Republicans and Democrats want to address housing in the upcoming legislative session, and some of their proposals overlap.
Everyone in and around the Capitol is aware of the housing shortage regardless of political affiliation but agreeing on solutions is a tricky issue that pits state and local control against one another.
Earlier this year, the Legislature approved a Housing Supply Study Committee that has been meeting for the past several months to learn about Arizona’s lack of affordable housing.
The committee members are now preparing documents on the issue and how they want to address it.
Committee chair Rep. Steve Kaiser, R-Phoenix, will present the report within the next two weeks or so. He will also likely sponsor some legislation that will come out of the committee as he did last year.
Democrat Gov.-elect Katie Hobbs has a very detailed housing plan that includes several proposed bills. She is a former social worker and legislator with an interest in housing problems.
Land costs and building costs have increased, more people are moving into Arizona, inexpensive housing is decreasing, and new housing isn’t being built as quickly as it did in previous years, but lawmakers already have possible solutions on the table.
Lifting Zoning Restrictions
Jake Hinman, Arizona Multihousing Association director of government affairs, said, “Zoning has made it extraordinarily difficult to get through the process. NIMBYISM is a result of zoning.”
He accused cities like Scottsdale of being “downright hostile” toward affordable housing while other cities like Tempe are taking the issue full-on and ending up housing the workforce and low-income residents.
Perhaps the most commonly repeated theme in the Housing Supply Study Committee is the need to cut back on zoning “red tape” that discourages developers from wanting to build homes in Arizona.
“Twenty years ago, you could take a property from dirt and build a house within six months,” Senate President-elect Warren Petersen said in an economic proposal he released earlier this year. “Those days are long gone as a litany of hurdles have been placed in obtaining approvals for land development and housing. Now, it can take as long as four years! Let’s increase the housing supply by shortening this window. One way to accomplish this is through administrative approvals for all projects that meet existing laws and requirements.”
Kaiser has made repealing zoning restrictions a priority over the past several meetings of the Housing Supply Study Committee, but the question that remains to be tackled is which zoning regulations must go.
This is not necessarily a partisan issue.
Hobbs offers some specific deregulation proposals in her housing plan.
“Examples of zoning changes that lead to more housing inventory include: building an additional dwelling unit, an accessory unit or a single-room occupancy unit on a residential lot; allowing higher density zoning that can accommodate more development of moderate-income housing; permitting higher density residential projects in or near commercial and mixed-use zones, major transit investment corridors, or employment centers; reducing restrictive requirements for affordable housing projects, such as minimum parking spaces, minimum unit sizes, or common area requirements; and providing zoning and financial incentives to developers who dedicate a certain percentage of units to market or below market rate housing,” she wrote.
Increasing density and allowing non-traditional homes also came up several times in the Housing Supply Study Committee.
Inclusionary zoning requires developers to devote a certain percentage of the units in a project to affordable housing and it’s banned in Arizona. Theile included the idea as a recommendation to the committee and was met with pushback from Spencer Kamps, vice president of legislative affairs of the Home Builders Association of Central Arizona.
Kamps argued that inclusionary housing essentially taxes the very developers who are trying to create needed housing. He asked where in the United States inclusionary housing has been able to fix a housing shortage, and his question wasn’t answered. Kaiser said he’s not convinced inclusionary housing can do enough to help Arizona.
The idea got a more positive reception from Tempe Mayor Corey Woods who said, “I do think an inclusionary zoning policy would be tremendously helpful.”
Glendale Community Services Director Jean Moreno asked whether inclusionary zoning funded by low-income tax credits could be a solution that keeps developers incentivized and affordable housing coming in.
Tax Increment Financing
Several states use tax increment financing or TIF, which incentivizes developers. A city sets aside the area to be developed and when property taxes in the region increase, the added revenue – separate from the base revenue stream – is diverted to the developer as a subsidy.
Arizona allows some forms of TIF but bans others. This issue has come up several times in the Legislature and is usually pushed by cities and towns that would get the benefit of more control over development.
In Arizona, developments often don’t allow people who use housing vouchers to rent at their properties. Tucson tried to stop developers from discriminating on income source, and it is now the subject of an investigation.
Speaker of the House-elect Ben Toma, R-Peoria, filed a complaint against Tucson on Nov. 16 for blocking income source-based discrimination, which he says violates state law.
“The Arizona Legislature … has explicitly prohibited municipalities from wielding their fair housing codes to continually exact more regulatory burdens on rental property owners,” Toma wrote. State law does ban municipalities with large populations from adopting fair housing ordinances.
Moreno, of Glendale, said discrimination is a problem because vouchers allow mixed income housing and so many communities won’t accept the vouchers. Cities only get a limited number of vouchers and a tight budget for them. Residents must be at the “very low” income level to qualify for them.
Blocking income source discrimination would be a good move in her opinion. “This would provide an opportunity to support households that are at a very low income,” she said.
Housing Trust Fund
Several legislators, including Sen. David Livingston, R-Peoria, Sen. Lela Alston, D-Phoenix, and Kaiser have sponsored legislation to fund the Housing Trust Fund with the Arizona Department of Housing, which can be used for projects like homeless shelters. The HTF got a significant allocation in last year’s budget, but Hobbs wants to increase it even more – as does Alston.