 199
f.

CFED’s Property Protection Policy

Within the property protection policy arena, CFED finds absent in Arizona both of the
policies it included as measures of state success in this area: a) anti-predatory lending
legislation; and b) a state disclosure requirement for property insurers to guard against
redlining. 200

198

Ibid, pp. 154-160.
Ibid, pp. 162-165.
200
Ibid, pp. 167, 169.
199

VIII. NATIVE AMERICANS AND IMMIGRANTS
Arizona has the third-largest Native American population in number and the sixth
largest in terms of percentage of population in the nation. 201 However, Native
Americans in the state face higher-than-average unemployment 202 and more than 35% of
them live below the poverty level. While there are a number of supportive institutions in
the state serving this population, the problems faced by Native Americans in areas
such as affordable housing are significant.
An even larger percentage of the state’s population is foreign born (12.8%), ranking
Arizona eighth highest on this measure. The bulk of the state’s foreign born hail from
Latin America, with the largest percentage born in Mexico. Eighty-five percent of the
foreign-born residents speak a language other than English at home, 203 and one quarter
of this immigrant population lives below the poverty level, compared to only 17.9%
of immigrants nationwide. Again, a number of resources are available to serve the
foreign-born population, but as with Native Americans, additional support is critical.
A.

NATIVE AMERICAN NEEDS

Statistics on Native Americans

Arizona ranks third in the nation in total American Indian/Alaska Native
population, with a total population of 255,879 as of July 2000. Only California and
Oklahoma have larger Native American populations in number. 204 Native Americans in
Arizona make up 5% of the state’s population, ranking the state sixth nationally in
terms of percentage of population, behind Alaska, New Mexico, South Dakota,
Oklahoma, and Montana. 205 Arizona’s Native Americans are members of the state’s 22
federally-recognized tribes. 206
As the table below shows, Arizona’s Native Americans are widely disbursed around
the state. There are 21 reservations around the state, and nearly 28% of Arizona land is
designated as Indian trust land. Sixty-three percent of Native Americans in Arizona live
on reservations, substantially higher than the national average of 38%. 207

201

U.S. Census Bureau, Statistical Abstract of the United States: 2003.
Arizona Department of Economic Security, 2003 Special Unemployment Report, June 2003,
http://www.de.state.az.us/links/economic/webpage/eaweb/spec03.html.
203
U.S. Census Bureau, Census 2000 Data.
204
Ibid.
205
Ibid.
206
Arizona Commission on Indian Affairs (ACIA), 2002-2003 Annual Report,
http://www.indianaffairs.state.az.us/aboutus/2002-2003%20Annual%20Report.pdf, p. 1.
207
Ibid, p. 8.
202

Geographic Distribution of Arizona’s Native American Population
Total Native
% On-Reservation
% Off-Reservation
American Population
Apache
53,375
98.2%
1.8%
Cochise
1,350
0.0%
100.0%
Coconino
33,161
71.4%
28.6%
Gila
6,630
90.3%
9.7%
Graham
5,005
90.2%
9.8%
Greenlee
142
0.0%
100.0%
La Paz
2,470
91.2%
8.8%
Maricopa
56,706
12.0%
88.0%
Mohave
3,733
46.7%
53.3%
Navajo
46,532
88.9%
11.1%
Pima
27,178
42.3%
57.7%
Pinal
14,034
65.9%
34.1%
Santa Cruz
251
0.0%
100.0%
Yavapai
2,686
28.6%
71.4%
Yuma
2,626
20.1%
79.9%
Total
255,879
62.9%
37.1%
Source: Commission on Indian Affairs, 2002-2003 Annual Report, p. 13.
County

Poverty and Economic Opportunities for Tribes

Tribes in Arizona engage in a variety of business enterprises, including gaming,
agriculture, and development of shopping centers, business parks, resorts and other
tourism enterprises. Specific examples of revenues sources include the following:
•
•

•

Big game hunting is relied upon heavily as a source of revenue by tribes
including the San Carlos Apache, Whitemountain, Haulapai, and Kaibab tribes.
The Hualapai Tribe, which borders 108 miles of the Grand Canyon’s South Rim,
is the only Indian-owned river company that acts as a concessionaire in the Grand
Canyon. 208
Within Arizona, there are 10 reservations/nations that have 18 combined
improved industrial development sites available for immediate occupancy. These
nations include: Ak-Chin Indian Community, Colorado River Indian Tribes, Gila
River Indian Community, Hopi Tribe, Navajo Nation (eight industrial parks), Salt
River Pima Maricopa Indian Community, San Carlos Apache Tribe, Tohono
O’odham Nation, White Mountain Apache, and Yavapai-Prescott. 209

However, these economic activities have not been enough to adequately support most
tribes. 210 This is evident in the poverty statistics for Native Americans in the state. One
third of Native American families and 37.3% of Native American individuals were
living below the federal poverty level in 1999. 211 Those living on reservations exhibit
an even higher level of poverty—the average household income on all reservations and
208

Michael Vaughn, Arizona Department of Housing, information provide via email, December 2004.
ACIA, Map of Industries, http://www.indianaffairs.state.az.us/busdev/industmap.html.
210
ACIA, 2002-2003 Annual Report, p. 9.
211
U.S. Census Bureau, Census 2000 Data.
209

trust lands was $23,289 as of 1999, with 42.1% of households below the poverty
level. 212 Unemployment statistics for June 2003 indicate that average unemployment on
Native American reservations for the first half of 2003 was 22.5%, compared to 5.5%
for the balance of the state. 213
Not surprisingly, Native Americans on reservations also face severe difficulty in
locating affordable housing. The Arizona Affordable Housing Profile, published in
2002, estimated the affordability gap for Native Americans living on reservations in
Arizona at 56.7% (compared to 9.2% for Arizona residents in non-reservation areas),
meaning that more than half of this population must pay more than 28% of their income
towards shelter or live in substandard and/or overcrowded conditions. 214
B.

NATIVE AMERICAN RESOURCES

Arizona Commission on Indian Affairs

The Arizona Commission on Indian Affairs (ACIA) serves as the state government’s
primary liaison with Indian Tribes/Nations in the state. ACIA's legislatively
mandated activities include:
• assembling facts needed by tribal, state, and federal agencies to work together
effectively;

•

assisting the state in its responsibilities to tribes by making recommendations to
the Governor and Legislature;

•

conferring and coordinating with other governmental entities and legislative
committees regarding Indian needs and goals;

•

working for a greater understanding and improved relationships between Indians
and non-Indians by creating an awareness of the needs of Indians in the state;

•

promoting increased participation by Indians in state and local affairs; and

•

assisting tribal groups to develop increasingly effective methods of selfgovernment.
Arizona Department of Housing

The Arizona Department of Housing (ADOH) has been involved in a number of efforts
to increase the availability of decent, safe and affordable housing on tribal land.
Tribal Liaison
In an effort to target resources to areas with the greatest need, ADOH created a Tribal
Liaison position in 2003. A Tribal Liaison position in most state housing agencies is a
rarity. Only a few other states have a position dedicated solely to providing technical
212

ACIA, 2002-2003 Annual Report, p. 14.
DES, 2003 Special Unemployment Report, June 2003.
214
AHC, the Arizona Department of Housing, and the U.S. Department of Housing and Urban
Development, Arizona Affordable Housing Profile: Findings and Conclusions 2002, p. 14.
213

assistance to tribes for housing related activities. Since the creation of the Tribal Liaison
position, ADOH has seen an increased interest in and knowledge of the programs offered
to tribal governments.
Low Income Housing Tax Credit (LIHTC) Program
Arizona is one of only a few states in the nation that provides a set-aside of LIHTCs for
developments on tribal land. Of the 40-plus developments awarded Low Income
Housing Tax Credits by ADOH in 2003 and 2004, six were located on tribal lands. Two
additional developments will assist various urban tribal members in the Phoenix-metro
area.
Tribal Housing Initiative
Another recent endeavor undertaken by ADOH is the creation of the Governor’s Tribal
Housing Initiative Task Force. The Task Force is the product of several meetings
between tribal and State officials prompted by Governor Janet Napolitano. During such
meetings, tribal officials noted four major policy areas to be addressed in order to
increase housing opportunities on tribal land, including: financial education, needs
assessments, infrastructure, and legal framework for private finance on tribal trust land.
Four subcommittees were formed to study these issues and make recommendations.
Participants in the working groups include representatives from tribes, funding partners
such as HUD, the Federal Reserve Bank of San Francisco, Fannie Mae and several
Arizona banks. These groups will be working to suggest policy changes and develop
strategies in their broad areas. One particularly exciting development by the Task Force
has been to take existing legal instruments in use by tribes to finance housing throughout
the country and to meld both bank and tribal perspectives into revised templates to meet
the needs of both an individual tribe’s legal structure and tradition, and the needs of the
Arizona banking industry on a tribe-by-tribe basis. It is believed that this will be the first
time in Arizona that specific legal issues relating to access to capital will be undertaken
and addressed for any interested tribe. Another major accomplishment of the Task Force
has been the creation the Arizona Tribal Resource Guide to Financial Education.
The Governor’s Tribal Housing Initiative also targets $2.5 million of State Housing Trust
Fund dollars for housing in tribal communities. This Initiative will support the creation or
rehabilitation of housing units on tribal land by leveraging additional resources, including
private and federal.
3.

Other State Agencies in Arizona

Many state agencies within Arizona provide assistance to tribes on all aspects of
development on tribal land. Assistance is provided in various capacities, including
training and technical assistance. Currently, numerous agencies have tribal liaisons that
work directly with tribes, including the Arizona Department of Commerce, Arizona
Game & Fish Department, and the Arizona Office of Tourism. The Governor also has a
policy advisor that acts a conduit between her office and tribal leaders. 215

215

Michael Vaughn, Arizona Department of Housing, information provide via email, December 2004.

Inter Tribal Council of Arizona

The Inter Tribal Council of Arizona (ITCA) is a membership organization of the highest
elected officials from each tribe in Arizona. Its goal is to improve the lives of Arizona’s
Indian tribes by enabling them to participate in the formation of public policies within the
state that impact their lives. ITCA provides a wide range of services to tribes, including
technical assistance and training in program planning and development, research and data
collection, resource development, management, and evaluation. ITCA also conducts
seminars, workshops, conferences, and public hearings on relevant policy issues. 216
5.

Arizona Indian Town Hall

Each year in June, ACIA sponsors an Indian Town Hall to allow representatives of tribal
governments to come together for three days of discussion on topics of importance to the
state’s tribes and nations. Over the course of the three days, participants draft a report
reflecting their ideas for addressing the topics discussed at the meeting. After the Town
Hall sessions, ACIA sponsors a series of post-Town Hall meetings around the state to
discuss the results of the report and educate tribal communities about legislative
processes. These meetings provide an opportunity for a wider range of community
members to learn about and participate in advocating on issues of concern. 217
6.

Resources for Native American Entrepreneurs

There are several organizations in Arizona that provide targeted counseling and technical
assistance for Native Americans interested in starting a business, including:
•
•
•
•
•

the Center for American Indian Economic Development at Northern Arizona
University;
the Greater Arizona Development Authority within the Arizona Department of
Commerce;
the Arizona American Indian Tourism Association;
the Arizona American Indian Chamber of Commerce; and
and the Arizona Native American Economic Coalition. 218
HUD’s Section 184 Indian Housing Loan Guarantee Program

Several Arizona tribes are active participants in HUD’s Section 184 Indian Housing Loan
Guarantee program, which provides loan guarantees for home ownership, property
rehabilitation, and new construction opportunities for eligible tribes and members seeking
to own a home on their native lands. The program primarily serves higher-income
families, and allows for private finance mortgages. In order to participate in the
mortgage process, tribes must adopt codes and ordinances that incorporate foreclosure,
216

Inter Tribal Council of Arizona, Inc., About Inter Tribal Council of Arizona, Inc.,
http://www.itcaonline.com/about.html.
217
ACIA, Arizona Indian Town Hall Process, http://www.indianaffairs.state.az.us/townhall/process.html.
218
ACIA, 2002-2003 Annual Report, p. 9.

land lease agreements, and eviction through tribal courts. Half of Arizona’s 22 tribes
are currently active in the program, 219 and HUD lists 10 participating lenders in
Arizona as of October 2004. As of December 2004, Arizona had the third-largest
number of Section 184 loans in the nation, 363, with a total dollar value of over $30
million. 220
8.

Passage of Proposition 202

Proposition 202 was passed by Arizona voters in 2002, codifying tribal gaming
compacts in the state. It requires that tribes contribute a portion of their revenues to the
state, and also solidifies gaming as a source of revenue for the Native American
community that provides money for a variety of programs, including education, hospital
emergency services, tourism, and local community economic development. The
proposition was sponsored by 17 of Arizona’s 22 tribes.
9.

Native American Connections

Native American Connections was founded in 1972 by Indian elders to provide a drugfree safe haven with support services. The organization serves the urban Indian
population and tribal communities throughout the Southwest, providing comprehensive
behavioral health services and transitional and permanent affordable housing to lowincome individuals and families. Native American Connections’ facilities are located in
the Phoenix metropolitan area. 221
10.

Phoenix Indian Center

The Phoenix Indian Center was established in 1947 to serve the needs of the American
Indians who came to downtown Phoenix to sell their arts and crafts or shop for their
families. Until 1954, the Center relied on volunteers to maintain its downtown location
on Wall Street. In 1954, the Center received funding and incorporated with the State of
Arizona as a private non-profit "501(c)(3)" status. Today, the Center is the primary
resource of social, economic, educational, leadership, employment, and training for urban
American Indians of Maricopa County. 222
11.

Native Americans for Community Action

Native Americans for Community Action (NACA) was founded in 1971 to address the
growing need for alcohol abuse prevention services among urban Native Americans.
NACA now provides a wide array of services including: adult basic education; career
counseling/job training (WIA); diabetes education and case-management; economic
development; emergency needs and supportive services; mental health counseling;
219

Michael Vaughn, Arizona Department of Housing, information provide via email, December 2004.
HUD Office of Native American Programs, Section 184 Loans Across the Nation,
http://www.codetalk.fed.us/OLG_184_stats.htm.
221
Native American Connections, About Us, http://www.nativeconnections.org/about.html.
222
Phoenix Indian Center, Inc., About Us, http://www.phxindcenter.org/index2.htm.
220

primary health care; substance abuse education and prevention for youth (Pathways);
substance abuse intervention/treatment for adults; tobacco education/cessation; and, a
vendor project that assists Native American artisans in economic development ventures.
Most of the programs are either free-of-charge or are offered at a low cost to clients.
Thousands of individuals and their families receive services from NACA each year. 223
C.

IMMIGRANT NEEDS

Immigrant Totals

According to Census 2000 data, 12.8% of Arizona’s population is foreign born, which
translates into 656,183 foreign-born residents. Arizona ranks eighth nationally in the
number of foreign-born residents and ninth nationally in the proportion of foreignborn residents in its population. Forty-eight percent of these residents entered the U.S.
between 1990 and 2000. Just fewer than 30% of Arizona’s immigrants are naturalized
citizens, a percentage substantially lower than the U.S. average of 40.3%. 224
INS also estimates that Arizona had 283,000 illegal immigrants within state borders
as of 2000, more than three times the number it estimated were in the state in
1990. 225 Arizona has also had sizable numbers of refugees during its recent history,
although the number of refugees arriving in the state has declined dramatically since
September 11, 2001. 226 In FY 2002, there were 1,119 new refugee arrivals in Arizona. 227
2.

Origin of Immigrants

The bulk of Arizona’s foreign-born residents (71.5%) were born in Latin America,
with the next largest groups coming from Asia (11.8%) and Europe (10.9%). 228 By
country, 66% of foreign born were born in Mexico, with the next largest group born in
Canada (4%).
Arizona’s foreign born reported their race on the 2000 Census as follows: 49.9% white,
1.3% Black/African American, 0.6% American Indian/Alaska Native, 9.5% Asian, 0.2%
Native Hawaiian/Other Pacific Islander, 34.3% some other race, and 4.2% two or more
races. Hispanic or Latino origin was reported by 70.5% of Arizona’s foreign born,
compared to 45.5% of foreign-born residents nationally reporting Hispanic/Latino origin.

223

Native Americans for Community Action, Inc., NACA History,
http://www.nacainc.org/NACA_History.htm.
224
U.S. Census Bureau, Census 2000 Data.
225
U.S. Immigration and Naturalization Service, Office of Policy Planning, Estimates of the Unauthorized
Immigrant Population Residing in the United States: 1990-2000, January 2003,
http://uscis.gov/graphics/shared/aboutus/statistics/Ill_Report_1211.pdf.
226
DES, Rapid Refugee Services Assessment, April 2003,
http://www.de.state.az.us/csa/pdf/BARA%20Final%20Report.pdf.
227
DES, Mission of the Arizona Refugee Resettlement Program (RRP),
http://www.de.state.az.us/csa/programs/refugee/default.asp.
228
U.S. Census Bureau, Census 2000 Data.

Eighty-five percent of Arizona’s foreign-born residents report speaking a language
other than English at home and of this 85%, 42.5% report speaking English “not well”
or “not at all.”
3.

Poverty Levels Among Immigrants

According to Census 2000 figures, 25% of Arizona’s foreign-born population has
incomes that put them below poverty level, above the national average for
immigrants. Among non-citizens, this figure rises to 29.9% (compared to only 13.5% of
foreign-born citizens in Arizona). 229 While specific data on housing affordability for
immigrants in Arizona is not available, the state notes in its 2004 Annual Action Plan that
minorities in the state, a group which includes large numbers of the foreign-born
population, are disproportionately likely to be living in crowded or substandard
conditions or to be spending more than 30% of their incomes on housing. 230
4.

Proposition 200

In the November 2004 election, Arizona residents passed Proposition 200, known as the
“Arizona Tax Payer and Citizen Protection Act,” which changed state law to require:
•

proof of U.S. citizenship of every person who registers to vote;

•

every voter to show identification at the polling place prior to voting;

•

state and local governments to verify the identity and immigration status of all
applicants for certain public benefits; and

•

government employees to report United States immigration law violations by
applicants for public benefits. 231

Supporters of the proposition argued that it would reduce the economic hardship to the
state that illegal immigration causes by requiring the applicants for benefits to prove their
legal status and eliminate fraudulent voting by non-citizens. Opponents of the
proposition argued that the proposition solved non-existent problems, and was on the
ballot only to feed anti-immigrant sentiment within the state. 232
D.

IMMIGRANT RESOURCES

Arizona Refugee Resettlement Program

The Arizona Refugee Resettlement Program (RRP)’s goal is to enable refugees to
achieve social and economic self-sufficiency after arriving in Arizona. The program
assists refugees in the state by providing direct services and helping them to receive
229

Ibid.
ADOH and DES, FY 2004 State of Arizona Annual Action Plan, p. 2.
231
Arizona League of Women Voters, Voter’s Guide, http://www.azvoterservice.org/guide.htm.
232
Ibid.
230

assistance through social services formula and discretionary, targeted assistance, and cash
and medical assistance grants. 233
2.

Arizona Hispanic Chamber of Commerce

The Arizona Hispanic Chamber of Commerce was founded in 1948 with a goal of
keeping Hispanic-owned businesses strong and progressive. In order to achieve its goal,
it provides a variety of services to the state’s Hispanic entrepreneurs, including seminars,
marketing consultations, leadership development, and networking opportunities. It also
has programs to support statewide economic and business development efforts. 234
3.

Community Housing Resources of Arizona

Community Housing Resources of Arizona (CHRA) is a nonprofit, HUD-approved
housing counseling agency establish in 1987 specifically to promote fair housing and
equal housing opportunities for residents of Phoenix. CHRA provides services that are of
particular help to immigrants looking to purchase a home, including bilingual, one-onone pre-purchase counseling, educational workshops and seminars, and direct-to-client
downpayment and closing cost subsidies. 235
4.

Corazon de Oro Community Services

Corazón de Oro is a nonprofit community development and health care organization that
ensures proper medical care and injury/disease prevention by educating the most
vulnerable communities in the region. The mission of the organization is to provide
linguistically and culturally competent health services and access to health care to the
diverse communities of Maricopa County. The organization also provides services in
housing development, ensuring that fair housing practices are followed as described by
the U.S. Department of Housing and Urban Development. 236
5.

Comite de Bienestar, Inc.

Comite de Bienestar serves recent immigrants to Yuma County, a county with a high
volume of immigrants arriving from Mexico. The organization’s goal is to empower
Mexican American citizens and immigrants to overcome the barriers that they face to
achieving success in the United States. The organization develops affordable housing,

233

DES, Mission of the Arizona Refugee Resettlement Program (RRP).
Arizona Hispanic Chamber of Commerce, About the AZHCC, http://www.azhcc.com/business/main.asp.
235
Community Housing Resources of Arizona, What is CHRA?,
http://www.communityhousingresources.org/.
236
National Council of La Raza, Corazon de Oro Community Services,
http://www.nclr.org/content/affiliates/detail/1032/.
234

and also provides counseling and financing for homebuyers and technical assistance for
homebuilders. 237
6.

Chicanos Por La Causa

Chicanos Por La Causa, Inc. (CPLC) is a statewide community development corporation
committed to building stronger, healthier communities as a lead advocate, coalition
builder, and direct service provider. CPLC promotes positive change and self-sufficiency
to enhance the quality of life for the benefit of those it serves. From the Nogales office,
certified staff assists families in securing citizenship and legal residence in the United
States. Clients are represented in immigration courts and all required immigration forms
are completed for both adults and children. In addition, there is a Notary Public on site to
notarize and translate for clients. As part of the South Yuma County Consortium, CPLC
is involved with offering citizenship classes, GED, ESL, and basic adult education
classes. 238

237

Rural Local Initiatives Support Corporation, Comite de Bienstar, Inc.,
http://www.ruralisc.org/pdf/comite_pdf.pdf.
238
Chicanos Por La Causa, Inc., http://www.cplc.org/.