Arizona’s Public Finance Moment: The Institutions We Build Before the Boom

At the Southern Arizona Development Finance Summit, we spent two days talking about what it takes to move a good idea from concept to construction. Sometimes that work looks like a bridge to a firehouse, water infrastructure for a small community, or the early design work that lets a nonprofit turn a vacant lot into homes. These projects rarely make national headlines. Together, they reveal whether a place has the capacity to act on its ambitions.

I recently read New Localism’s interview of Bruce Katz and Michael Saadine’s conversation with Mark Kvamme and Ray Leach of the O.H.I.O. Fund. Their private fund has attracted more than $693 million in committed capital and invested $315 million across companies, real estate, infrastructure, and other funds, according to the article. The O.H.I.O. Fund represents a goal many states share: local investors putting substantial private capital to work in the places they know best. Certainly at the Summit, capital -- and the lack of it -- was central to the discussion. But the O.H.I.O. Fund capital did not arrive in a vacuum. Ohio spent years building institutions, relationships, and projects ready for investment. Private capital can fuel growth at scale; public institutions and their partners help create the conditions that make that investment possible.  

When seeing this startling success we should ask ourselves a useful question: Are we building the financial infrastructure and public sector bedrock that will let Arizona turn good ideas into durable, broadly shared prosperity?

What public finance actually does

Most of us encounter public finance only when we hear the word bond (and maybe even not then!) Here is the plain-English version: a public or public-purpose institution helps assemble money for a project that serves an eligible public goal. Investors or lenders provide capital today; the project repays it over time from a defined source, such as project revenues, taxes, or other pledged funds. Depending on the program and the project, the tools may also include loans, guarantees, revolving funds, grants, or carefully targeted subsidies.

Think about a housing development that could pencil out once built, but needs a water line before construction can begin. The question is not simply whether there is money somewhere in the economy. It is whether that money can reach the project at the right stage, at a cost it can bear, with a clear and responsible plan for repayment. Public finance helps connect those pieces. It can make a viable project possible or bring it forward sooner. It cannot make an unviable project sound by giving it a clever financing structure.

This matters well beyond individual transactions. A manufacturer needs utilities and workers who can afford to live nearby. A family needs a home, a functioning neighborhood, and a path to build wealth. A small business needs space, customers, and access to capital. Economic development succeeds when these investments reinforce one another.

I recently presented to the Emerging Leaders 2026 Cohort with the Chamber of Southern Arizona on the topic of entrepreneurship and innovative ecosystem.  While it might have seen odd at first to talk about affordable housing in the context of startup technology,  public infrastructure is critical for innovation.  Entrepreneurs cannot dream the audacious dreams or leap into unknown risks when they are unable to reasonably cover the basics for living or find a workforce or rent their first manufacturing facility or access transportation for parts and shipping.  Affordable housing, reliable transportation, strong real estate readiness, and clear pathways for building business foundations are essential before Angel Investors and Private Equity Funds. 

Arizona’s tools are beginning to wake up

For years Arizona’s public finance landscape was pretty quiet.  Major public finance infrastructure was dormant or inconsistent.  For example the State’s bond bank was inactive, the Arizona Finance Authority was unstaffed. In Southern Arizona neither the Pima IDA nor the Tucson IDA had any staff to guide local public finance efforts. That is starting to change.

The Greater Arizona Development Authority, or GADA, was reactivated in 2024 after a decade of inactivity. In 2025, it announced its first rural infrastructure investments in more than ten years: support for a bridge in Superior, water-system design in Apache County, and industrial land development in Winslow. Its return is a reminder that an institution can be a durable asset even when it has been underused.

The Arizona Finance Authority is also putting more of its tools to work. In August it launched a $1 million revolving loan fund for cleaning up contaminated sites so they can be put back to use. Arizona’s new State Affordability Infrastructure Districts framework creates another route to finance eligible roads, water, and sewer infrastructure over time. They also administer revolving loan funds for microbusinesses and energy efficiency upgrades for small businesses.  Perhaps their most ambitious project is raising a $50M public and private fund, called the Affordable Housing Accelerator Fund.  Each tool addresses a different bottleneck and demonstrates Arizona public finance is back in the game. 

At the local level, industrial development authorities can connect developers and nonprofits to bond markets and other forms of capital. At the Tucson IDA, we have seen what that can mean in concrete terms: our recent bond activity has helped advance more than 500 multifamily homes in the last year. We helped over 10,000 families access homeownership with our down payment assistance programs. We are also testing predevelopment financing through our Neighborhood Catalyst Fund because a promising project can fail long before it reaches the bond market if nobody can pay for site control, plans, or feasibility work. Through DistrictWorks Arizona, we are helping project sponsors assess whether the new infrastructure district tool fits their plans and, if it does, assemble the team to form, finance, and administer it. Through PermitReady Tucson, developed with the City, we are introducing a pre-submission review intended to help applicants catch missing or inconsistent materials before their formal commercial permit review. These efforts are still young. Their shared purpose is simple: make it easier for a sound project to become ready for investment.

The connections are beginning to matter as much as the programs. The Southern Arizona Development Finance Summit brought developers, lenders, public agencies, nonprofits, and investors into the same conversation about how projects actually get financed. These are early signs, not proof that Arizona has a coordinated system. But early signs are how systems begin.

How we could get this wrong

First, we could confuse announcing a new fund with creating a pipeline. Capital cannot finance projects that have no site control, reliable cost estimates, permits, capable sponsor, or credible repayment plan. Project preparation is economic infrastructure, too. Pipelines are built through painstaking diligence, relationships and market trust. A recent delegation of 40 regional leaders meeting in New York with 16 site selectors is a great start, as are major international delegations to Taiwan with our municipal leaders. Showing up and telling a compelling, unified story is half the battle.

Second, we could allow urgency to outrun safeguards. Public tools should bring more projects across the finish line, but financing decisions still require independent underwriting, transparent terms, realistic water and infrastructure assumptions, and a clear account of who carries the risk. Tax-exempt financing is a tool, not a public endorsement of every feature of a project. Having strong but transparent and fair guardrails is critical. 

Finally, we could build an impressive system that serves only the projects already closest to capital. Smaller cities, Tribal communities, locally rooted developers, and emerging businesses often need more help preparing a financeable project. If we measure success only by transaction size and speed, we will miss the places where a modest intervention has the greatest effect.

What comes next

None of this requires one institution to own Arizona’s future. It works when institutions have clear roles and trust one another enough to collaborate.

At the Southern Arizona Development Finance Summit, I saw that collaboration taking shape. Developers, lenders, public agencies, nonprofits, and community leaders came ready to share ideas, ask hard questions, and find ways to move projects forward together. We are at the beginning of this work, and that gives me hope. The conversations we started at the Summit can become the relationships and financial capacity that help Arizona act on its ambitions.