As the Program Manager of the Arizona Industrial Development Authority (AZIDA), I feel compelled to respond and correct the record in the wake of the Arizona Republic‘s astonishingly false and misleading articles about the organization I serve.
We were stunned by the Republic’s contrived assertions that somehow our work puts Arizona taxpayer dollars or our state’s reputation at risk. None of that is true, leading me to question, what was the paper’s real motivation behind this story?
By way of background, AZIDA was established in 2016 with a three-fold mission: to make home ownership more affordable for low and moderate-income families; to issue conduit revenue bonds to lower financing costs and promote development; and to further economic development within the state.
Our all-volunteer board serves without compensation, and all meetings of the board are held in an open, public forum. In addition, one hundred percent of our funding comes from voluntary private sector fees. We receive no taxpayer dollars, but we do contribute dollars to Arizona in the tens of millions.
Since the creation of our organization less than six years ago, AZIDA has delivered over $60 million in funds supporting affordable housing and economic development — all without costing taxpayers a dime. In addition, AZIDA has originated nearly $9 billion in affordable home loans in Arizona, provided over $250 million in down payment assistance, and established a Special Grant Program that assists qualified veterans in purchasing homes located in rural counties.
As required by law, excess revenues derived from these programs are transferred to the state’s Housing Trust Fund, where they are used for affordable housing development and programs for services like homeless shelters. Since Fiscal Year 2017, AZIDA has transferred nearly $40 million to the state’s Housing Trust Fund at a time when affordable housing is in high demand.
As mentioned, AZIDA also issues revenue bonds, serving as a conduit between development sponsors and lenders, which usually means banks, insurance companies or other financial institutions. By acting as a conduit — a broker, essentially — to a loan between two separate private parties, AZIDA helps development projects advance at a lower cost than typically would have occurred, while generating revenue for the state through fees paid by the parties.
To date, we have closed a total of 110 conduit revenue financings, the vast majority of which went to support the construction of public charter schools, affordable multifamily housing projects, and health care facilities in the state.
With just one of those projects currently in default (not two, as the articles inaccurately report), our bond default rate is just 0.9%, the envy of the public finance industry.
It’s critical to point out that our bonds are not supported or backed by taxpayer dollars or Arizona’s credit or reputation. In the extremely rare occurrence that a developer defaults on an AZIDA bond, there is no liability to the state, as is widely known within the industry and clear in all our documentation.
Among the Republic’s many misleading assertions is that AZIDA’s board adopted a policy to engage in risky Recession-era swap speculation. That’s absolutely false. AZIDA has gone to great lengths, even engaging an independent registered financial advisor, to put in place policies that guarantee no exposure to any swap in any way.
The articles also falsely and inexplicably try to frame Governor Ducey as AZIDA’s “overseer” and someone who personally signs off on our bonds. Again, both statements are false. AZIDA is a non-profit corporation, not part of state government, nor are we “part of the Arizona Commerce Authority,” as the article falsely states at various times.
Other than appointing board members, the governor’s sole role, by statute, is to confirm that a public hearing has taken place for the limited number of our bond issues for which such a hearing is required under federal tax law. He is not involved in any way in the review or approval of any project or bond issue.
All this begs the question, why would these reporters go to such efforts, composing a lengthy 4-part series rife with false statements and inaccuracies, to smear our organization? Well, I think it’s worth considering the reporters’ ultimate intentions.
Starting in February 2021, I worked for nine months in good faith to provide all documentation requested and answer all questions posed by the reporters. At the beginning, it was clear their goal was to tie Governor Ducey to a project in which the board was involved, likely hoping to find a conflict of interest. As mentioned, the governor has no involvement in our board’s decision-making, so when this angle didn’t pan out, the reporters pivoted and began asking about any undue influence from the governor.
Again, there are no facts to support this pre-conceived narrative and never have been, so when this alternative pursuit also proved fruitless, the authors pivoted once again, moving away from their preferred “corruption” conclusion to a new one about “risky” investments, a conclusion not based on any evidence, but simply the reporters’ fanciful and uneducated opinions.
At AZIDA, we are proud of the work we’ve done to generate revenue for the state and support worthy endeavors like affordable housing and economic development. We will continue to operate with the utmost integrity and transparency, our motivation being to continue serving Arizonans as we’ve been charged to do.
After reading these reporters’ baseless assertions and observing their deeply suspect behavior, I can’t help but wonder, what are their motivations?
Patrick Ray is the Program Manager of the Arizona Industrial Development Authority and can be reached at [email protected].