The Senate passed a measure intended to bring down housing prices on Wednesday, March 6, but Gov. Katie Hobbs has not yet signaled her approval of the bill after vetoing a similar proposal last year.

“We want a bill that is negotiated, and as far as I know, everyone is still at the table and willing to stay at the table to get something that works to make more affordable housing for Arizonans,” Hobbs said Thursday.

SB1229, titled the “Arizona Starter Homes Act,” passed 16-13 with bipartisan support, although several senators said they hoped to see further changes to the bill before the House votes on it.

The measure would prohibit cities with a population of more than 70,000 from enacting certain restrictions and regulations related to new home construction and development standards.

Those regulations include mandatory minimum lot sizes for homes greater than 3,000 square feet for single-family developments that are five or more acres in size.

Design features like requiring the inclusion of a garage or requiring specific architectural or aesthetic features would also be prohibited. The bill’s intention is to allow people to build smaller homes with design elements they can afford.

Supporters of the bill say working class Arizonans are being driven out of the housing market by these city regulations which prohibit the construction of less expensive starter homes.

“I stand on the side to legalize starter homes. We are facing a crisis in housing affordability,” said the sponsor of SB1229, Sen. Shawnna Bolick, R-Phoenix.

Hobbs vetoed a similar proposal last year and called it “unprecedented” legislation that would lead to unclear outcomes for Arizonans after an outcry of opposition from municipal leaders who expressed concerns over safety and the ability for city officials to plan housing developments.

Despite the veto from last year, more than half of Democrats who voted on March 6 were in favor of the bill.

The League of Arizona Cities and Towns is opposing the Starter Homes Act and municipal leaders have expressed concern that nothing in the bill guarantees affordable homes will be built.

Nick Ponder, the senior vice president for governmental affairs at HighGround Public Affairs Consultants and a lobbyist for the League, said League officials are disappointed the legislature moved SB1229 without further amendments offered by their organization.

“That’s unfortunate because we think it’s essential for cities to be able to plan for growth; plan for the number of police precincts and fire houses; how wide the roads and water pipes need to be; where parks and libraries will go. And we support the idea of the public participating in that process,” Ponder said. “They don’t want any of that and [SB1229] makes that clear. Their bill doesn’t ensure the homes are affordable or that they aren’t all bought by corporations.

The League has pitched its own version of the Starter Homes Act with SB1698, sponsored by Sen. Vince Leach, R-Tucson. That bill was not assigned to a committee as lawmakers have preferred to proceed with SB1229.

The League’s bill defines a starter home as any home that can be sold to an individual or family whose income does not exceed 120% of the area median income. It would also limit occupancy in a starter home for up to 15 years to people who meet the income requirements and allow some regulations on where and how many starter homes could be built.

“We wrote our bill based on the governor’s veto letter from last year. We take the issue of affordable housing very seriously,” Ponder said. “We would encourage the Legislature to pursue our bill instead of one that doesn’t allow for responsible planning, affordability or corporate protections.

Hobbs said her upcoming decision on the Starter Homes Act this year won’t be contingent on the League’s stance of the bill. She acknowledged SB1229 doesn’t guarantee affordability and said she’s looking to cut regulations that would lead to making housing more attainable for Arizona residents.

“They are one stakeholder at the table,” Hobbs said. “There’s a lot of stakeholders at the table.”

The issue of affordable housing has spiked among voter concerns in Arizona and across the country, according to a recent poll from Noble Predictive Insights. Four in 10 respondents said housing affordability was one of their top three concerns and nearly 30% of respondents said housing is so expensive that they’ve considered moving out of the state.

“When people talk about inflation or a cost-of-living crisis, they’re talking about housing,” said David Byler, chief of research at Noble. “This issue just recently burst onto the political scene – and the party that solves this issue could earn massive goodwill with the public.”

The median Arizona home sale price in January was $453,000, according to the real estate brokerage Redfin. Five years ago, the median sale price for Arizona homes was just under $285,000.

“The average first-time homebuyer is now 38 years old. It’s encouraging to see the broad recognition of the state’s housing crisis, and the attention that is being given to an entire generation of Arizonans who are being denied access to homeownership and the American Dream,” said Jake Hinman, a lobbyist who is supporting the bill on behalf of the Arizona Neighborhood Project.

Leach said he was concerned the bill isn’t different enough from the measure Hobbs vetoed last year. Bolick and Rep. Leo Biasicucci, R-Lake Havasu City, originally proposed near-identical bills in the House and Senate to last year’s measure, but the Senate did amend SB1229 on March 6 after several stakeholder meetings for the bill.

The amendment would allow cities to require private streets or roads attached to home lots and a 3,000 square-foot-minimum instead of the original bill’s 1,500 square-foot-minimum.

Cities could also require development fees as a condition for construction of starter homes that would cover the public services needed to support the new residences.

“I’m encouraging the community on the side of [SB]1229 to make sure that we have something as clear as we can be with the Ninth Floor to make sure every one of us on this floor aren’t doing an exercise of futility,” Leach said.