Some opponents say the issue should be left to the cities to decide
Homebuilders are among key opponents
An attempt to enact legislation to protect historic neighborhoods failed in the House this week, but bill supporters are working to quickly bring it back before the legislative session ends.
There were multiple bills introduced this session to enact legislation to protect historic homes. Rep. Matt Gress, R-Phoneix, introduced a bill earlier this session that passed the House but didn’t get a Senate hearing. With no Senate movement on his measure, he kept the idea alive with a striker amendment on Senate Bill 1118 that rewrote the bill to be similar to his House legislation.
But the House on June 1 voted 25-30 against SB 1118. Now, Gress is motioning for the bill to be introduced later for reconsideration, but time is running out this session as budget talks are close to finalizing.
The House version of the bill originally called for an exemption for historic neighborhoods to the state’s middle housing law that went into effect at the beginning 2026. The law requires cities of a population of 75,000 or more to allow the development of middle housing options like duplexes, triplexes, fourplexes and townhomes, within a mile of a city’s central business district.
The proposal has since been amended with SB 1118, which now clarifies middle housing may be developed in historic areas if the new construction is designed to be compatible with the historical character of a neighborhood.
Save Historic AZ, a group of historic neighborhood associations that have supported Gress’ bill this session, said in a June 2 news release that the bill would return next week to the House floor for another vote since some key supporters were absent and some House members who originally voted yes on the House bill flipped their votes on the Senate version.
“The opposition, sensing defeat, pulled out all stops to stall 1118 until next week,” Save Historic AZ said in its news release.
Gress also sarcastically congratulated the lobbying efforts of the Arizona Housing Coalition and the Home Builders Association of Central Arizona on the House floor when it was clear he didn’t have the votes to pass the bill. He specifically called out former Republican state Sen. Steve Kaiser, who is now a lobbyist on behalf of the housing coalition, and the homebuilders’ Vice President of Legislative Affairs Spencer Kamps, who both were sitting in the gallery to observe the House vote on the bill.
“This issue is not over,” Gress said. “We will continue to advocate for communities and neighbors and historic preservation.”
Kaiser declined to comment on Gress’ words on the floor and Kamps did not respond to a request for comment from the Arizona Capitol Times. Both their organizations have supported the state’s middle housing law and have called Gress’ bill an attempt to undermine the law.
It was a bipartisan group of lawmakers who voted against the bill, with more than half of House Republicans and 10 Democrats opposed to the measure.
Rep. Sarah Liguori, D-Phoenix, has faced some controversy from constituents in her central Phoenix district over her opposition to the idea. She was one of the 10 Democrats who voted against it.
She called for cities to enact their own local policy to apply the state’s middle housing law to extend further than just a central business district so more neighborhoods could see middle housing options.
“Historic neighborhoods were built on middle housing principles, and I think that more neighborhoods and more accessibility with housing types is what we as a body should be doing for Arizonans — not retracting backwards on it,” Liguori said.
Rep. Kevin Volk, D-Tucson, said he saw Gress’ bill as an attempt to protect Phoenix historic neighborhoods since there are several within the city’s central business district. He also said expanding the middle housing law to cover the entire city would drastically increase the number of properties eligible for middle housing, although he said he was interested in a bill that more broadly protects historic buildings.
Rep. Teresa Martinez, R-Casa Grande, also voted against the bill and said she was bothered that it could give residents of historic homes different rights than non historic neighborhood residents, although she said she was open to working on the bill in the future.
“The rule for thee is not the rule for me and I hate that kind of attitude,” Martinez said.
Gov. Katie Hobbs favors Land Department map designating areas for solar projects
GOP bill blocks state agency from creating solar-only areas
Both side differ over best use for state land
The Hobbs administration has unjustly prioritized renewable energy projects over new housing projects, legislative Republicans contend.
Led by Rep. Ralph Heap, R-Mesa, lawmakers are one step away from approving legislation that would override a practice by the Arizona Land Department to study and make available a map where the agency believes its extensive holdings make the most sense for large-scale solar projects.
The caveat, said the Mesa Republican, is that the agency is not preparing similar maps for others who might want to buy or lease state lands. And that, he told Capitol Media Services, amounts to the agency “putting its thumb” on the scale in a way that gives solar projects more priority than housing.
“By designating a map for solar, but not for other industries, the Hobbs administration is effectively declaring solar the preferred use of the land,” he said in a separate statement in support of his legislation.
“For many residents, these parcels are among the worst possible locations for utility-scale solar: near established residential neighborhoods, directly in the path of growth, and on land that could otherwise support new housing,” Heap said. “At a time when housing affordability is a top concern for Arizonans – and when communities are increasingly frustrated with large wind and solar projects being placed in their backyards – Hobbs placing new renewable energy development in the heart of urban and suburban cores makes zero sense.”
The governor says she remains convinced that Arizona needs an “all of the above” approach for energy. And she said all she’s looking for is balance.
“I think that it is essential that we’re not picking winners and losers in the energy equation,” Hobbs said in response to questions by Capitol Media Services.
Hobbs says that the agency’s policies have only one guiding star: What raises the most money for the state. But that raises the question of whether the department could be skewing that evaluation.
For Heap, Exhibit No. 1 is that solar map.
But there is other evidence that there are decisions being made which are designed to encourage renewable energy projects on state lands.
“When the federal government acted to limit what they were going to approve on federal lands, we took the opposite action and said we’re going to expedite approvals on state land,” she said.
“And we’re doing that,” Hobbs said. “We have to ensure that we’re not limiting what we can use to power Arizona.”
The governor has said, however, that none of that puts the Land Department out of compliance with state requirements and guidelines for how to lease and sell state land.
“The number one responsibility of State Land, and the constitutional obligation, is to get the highest value of land for the trust,” Hobbs said.
When Arizona became a state in 1912 it was given about 10 million acres of land by the federal government to be held in trust.
Some of it has been sold off for development, leaving about 9.2 million acres, with about 8 million acres remaining for K-12 education. While there are outright sales, something pretty much required for new residential developments, the trust also can make money by leasing that property, including for grazing, some long-term commercial development as well as for mining.
It can also develop solar and wind energy.
All that gets figured into that constitutional requirement that state lands must be managed for its “highest and best use” and to maximize financial returns.
But Heap told colleagues during legislative hearings that the action of the Land Department, under Hobbs, to create the “solar scores map” skews all that.
“This map singles out solar development, often near growing communities in places like the greater Phoenix area while offering no comparable scoring and mapping for other critical uses like home building or mining,” he said. “This tilts the playing field towards one industry, risks lower value uses, and short-changes the funding our schools need.”
That’s where Heap’s HB 2975 comes in. It has a two-step approach: kill the ability of the Land Department to have a solar map and instead direct the agency to prepare similar maps, this time for residential and mining.
“This ensures neutral, data-driven decisions that prioritize the highest return for Arizona,” he said.
Hobbs, for her part, insists that’s what’s already happening with the actions of the Land Department when it decides who gets to lease or buy state lands.
“If the highest and best value of the land is renewable energy, that will be the case,” she said.
“If the highest and best use is housing, that will be the case,” the governor continued. “We’re not sacrificing one for the other.”
But Spencer Kamps, vice president of the Home Builders Association of Central Arizona, said it’s not that simple. He said that the decision of the Land Department to create a map for best places for solar – and only for solar – can affect who gets access to state land.
Kamps pointed to large areas on the map of available state lands which are color-coded as being the most suitable for solar. Many of these parcels are in lands on the edge of existing urban development, not just around the Phoenix area but also in Pinal County and both northwest and southeast of Tucson.
“In the absence of a similar map for other industries, some might say the solar map is serving functionally as a ‘presumptive highest and best use map,’ which gives solar a ‘rebuttable presumption’ of highest and best used in each part indicated in green,” he said in prepared comments.
HB 2975, which has been approved on a party-line vote by the Republican-controlled House and now awaits a Senate vote, has its detractors.
“It does single out solar in a punitive way,” said Sandy Bahr, director of the Grand Canyon Chapter of the Sierra Club, of the proposal to eliminate the solar map.
“It does not negate that very high responsibility of the state Land Department to determine what is the highest and best use and to maximize dollars for the trust,” Bahr said. “So I don’t know why you would want to get rid of that.”
Rep. Chris Lopez, R-Casa Grande, wanted to know whether it was appropriate to have things like large solar farms near residential development.
Bahr responded that there are multiple factors that go into such placement. But she said that proximity is not necessarily a bad thing.
“Generally, having that solar generation closer to where that electricity is being used is good,” Bahr said.
The measure also drew opposition from Chispa Arizona, a program of the League of Conservation Voters.
“We feel HB 2975 moves Arizona in the wrong direction and removes a useful planning tool,” said lobbyist Jodi Liggett.
Heap, a Republican candidate for the Arizona Corporation Commission, which regulates utilities, said his legislation he’s not trying to kill utility-scale solar.
“In fact, I don’t mind some solar,” he said. “You want some solar fields? I don’t have a problem with that.” But Heap said he wants to ensure that other uses, including residential and mining, also get a fair chance to buy or lease state lands.
There’s also the question of whether solar leases can impair residential development.
“They want to put all these solar fields out in Pinal County,” Heap said, referencing a plan to put in an 8,100-acre project on state land near Florence Junction.
“That’s definitely in the line of housing development,” he said.
“We say we want more housing,” Heap said. “But definitely the solar would negatively impact a lot of growth in that area.”
Heap was not alone in his concern about the project. It was unanimously rejected by the Pinal County Board of Supervisors.
The fight over the solar map at the Capitol doesn’t address parallel findings raised in a report last year by the Auditor General’s Office which said the agency has failed to properly plan for its land sales, including for residential development.
“For years, the department has failed to keep land and housing development moving with consistent long-term disposition planning and predictable decisions,” said Rep. Gail Griffin. The Hereford Republican chairs the House Committee on Natural Resources, Energy and Water.
“That means less trust revenue for classrooms and fewer lots available for homes,” she said. “The department can improve housing supply and education funding today by selling more land and ending the internal practices that keep projects stalled.”
In the spirit of building consensus, as my mother always taught me, it’s essential to approach discussions with an assumption of good intentions. Unfortunately, some have resorted to characterizing our efforts as classist and racist, which is hurtful and is simply unfounded. I would warmly invite legislators and skeptics to visit our communities. They’ll discover a racially and economically diverse group of residents, including dedicated teachers, young families just starting out, first responders, and seniors living on fixed incomes. In fact, we are seeing the rise of million-dollar units that risk displacing long-time residents. I encourage everyone to take the time to get to know us. I assure you that our districts are welcoming and inclusive.
Recently, Phoenix City Councilwoman Anna Hernandez shared an opinion piece that misrepresents the bipartisan HB 2375, suggesting it jeopardizes affordable housing. She invoked redlining and discrimination. While I respect her passion, I find these claims troubling. As a proud Latino, I am concerned when accusations arise about racism related to HB2375, as it is actually designed as a common-sense solution that supports both historic neighborhoods and new housing opportunities.
I wonder if Councilwoman Hernandez truly believes that placing a million-dollar condo in a historic district constitutes affordable housing. Her comments regarding redlining and exclusion do a disservice to those who fought against real instances of such injustices. It’s important to recognize that Latinos and lower-income families do indeed reside in historic neighborhoods.
All HB2375 seeks to do is ensure that historic homes are preserved, preventing them from being torn down for middle-housing developments, while still allowing for thoughtful housing solutions that include everyone in our neighborhood.
It’s worth noting that Hernandez played a significant role in shaping the previous bill, HB2721, when she was a state representative. The measure contributed significantly to our current challenges. There seems to be a disconnect, as many in the community feel unheard. It’s been clear that HB 2721 requires revisions, a point acknowledged by both Democrats and Republicans alike.
Hernandez has admonished neighborhoods for seeking support from government relations professionals; ironically, I believe that approach would not have been necessary had there been more willingness from lawmakers in previous sessions to engage directly with all stakeholders instead of ignoring them. Regardless, we welcome the chance to be part of the housing solution, but in a thoughtful manner.
I believe the latest opposition to HB2375 stems from opponents’ growing frustration that their numerous attempts to derail this bipartisan initiative have not succeeded. Despite the efforts of individuals who solely push national middle housing policy to halt progress, the bill continues to move forward because many recognize the need for practical, sensible solutions that benefit our communities.
It is easy to kill a bill, to stop something from happening, and to complain. It is much harder to build consensus, look for solutions that benefit everyone, and work in a bipartisan way for a better future for all. We in historic communities are up to the challenge and hope others will join us.
W. Aaron Montaño Searles is President of LMC Enterprises Consulting and a native Arizonan committed to community advocacy, serving as the President of the Willo Historic Neighborhood Association board, Save Historic Arizona Co-Chair, and Chair of Encanto Village Planning Committee.
Arizona’s affordable housing program may sunset in 2025
Legislative Republicans request audit to assess program’s worth
The state’s housing department expects 1,600 more units to be built
A state program intended to incentivize the development of affordable housing is scheduled to sunset at the end of 2025, and legislative Republicans are awaiting an audit to determine if it’s worth continuing in the future.
Members of the Joint Legislative Audit Committee voted unanimously to approve a special audit from the Auditor General’s Office that will examine the Department of Housing’s Low Income Housing Tax Credit program, which will be included in the department’s regular sunset review.
The state program, modeled after the federal program that began in former President Ronald Reagan’s administration, was launched in 2022 to promote the development of affordable rental housing for low-income individuals and families by creating tax credits to incentivize housing developers to build affordable housing units.
The audit committee’s chairman Rep. Matt Gress, R-Phoenix, said he’s not sure if the state program is worth continuing because it only accounts for 2.5% of total low-income housing tax credits in Arizona and hasn’t led to the creation of many units in the state.
The program was authorized in 2022, but the first housing units funded by tax credits opened in the state in 2024 due to the state’s three-year rolling budget. With state tax credits, more than 400 units have been completed in the past two fiscal years, according to annual reports from the housing department.
“It represents a very tiny portion of the whole array of funding, and it does raise a question for me of whether this program is worth continuing on the state level given its insignificance,” Gress said.
Democrats on the committee greenlit the audit, defended the merits of the program, and asked their Republican colleagues not to be so hasty in deciding its fate with little data on the results it has produced.
“Without LIHTC, multifamily developers have no incentive to provide affordable rental housing based on the land and building costs of today,” said Sen. Flavio Bravo, D-Phoenix. “I look forward to the study, but I don’t want to leave today with the unanimous view that it’s insignificant. I do believe it’s played a crucial role in our state.”
The Legislature did not renew funding for the state tax credit program in the recently enacted budget. The state funded it in 2024 with $4 million and renewing it was a goal for Gov. Katie Hobbs and several other Democrats in the Legislature.
“We’re still in the infancy of this program,” said Rep. Stephanie Stahl Hamilton, D-Tucson.
Nicole Newhouse, executive director of the Arizona Housing Coalition, said many units have not yet been completed with state tax credits, and the housing department expects close to 1,600 units as a result of tax credits funded by the Legislature.
“It has actually produced a fair number of units for the state. I just think they were looking at what’s come online. Not what’s in the queue to come online,” Newhouse said. “Given the size of the program, the fact that it has 1,586 units and counting, I think it’s pretty good.”
Gress noted during the committee hearing that the program’s sunset date at the end of the year doesn’t mean that units will stop being built from tax credits since credits can be claimed for a 10-year period.
Without any new allocations from the Legislature for new tax credits, any units built in future years would have to come from funding currently appropriated.
Many units developed from tax credits are intended for vulnerable populations, including older adults. Sen. Tim Dunn, R-Yuma, said several senior housing centers have been built in his district using low-income housing tax credits. However, he said he’s interested in seeing the results of the scheduled audit.
A 2025 annual report from the Department of Housing notes that the state received $101 million in federal tax credits, which supported nearly 5,000 housing units in 2025.
“I’ve seen studies on this that show the low-income housing projects are already subsidized 90 cents on every dollar from government subsidies and I do see a role in trying to expand the housing stock, but we want to do it in the most efficient way possible and I think this review will help us understand how Arizona is running its low-income housing tax program,” Gress said.
The “Arizona Starter Homes Act” failed to become law again in 2025, marking the second consecutive year it was not enacted. Lawmakers have attempted to pass zoning reform for multiple years now, but have had little success. Jake Hinman, a lobbyist with Mavrik Policy Group and one of the bill’s outspoken supporters, discussed the Starter Homes Act with the Arizona Capitol Times.
The questions and answers have been lightly edited for style and clarity.
What are the biggest challenges to the housing market?
The most obvious challenge is we’re in a huge supply and demand deficit. There simply aren’t enough homes and not enough options out there for people to choose something that fits within their budget. Arizona continues to be one of the fastest growing states. Maricopa County continues to be one of the fastest growing counties in the country. Our state is doing a marvelous job with its growth and implementing policies to attract new investment. Because of that, people are moving here and families are growing in Arizona and we just simply don’t have enough homes to fill that market gap. Imagine that you have a dinner party and you have 10 chairs around your dinner table and you invite 11 guests over to that dinner party. No matter what, there will be one person without a chair at the dinner party. That’s sort of where we’re at with housing in Arizona and across the country right now. Because so many housing types have been made illegal, the market is left with very few options to choose from. So, you get very affordable housing because it’s subsidized, or you typically get very expensive houses as your option, but we’ve cut essentially everything out in the middle.
The Starter Homes Act could be one of those mechanisms. Sell me on the bill.
It all kind of goes back to how we’ve outlawed or made illegal a variety of housing types that were once abundant across Arizona and abundant across America. One of those types are what we just casually call starter homes. These were the homes that our parents and our grandparents bought in their mid-20s and late-20s, and it’s what they used to build their equity and climb up the housing ladder. Throughout this entire process, I would talk a lot about how the average age for first time homebuyers is now 38 years old. The average home across Greater Phoenix is close to a half a million dollars right now. When you think about all of these Arizonans who desperately want to lay down their roots and have access to the American Dream, they’ve been simply boxed out of it all. The bill, we thought, was pretty straightforward. It’s just simply saying if somebody owns land, they should be able to build a modest or small house on it. These homes were once abundant in Arizona. If the market desires it, let builders bring those homes to the free market. These exact homes were once abundant in Arizona, but if we’re forcing an entire generation to wait until they’re 38 years old to purchase property and to obtain their American Dream, I think we have bigger societal issues that are going to be at play here, aside from economic issues of being able to attract a good workforce in Arizona.
This is an issue I know you’re passionate about. Why is it important for you?
This issue really goes back to the birth of our nation. America was founded on a number of principles, but one of those was private property. If you look at the early teachings of our founding fathers, you know that private property was a critical component in the formation of our country. It feels that, over the years, we’ve moved away from that to where a private land owner in the state of Arizona or across the country has lost control of their property, and now the government or the neighbors now have more control of somebody’s private property. Imagine telling Thomas Jefferson or James Madison that one day the government will be in the position of telling a private property owner what color to paint their house or what type of roof shingles they have to use or the type of exterior lighting for their house.
Were you encouraged by lawmakers’ attention to this issue?
There is so much interest in this on both sides of the aisle, and you’re seeing lawmakers who may not typically work together, come together on this issue to try to bring solutions for Arizona families. This is one of the top issues for voters. Constituencies really care about this right now because there’s a lot of people who are hurting. They’re hurting because rental rates are high right now, and they can’t access home ownership. I think lawmakers across the aisle are recognizing that and we are seeing other great policies to legalize backyard accessory dwelling units and other middle housing options get across the finish line. To me, that’s incredibly encouraging.
What’s going to be your approach in the next session?
I honestly don’t know what next year will hold. I don’t know if starter homes will come back, to be quite honest with you. We’ve had two years where we haven’t been successful, so maybe we’re not ready for starter homes and home ownership just yet in Arizona. I hope this will be the year where we see local action.
What other legislation were you involved with this session?
I had the pleasure of working on a number of issues this year. One issue that I was really excited about working on was school lunches with House Bill 2164. This one was really interesting from the beginning. Health and wellness has always been an issue near and dear to me so it was very rewarding to work on this one. Probably what made it even more special was the fact that my wife was heavily involved. The bill is pretty straight forward. It basically says, any school sponsored meal or snack can’t contain eleven ingredients that we list off in the bill. Those ingredients are mostly synthetic foods dyes and some other ingredients that have been linked to certain health issues. But the basic idea is, if taxpayers are going to pay for school meals, then we can at least try to make these meals healthier with less ultraprocessed ingredients.
How did you feel about getting that bill to the finish line?
Honestly, I don’t think I was expecting the level of support and excitement. In fact, Rep. Leo Biasiucci and I often joke that we thought this bill would just end up being a conversation starter and maybe not get across the finish line. I don’t think either of us thought it would pass unanimously. Right from the start, we had so much support and I think that support, and frankly the national conversation that we are having around food right now, certainly helped in a big way. We had so many voices involved in this one. Biasiucci and Sen. Janae Shamp were incredible. Rob Schneider has been a huge vocal supporter and has been with us since day one and really brought a ton of energy and excitement around this bill. Calley Means, whose sister Casey has been nominated for surgeon general, was a huge proponent of the bill. All of this was capped off in April when, after the bill passed unanimously in the Senate, Secretary Robert F. Kennedy Jr. came to Arizona to talk about the bill. This one really was such a great team effort.
This legislative session has seen severalbillssnake their way through the Arizona Legislature, threatening to exacerbate Arizona’s affordable housing crisis and damage neighborhoods like North Central Phoenix. Thankfully, many have been defeated or stalled, but the Starter Homes bill (SB1229) remains.
I want to be very clear: We need affordable housing solutions. But we can’t make the problem worse by taking shortcuts.
Strong neighborhoods are the backbone of thriving cities and communities. Zoning isn’t just about land use — it’s about creating, maintaining and protecting a community where families can put down roots, invest in their homes, and contribute to the local economy. Well-zoned neighborhoods allow for the effective allocation of public services such as police, fire protection, sanitation and schools.
We need responsible growth and development paired with new laws that remove obstacles to housing affordability. Unfortunately, our Legislaturehas created rather than reduced barriers to affordable housing. Arizona is one of only seven states that prohibit local governments from enacting mandatory inclusionary zoning. State statutes prevent counties and municipalities from passing any land use regulations that make development project approval contingent on the construction of housing that will be rented or sold at an affordable rate. Arizona statute forbids restrictions on rent prices or rent increases. If the Legislature focused on allowing inclusionary zoning, then it is highly likely that this alone would help solve the affordable housing crisis.
But, recent housing bills in the Legislature do nothing for affordable housing or common-sense zoning. Instead, they weaken local control over community planning and disregard residents’ investments in their communities. Some of the bills we saw this year would override existing zoning protections and open the door for construction that doesn’t fit the existing character of historic neighborhoods. These bills have no regard for infrastructure limitations in older neighborhoods and the impracticalities of extensive development. SB1229 incorrectly blames city zoning for housing issues without addressing the real causes of housing affordability. Worst of all, the legislation ignores state constitutional provisions regarding municipalities and threatens to destroy historical communities.
If one-size-fits-all bills like this pass, it promises colossal changes for neighborhoods across the state. Say goodbye to local control and watch as historic and single-family homes are replaced with higher-density apartments, duplexes, triplexes, and fourplexes. Watch as party houses and rental homes monopolize areas that could benefit single-family residents and drivers of our local economy. Remember Billy Joel’s No Man’s Land? The bottom line here is that our neighborhoods lose.
Who wins? Out-of-state investors and developers. They will have gained the ability to build what they want, where they want, without local oversight. Between 2021-2023, house prices increased by 56% when investors bought one out of every four homes for sale. Short-term vacation rentals have also inflated the value of homes. With no restrictions on these factors, guess who will be buying up the new builds. This dangerous concept lines the pockets of a few at the expense of many and doesn’t fix affordable housing.
As cities grow, it is crucial to recognize the importance ofmaintaining strong, locally controlled zoning policies. Neighborhood leaders and residents offer practical insight but are often excluded from legislation. Ensuring thoughtful development while preserving the integrity of existing neighborhoods is the key to successful growth and leaves a positive mark on the community. The irony is that our local relationships and expertise could help solve the affordable housing deficit in Arizona. But instead of being brought into the conversation, proponents of harmful bills label concerned property owners and residents as anti-development NIMBYs (“Not In My Back Yard”) as part of disinformation campaigns to crush opposition to ram bills through.
SB1229 would prohibit cities from requiring specific features, amenities and other design elements of a home with the goal of building smaller homes that fit with the budget constraints of first-time homebuyers. A surveycommissioned by the League of Arizona Cities & Towns found that 73% of respondents have the most confidence in their local city or town to determine housing needs for the community instead of the Legislature. 85% of respondents wanted local residents to have input on how their community is developed, and 77% of respondents agreed that more affordable housing is needed in their communities.
Instead of just checking what looks like an affordable housing box, legislators should carefully assess proposed housing bills and ask themselves, what are the consequences of passing statewide legislation? Previous legislation has hindered affordable housing in Arizona. Let’s not make the same mistakes again by superficially passing housing bills that will destroy the very neighborhoods that are the bedrock of our cities and towns.
Arizona is deep in a housing crisis. Families across the state — seniors, essential workers, veterans and young parents — are struggling to find a place they can afford. Rising rents are outpacing wages, and the shortage of affordable homes grows each year.
Amid the crisis, the state’s Low-Income Housing Tax Credit (LIHTC) program is doing what few programs manage: it’s delivering results. It has already brought new housing online in both rural and urban communities and fueled job growth and economic activity along the way. We can’t afford to let it expire.
A smart investment that builds what we need most
Here’s how the program works: Developers are awarded tax credits if they agree to keep rents affordable for at least 30 years. Those credits help fund construction — but only after the buildings are up and occupied. That means Arizona gets real housing first, before any state dollars go out the door.
The State LIHTC specifically targets the kinds of projects that would otherwise not be financially feasible — especially in rural towns and underserved neighborhoods that federal programs often overlook.
Real projects. Real impact.
Across the state, the program is already making an impact:
Globe’s Hill Street School has been renovated into 64 affordable apartments for seniors. This project — powered by both state and federal credits — is now open and providing much-needed housing in a historically underserved area.
In Prescott Valley, 72 additional senior units are under construction at the View Point II community. The state tax credit filled a funding gap that would have otherwise stalled progress.
In total, projects supported by the state LIHTC are expected to deliver over 1,500 homes, most of which are affordable to low-income households.
It pays off — big time
According to analysis from Elliott D. Pollack & Co., the developments sparked by this program are generating:
$746 million in statewide economic activity
4,558 construction jobs
$318 million in wages
Once built and occupied, these homes will support 464 permanent jobs, $66 million in annual local spending, and $8.1 million in tax revenues each year.
The return on investment is clear. Over time, the state earns back more in tax revenue and economic growth than it provides through the credit. It’s a fiscally sound strategy that pays dividends across multiple sectors.
Impact before state investment
The Centerline on Glendale project tells the story well. It received a $2 million state tax credit. Despite that, there was no impact on the state budget for fiscal years 2022, 2023 or 2024. The state does not see an impact until FY2025, when the project is completed and the credit is finally claimed.
In the meantime, the project brought in 884 construction jobs, paid out $63.6 million in wages, and added $149.4 million in economic activity. Once occupied, new resident spending is projected to generate another $15.4 million annually.
The program puts housing and economic gains in motion before a single dollar leaves the state budget.
A program at risk
The State LIHTC was created in 2021 with bipartisan support and a four-year funding window. Unless the Legislature renews and expands it in 2025, the program will sunset — right when it’s producing the strongest results.
Ending it would halt construction on future projects, dry up local investment and slow momentum on housing solutions.
This program delivers
The numbers speak clearly. Arizona’s State LIHTC has supported the renovation of a historic school into senior housing. It’s helping fill critical gaps in rural towns. It’s bringing in jobs and new revenue. And it’s doing so in a fiscally responsible way.
As Arizona’s housing shortage continues, this credit gives communities a tool that works. The state must act now to renew and expand the program to keep pace with the demand for affordable housing.
Nicole Newhouse is the Executive Director of the Arizona Housing Coalition.
As housing prices in Arizona climb to half a million dollars, advocates like Nicole Newhouse and the Arizona Housing Coalition are urging a policy that makes home ownership more attainable and creates a safer environment for people experiencing homelessness. Currently the state’s unhoused population hovers around 15,000, and, in a recent interview, Newhouse discussed the coalition’s work to pass legislation that alleviates the housing and homelessness crises across the state.
The questions and answers have been lightly edited for style and clarity.
What are the biggest housing challenges right now?
It’s land and cost. Now, the land part, it really depends on the developer. There are some developers who have no problem with zoning because of where they choose to build. There are other developers who would say that it has everything to do with zoning. I would say that close to 90% of the land in Maricopa County is zoned for single families, and, in order for us to meet the needs, we need to have different types of zoning to allow more density. There are also some regulatory barriers, permitting barriers and bureaucratic barriers. I toured a project done by Catholic Charities that took them 12 years to build and had everything to do with zoning and permitting. Most developers could not take on that kind of risk for that amount of time.
Could you tell me a little about the work that the Housing Coalition does?
We are a coalition of over 350 organizations, nonprofit and for-profit, that run the spectrum of homelessness and affordable housing and everything in between. Those organizations are everything from shelters, emergency shelters, and all of the forms of homeless support, whether it’s transitional housing or permanent supportive housing. We also have organizations that are in behavioral health, addiction and workforce development. We have affordable housing developers. We have lenders and community development institutions that are involved in the financial transactions. So our membership spans all of this. The one thing we do is we learn from all of our members. People down here, they get updates from their policy advisors about what we can and can’t do; what we should and shouldn’t do. We go to our members to really understand what’s happening on the ground to tell us what’s working and what’s not working so that we can then recommend policies that would actually positively impact the work and shrink our need to actually exist.
What do you see as the biggest legislative priorities of this session?
At this point, I would say the renewal and expansion of the state low-income tax credit in combination with the renewal of the Department of Housing for at least four years. In terms of positive action — things that the Legislature can do to help, those are the two biggest priorities. A lot of people don’t understand the low-income housing tax credit, but it is a public-private partnership that Ronald Reagan started. It is responsible for the vast majority of affordable housing across the United States. The state program was started in 2021 under Gov. Doug Ducey, and really what it boils down to is if you’ve ever bought a home, you’ve got to take out a mortgage. But the amount of debt that you have can impact how much mortgage you could get. When you’re building an affordable housing project, you have lots of different things that you use to cover the full cost of the build that’s called the capital stack. And what tax credits do is allow you not have debt, but have equity. You compete for an allocation of tax credits. The builder doesn’t use those — what they do is they go and sell them to a company that wants to lower their tax liability. They get a discount and they buy them from the developer infusing capital. It sounds convoluted, but the state program allows developers to build these projects, particularly now that the cost of things is going up, in rural areas where it would not be affordable for them.
How does the coalition feel about the Legislature’s approach to addressing homelessness with increased regulations around mixed hoteling, drug-free homeless zones, and more data for outcomes of our unhoused population?
Having talked to a lot of the lawmakers, I know that they’re coming from a place of good intention. I don’t know that they’ve thought it all the way through or spreadsheeted it as I would do. What’s the cost and what’s the benefit in both the hard cost as well as the community cost and the hard dollar benefit and the community benefit to those approaches? Why in the world would we take away a non-cap shelter where the hotel operator is a willing participant and they understand the risks that they run? I don’t understand why, other than it’s punitive. We all want drug-free homeless zones, but people who are suffering from addiction very seldom can hit sobriety one and done. Getting sober is not a linear process, especially when you’re dealing with the trauma of being homeless, plus whatever traumas created the place for you to become homeless.
Why shouldn’t the Legislature continue the Department of Housing for just one year as proposed by House Bill 2209?
It’s disruptive to builders. It could be disruptive to our federal funding. We’ve already got a shortage and if we put a question mark on things, what is it going to do to the shortage? Coming from financial services with lots of compliance, you don’t put them on a pip and threaten them with firing in a year. What you do is have ongoing reviews. You’ve got the auditor general report and you’ve got the plan that the department has put together. Then, make sure that there is a report out to the Legislature episodically. You want to do it once a quarter. The renewal for a single year has no functional reasoning. There’s lots of ways they could keep the department accountable that doesn’t require putting everything else in jeopardy.
What kind of policy ideas or legislation is not being heard right now that you think would benefit the state?
With housing, the prohibition on inclusionary zoning is really challenging. I think that if the state would stop that preemption and allow cities to make the determinations that they want to make about having inclusionary zoning as part of their plan, I think we could naturally see some developments of affordable housing happening. I also think cities and towns don’t always have some of the financing tools that they (should) have. So tax incremental financing with good guardrails.
The league tried to start that this year, but it didn’t really go very far. I know that recently the Department of the Interior and the Department of Housing and Urban Development secretary announced the use of federal lands. Before we went out into our wildernesses, I would want to take a look at what we have as urban infill and see what, if anything, we could do with that and what that could produce.
And what about homelessness policy?
It’s not a delight to anybody that has to deal with the budget. It takes money. There are 15,000 people we can count who are living on the streets and in shelters, but I’ve only got enough beds and vouchers for 10,000. So I need not just support for people that are sitting in shelters, but places that they can graduate to before they’re ready to get into an apartment. Something you’ll hear from a lot of lawmakers is that we can’t give apartment keys to somebody who is addicted and I don’t necessarily disagree. There’s something that used to exist a long time ago here in Phoenix called single room occupancy where you could get shelter, but people rented them for the day. We just need to be creative and get stakeholders who don’t have a political agenda in the room.
Would the Starter Homes Act move the needle in helping people find affordable homes?
Even among our coalition, there are differing opinions about it. We certainly have some fans of the Starter Home Act. The coalition as a whole is absolutely interested in making sure that Arizonans have a pathway to home ownership. It’s a big question mark. I can say supply is always good. Developing opportunities for ownership is good. Single family, yes, but we really need to focus on density. A 1,500 square-foot-lot is not doing a whole lot in terms of helping a homeowner develop equity. It’s very seldom the bricks and the sticks that are appreciating — it’s the land.
This measure appears to be dead at the moment, but did the “Yes in God’s Backyard Bill” YIGBY suffer from reduced scope by limiting it to single-family homes?
A great deal. Now, I will say we have a lot of churches and religious institutions across the state and even if we had like only 10% of them built and they built five units per acre, it would still be introducing more units than we have. I don’t want to discount the work and the compromise that went into that bill. That’s important particularly in Maricopa County because of the sheer absence of units. I invoke the Common Sense Institute because their report last year estimated that it would take Maricopa County 85 years to build our way out of this at our current rate.
Political leaders in both parties at the legislature have identified affordable housing as one of their top issues, but one bipartisan bill aimed at lowering housing prices with smaller homes is close to approaching Gov. Katie Hobbs’ desk.
After many stakeholder meetings and negotiations throughout the legislative session, the House Government Committee passed the “Arizona Starter Homes Act,” 5-4, as several members on the committee expressed their problems with the bill.
SB1229 now needs to get through the House, and likely the Senate again for a final vote on amendments before Hobbs gets her say.
With the goal of building smaller and cheaper homes, the measure would prohibit cities with a population of at least 70,000 from requiring specific home design and development standards.
The Government Committee’s discussion of the measure opened with Rep. Janeen Connolly, D-Tempe, introducing a striker amendment that would replace its language with that of a similar measure backed by the League of Arizona Cities and Towns that municipal leaders say would ensure Arizona residents, not corporations, purchase the new homes.
Critics of SB1229 say the measure doesn’t guarantee the homes built under the terms of the bill will be affordable or be sold to Arizona residents.
“Our goal is to put Arizona residents at the front of the line when it comes to buying and owning starter homes, not Wall Street investors who sell to the highest bidder,” said Chandler Mayor Kevin Hartke, president of the league. “This bill would help increase the affordable housing pipeline and make homeownership attainable for hard-working families and residents.”
SB1229’s sponsor, Sen. Shawna Bolick, R-Phoenix, called the league’s amendment “hostile” in a post on X prior to the House Government Committee hearing on March 25. The amendment is similar to a competing starter homes proposal backed by the league, SB1698, which never received a committee hearing this session.
Connolly withdrew her amendment shortly after introducing it. The league’s Legislative Director Tom Savage told the Arizona Capitol Times that the amendment isn’t an attempt from the league to “take over” the bill, but is a method to at least get their proposal heard by the Legislature.
The league has feuded with supporters of the Starter Homes Act for years. Nick Ponder, a lobbyist with HighGround Public Affairs Consultants who lobbies for the league, said the league has been working on “starter home” legislation since back when former Sen. Steve Kaiser championed the issue.
Kaiser’s major housing bill in the 2023 legislative session died in the Senate. Gov Katie Hobbs vetoed a similar starter homes proposal in 2024 and Ponder said the league wrote its bill this year based on Hobbs’ veto of the 2024 measure. He said the League considers SB1229 to be a “pure developer” bill that interferes with municipal infrastructure and general plans that are required to be approved by voters.
Queen Creek Mayor Julia Wheatley, said, “This legislation disproportionately impacts the town and our ability to determine the look and feel while balancing our agricultural and equestrian roots with residential development.”
Starter Act supporters argue the free market will ensure more affordable homes are built with the bill because there are developers who want to provide a product for first-time homebuyers.
“Preemption is a weapon that the Legislature uses when they feel like that there’s no other other choice, and I believe we’ve reached a boiling point across the board,” said Rep. Justine Wilmeth, R-Phoenix. “It’s a supply and demand economy … A big reason why prices are so high is that there’s no supply anymore”
The league’s proposal would allow cities to require slightly larger homes than what SB1229 offers, with a residency requirement of 15 years from the owners of new starter homes and an area median income requirement to try and target working-class Arizona residents and families.
“I do hope that as the senator’s bill moves forward, we see a number of additional amendments that reflect these considerations,” Connolly said.
Bolick said she still expects one additional floor amendment to SB1229 before it receives a full vote from the House floor and is sent to the governor’s desk.
Jake Hinman, a lobbyist supporting SB1229 on behalf of the Arizona Neighborhood Project, said he believes the bill as currently written would allow people to buy homes at a price around $250,000 to $260,000, but concessions made with the bill have already increased the expected prices of the new homes.
Still, SB1229 may be the only opportunity this legislative session for lawmakers to get a significant housing bill aimed at lowering the cost of single-family homes this session.
Despite the strong bipartisan action the Arizona Legislature took last year to allow more homebuilding, the state’s housing shortage — and high costs for renters and homebuyers — persists. The legislature advanced innovative approaches to increase housing — like allowing backyard casitas; authorizing duplexes, triplexes and fourplexes near business districts, and streamlining construction approval processes. To continue finding solutions, state lawmakers should now act on a suite of pending legislation.
Last week, the Arizona Senate took a great step by passing the “Starter Homes” legislation to enable the construction of smaller homes on smaller lots in new developments. The House should pass its companion bill, HB2371. Smaller houses generally cost less to construct, and big lots are expensive — so the legislation can pave the way to building more starter homes at lower prices for younger generations, first-time homebuyers and others.
One example is the city of Houston, which took similar steps to reduce minimum lot sizes. The new houses that were built there costan average of $200,000 less than comparable new homes. And here in Arizona, the city of Nogales has also taken action and is hoping for similar results.
The need is dire. The monthly cost of owning a home in Arizona jumped 78% over the past seven years, and rents more than doubled over the same period. Thirteen percent ofPhoenix-areahouseholds still spend at least half their income on housing. Meanwhile, wages in Arizonahave not kept up with rising housing costs.
Research further shows that high housing costsare the primary driver of homelessness as people compete to rent a limited supply of homes, and wealthier residents can outbid others for available housing. During the past seven years, Arizona’s limited supply of homes and resulting high housing costs have driven up homelessness in Arizona by 65% — well above the corresponding national increase of 40%.
Why is Arizona — along with much of the West — facing a housing shortage? Experts agree that local regulations and high construction costs are major causes. Without enough homes in the state, newcomers from California (or other states)can outcompete Arizonans for limited housing stock.
Tushar Kansal
The “Starter Homes” bill is a good beginning. The Legislature can do further by expanding the availability of casitas. Last year’s legislation allowed casitas in larger cities, but counties can benefit from them too. These small, accessory units generally rent for less than studio apartments, making them affordable for lower-income residents. Casitas increase housing supply and increase home values by adding a rental housing unit to an existing lot that can later serve a family’s aging parents or young adults. The House should pass HB2928 to allow for more casita construction in counties.
Finally, like zoning regulations, onerous permitting procedures can slow housing development. Builders face high costs for staff, attorney and consultant time, as well as interest on borrowed money while they wait for local government approvals. SB1353 would streamline and speed up permitting for homebuilding — and the Legislature should pass it. Sixteen states, ranging from California to Montana to Vermont and Texas, have passed legislation in the past two years to streamline permitting to reduce costs and build new homes faster.
Evidence fromcities such as Minneapolisand Houston shows that creating more housing — which these proposed changes would prompt — makes housing more affordable for everyone. This year, the Legislature can take proven steps to improve rental affordability, increase homeownership and reduce homelessness for all of Arizona.
Tushar Kansal is a senior officer with The Pew Charitable Trusts’ housing policy initiative, and Enrique Davis-Mazlum, Ph.D., is the Arizona state director of UnidosUS.
When you hear “affordable housing,” what comes to mind? For many Arizonans, the term conjures stereotypes of dilapidated complexes or government handouts. But let’s redefine it: Affordable housing is simply housing that costs no more than 30% of a household’s income. It’s the apartment a Phoenix teacher can rent without working a second job, the starter home a Flagstaff nurse can buy near her workplace, and the senior living complex where a Tucson retiree isn’t forced to choose between groceries and rent.
This isn’t about “those people.” It’s about us. Nearly half of Arizona renters are “cost-burdened,” spending over 30% of their income on housing. Teachers, firefighters, baristas and delivery drivers — people who keep our economy running — are being priced out of their own communities.
In 2023, of the close to 50,000 units permitted in Arizona, only 8.5% of those were affordable housing units. We’re building more, but less for the people who need it most.
This crisis demands urgency, creativity and political courage. Arizona’s leaders must act now to renew critical tools, expand proven solutions, and unlock innovative pathways to housing. Here’s how:
Stabilize Leadership: Renew the Department of Housing First, lawmakers must pass SB1357 to renew ADOH for four years. This agency is the backbone of Arizona’s fight against the housing crisis, coordinating federal grants, developer partnerships, and programs that keep roofs over families’ heads. In 2024, ADOH delivered $1.24 billion in aid, financing more than 4,300 affordable units and preventing foreclosures for thousands. A House bill that has crossed to the Senate this week proposes a single-year renewal, but federal programs demand long-term stability — housing projects take years, and short-term extensions risk deterring builders, investors and lenders. A one-year timeline forces ADOH to prioritize survival over solutions like converting hotels into housing or rehabilitating homes for seniors.
Expand the State Low-Income Housing Tax Credit Program: Fuel for Affordable Development Arizona’s affordable housing crisis demands bold investment — and the state Low-Income Housing Tax Credit program delivers. A 2025 study that the Arizona Housing Coalition commissioned with Elliott Pollack and Company found that Arizona’s LIHTC-funded projects generated $745.9 million in economic activity, created 4,558 jobs and will yield $5.8 million annually in tax revenues. For every $1 Arizona invests, it leverages $4 in federal funds. Yet state LIHTC funding has stagnated at $8 million since 2015 and is oversubscribed year after year, belying the enormity of the need. Increasing the investment to $15 million would reenergize stalled projects, build thousands of units, and replicate successes like Centerline on Glendale, the very first state LIHTC project that created 368 affordable units.
Yes in God’s Backyard: Unlocking Land, Building Community Another proposed bill, HB2191 — ‘Yes In God’s Backyard’ — allows faith communities to repurpose underused land into much-needed mixed-income housing without rezoning hassles. In Phoenix alone, over 500 religious sites exist and remain largely untapped, meaning if just 10% were developed at five units per site, we could gain 2,500 affordable homes without taxpayer dollars. Projects like Phoenix’s Acacia Heights — which took 12 years to complete — show why cutting red tape matters. Critics fear density, but YIGBY ensures modest, mission-driven developments that respect neighborhoods.
The Road Ahead: Beyond Building Even with these tools, Arizona’s crisis runs deeper. Wages lag far behind housing costs — rents jumped 35% since 2018, while incomes rose just 18%. Single-family zoning dominates 80% of Phoenix, blocking duplexes and apartments. Until we embrace denser, diverse housing — granny flats, townhomes, mid-rises — supply will lag.
Affordable housing isn’t a handout — it’s economic infrastructure. When nurses and grocery clerks can live where they work, traffic eases, local businesses thrive and communities stay intact.
Lawmakers must:
Renew ADOH to preserve Arizona’s housing advocate.
Expand LIHTC to leverage federal dollars and rebuild our affordable pipeline.
Pass YIGBY to empower communities to be part of the solution.
But Arizonans must also shift our mindset. The desert’s beauty lies in its resilience — and so does ours. Let’s replace “not in my backyard” with “yes, in our community.” The crisis isn’t coming – it’s here. The time to act is now.
Nicole Newhouse executive director of the Arizona Housing Coalition.
A series of very unusual economic recessions (Great Recession; Covid-19 Recession) and the following expansions changed the financial model for homebuilding. Heightened costs of labor and materials, combined with some complex financial issues, led to housing price escalation in Arizona, across the nation, and across the globe to other well-developed countries.
Arizona’s cities and towns did not cause the breakdown of the financial model for housing development, nor did they cause the housing price escalation that has been realized across the globe. Local government entities also did not influence the Federal Reserve Board to make such bad decisions that led to inflation further increasing, near zero cost access to money influencing investor purchases, and the current “Golden Handcuffs” of mortgage rates below 3.0% that is restricting housing sales.
Nick Ponder
Of course, making such arguments would be either purposefully misleading, or implies a lack of knowledge or bias among the advocates.
The correct explanation is that larger-scale macroeconomic influences negatively impacted housing affordability, and that cities and towns are helping to remedy the problem. This is not an opinion, it is an economic fact.
Fixing housing affordability problems requires developers to partner with local government entities, not scapegoat the cities and towns of impacting global housing price escalation.
WHY IS THE PROBLEM NATIONAL & INTERNATIONAL?
The housing crisis is a macroeconomic issue, not a microeconomic issue. This is why blaming zoning is a misguided analysis of the origin of the crisis and solutions to the crisis.
When you look at this in a macro sense, the housing crisis is not a micro Arizona problem but rather a macro national issue and, in many cases, an international issue. In Arizona, in particular, housing remained affordable immediately before Covid but after 2020 several shocks and factors made the housing market unaffordable.
Let’s look at several variables:
Great Recession of 2008 and subsequent slow recovery
Post Great Recession under-building of housing after excessive overbuilding
Growing trend of corporate ownership in housing
COVID work from home culture allowed people to move to places with lower costs of living (AZ); we have always been growing rapidly.
Californians moving to AZ had higher AMI to compete with Arizonans
Supply chain congestions created significant inflation in materials costs
Changes in workforce participation inflated labor costs
Rapid reductions followed by increases in mortgage rates by the Federal Reserve froze people in their homes
These eight variables combined with other Arizona market challenges like increasing land costs, labor costs, and regulatory challenges have pushed housing costs up by over 60%. None of these issues have to do with newly restrictive zoning! But these issues can be marginalized with better partnering between the development community and local government entities rather than the misleading and false information campaign currently being deployed by the same members of the development community.
GREAT RECESSION
Arizona was in a housing boom before the Great Recession. However, when the economy collapsed, we were hit harder and our housing industry was slower to recover. The virtual shutdown of the housing industry created a growing challenge that would be realized after Covid when several other variables came into play.
Development is on the rise. Since January 1, 2020, Arizona ranks 6th in the nation in total units permitted despite being 14th in population. We have permitted 315,000 units and constructed 249,000 of those units.Additionally, in Maricopa County alone Arizona communities have approximately 110,000 units in the pipeline and with an assured water supply certificate just awaiting construction. The 110,000 permitted units in Maricopa County are enough to satisfy today’s housing shortage.
COVID-LINKED INFLATION
The Covid pandemic created inflationary pressures in multiple ways. First, it created pressures in many individuals seeking larger homes with more space for home offices and outdoor space, inspired by greater flexibility in where they could locate as a result of telework opportunities. The beginning of the pandemic reflected a low interest rate environment that fueled competition and pushed up prices.
In addition to the initial competition created by low interest, the addition of government stimulus and the inability of people to travel or dine out inspired using disposable income on home renovations, appliances, furniture, and other products and materials used for housing.
Prior to the pandemic certain materials prices were already on the rise driven by trade disputes overseas. Those rising prices were followed by the pandemic, which saw an increased demand in all material and product areas.
One additional item often not cited is Arizona’s area median income was lower than that of California. Because of the transient nature of the new workforce, people moved from Silicon Valley and Los Angeles to Phoenix-metro during the pandemic and they brought their Silicon Valley salaries. This provided Arizonans with yet another additional challenge in an already competitive market.
INTEREST RATES
Housing is a ladder. People moving out of their starter homes and into a forever home make way for those in apartments to move into a starter home. Those moving out of a forever home and into a 55+ community make way for those moving from a starter home to scale into their forever home, and so on.
While Covid started with historically low interest rates the hot inflation that followed in 2021 was met with increased interest rates. Many Americans had already locked in at 3% interest rates. With interest rates spiking to 7% this has locked people into their homes breaking the housing ladder.
CORPORATE HOME OWNERSHIP
Since the Great Recession private equity and corporate interests have been purchasing significantly more units in the Arizona housing market. These investment opportunities diminish the supply of starter homes, competing with first-time homebuyers and increasing rents 25% or higher above their pre-sale rents.
In Phoenix-metro, 20% of the single-family rental housing units are owned by large corporate owners such as Invitation Homes (Blackstone), Tricon, Progress, and FirstKey. These entities serve as market manipulators, able to offer full cash purchases with short closing periods and no inspections; options a traditional first-time buyer cannot offer.
In addition the corporate ownership of single family homes, many communities in Arizona have been subjected to the exposure of corporate ownership in the short term rental (STR) market as well. In 2016, legislation was pursued to preempt local governments in Arizona from limiting the use of STRs in cities and towns. At the time, testimony spoke to the sharing economy and the need for the widow to rent a room in her house or the veteran to rent his home when he was deployed overseas.
Arizona became the first and only state in the country with a statewide preemption on STRs and became a testing ground for corporate ownership in the market. Today, upwards of 20% of the homes in some communities are STRs with many owned by corporations. In other communities the numbers may only be 1% to 5% but those are units that take away from individuals seeking shelter.
Today, 60,000 units in Arizona are consumed in the STR market. Further, there is a new trend in housing seeking fractional ownership of homes similar to a share in the stock market. This fractional ownership model is another way corporations keep individuals from owning homes and capitalize on the housing shortage.
Perhaps if government wants to incentivize first time individual home buying they should consider reducing the incentive for corporate ownership of individual family homes. It has often been said with worldly wisdom that if you want less of something you tax that something. Since individual homebuyers are being pushed from the market by corporate ownership entities one would consider the tax policy which treats both types of ownership identically rather than differently.
MULTIFAMILY SALES
Sales of multifamily units are at a 40-year low in the United States. Condos and townhomes are more affordable than single family homes. However, due to federal FHA regulations and, more importantly, challenges with state construction defect laws, developers are choosing to rent these units (build-to-rent) rather than sell them due to risk concerns and insurance costs, pushing sale prices higher.
Phoenix-metro has become one of the hottest markets for build-to-rent communities. Not placing these shared-wall units for sale robs Arizona first-time home buyers of a low cost options.
LAND EFFICIENCY
Arizona has limited private land. For that reason we’re are extremely efficient with the land we have. Arizona has the 3rd smallest median lot size in the nation and today, in response to limited private land, we are building smaller than we ever have.
John F Long built Maryvale and his first development averaged 9,100 sq. ft. per lot. Seventy percent of all lots in Maricopa County are smaller than his first development.
The average Maryvale lot is around 6,500 sq. ft. Today our growing communities are routinely building homes on lots smaller than the Maryvale lots of the 1950’s and 60’s.
While our communities remain committed to being efficient with the limited land Arizona has available for development, we must also create diverse options for our residents. Arizona residents want options for small, medium, and larger lots that allow them to climb the housing ladder within their same community. We need space for apartments but also lots that value the agrarian history in our communities.
Creating a one-size-fits-all option that cuts out local input and smart community planning is not what Arizona residents want.
If the State truly wants to incentivize first-time homebuyers and builders they could consider amending the State Constitution to prioritize the sale of some of the 9 million acres of the land they own for that very purpose. Providing more land for such developments would help incentivize the supply of starter homes in the State.
AGE OF OWNERSHIP & AFFORDABILITY
In recent discussions about the average age of ownership for first-time homebuyers there have been some anecdotal suggestions that in the past first- time homebuyers frequently obtained their first homes in their mid-twenties. However, data proves otherwise. While it is accurate the price have increased due to these macroeconomic forces and the age of ownership for first-time homebuyers has correspondingly increased, the average age has been over 31 years of age since 1981.
Data from the Maricopa Association of Governments, specific to the Maricopa County planning area (includes City of Maricopa, Casa Grande, Marana, Coolidge, and Florence) housing remained affordable despite the development communities under-building following the Great Recession. Through 2019 nearly 60% of all homes in the MAG region sold for under $300,000 and 80% were under $400,000.
While these market-driven forces have created the housing challenges that we have today, Arizona communities have been at the forefront of policy solutions in their communities to increase housing units. Arizona communities have reduced lot sizes, minimized setbacks, supported legislation to restrict approval timeframes, providing programs to invest locally in affordable housing, supporting the state Low Income Housing Tax Credit (LIHTC) program, and many more.
Arizona municipalities, residents, and developers have built incredible, vibrant communities that are attracting businesses and people from across the globe. The answer to this point-in-time macroeconomic housing crisis is not to treat so flippantly what we’ve taken so much care, resources, and patience to curate.
We look forward to supporting more locally driven solutions to the housing challenge that keep in place the essential 3-legged stool of municipal planners, developer input, and resident input.
MYTH vs FACT
Cities do not allow carports
Many cities allow carports and after checking with them developers have not requested to build a carport or a home w/o a garage in at least the past decade.
Cities have outlawed small lot homes
Cities are required by the Legislature to go through the general plan process. Lot sizes in units per acre are set forward in the general plan. We are building smaller than we ever have today.
Cities mandate carriage lights on homes
The city in question does not require streetlights. The $100 carriage lights take the place of thousands of dollars in streetlights. Lighting houses provides neighborhood deterrents for property crimes.
Cities require private streets
Cities do not require private streets. If a road is not built to spec the city will require the street to be “private” rather than conveyed to the city as it may not meet standards for public safety or public works traffic.
Cities require neighborhood parks as amenities, that should be the role of the city
40 cities in Arizona do not have a primary property tax. Other cities keep property taxes very low. Those taxes are kept low by requiring, for a nominal cost in the construction of a home, small neighborhood parks rather than large taxpayer funded regional parks.
8 QUICK TOOLS TO FIX HOUSING
Now that we have level-set the REAL reasons for the housing crisis that is macroeconomic in nature and not only hit Arizona but the nation, let’s talk about potential solutions. We believe there are 8 easy solutions to address the current housing challenges:
Tax Increment Financing (TIF)
Arizona is the ONLY state in the country that does not allow TIF. In many states it is used to build infrastructure which reduces taxpayer costs (impact fees) or is also used for affordable housing projects.
Local tools (infill property tax freeze)
In 2024 the League proposed an effort to freeze local property taxes for 7 years on infill housing projects to allow those developments to pencil out for builders.
League Starter Home bill
A pragmatic approach that maintains the 3-legged stool between developers, residents, and municipal planners.
SB1698, HB2834
Restrictions on corporate mass ownership
SB1209
Removing local constraints on short term rentals
HB2308
Extending LIHTC
HB2660
Correcting construction defect challenges
We are at a 40-year low in multifamily home sales in part because of this issue.
HB2713
Inclusionary zoning prohibition repeal
As part of the adaptive reuse bill from 2024, HB2297, developers were required to include 10% of the units as affordable. Some allowance for inclusionary zoning at the local level would aid in affordable and workforce housing.
HB2595
Nick Ponder is senior vice president for Governmental Affairs at HighGround
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