Housing panel recommends zoning law changes

New homes are under construction at the new master-planned community Reserve at Red Rock in Mesa on Nov. 30. Housing affordability has fallen to its lowest level in 33 years, and mortgage and home prices have surged. (Photo by: Alexandra Buxbaum/Sipa USA)(Sipa via AP Images)

The chairman of the Housing Supply Study Committee is proposing to alter zoning laws and permanently fund the Housing Trust Fund to create more affordable housing in the state.  

Rep. Steve Kaiser, R-Phoenix, made those recommendations and others in the committee’s final meeting Dec. 20.  

Kaiser concluded that Arizona lacks housing data, zoning is a primary barrier to affordable housing, the building process should be sped up and there is too much NIMBYism blocking development. 

Committee members sent recommendations to Kaiser, which he considered and approved certain ones. 

Rep. Steve Kaiser, House, affordable housing
Rep. Steve Kaiser, R-Phoenix

The most ambitious recommendation and the one Kaiser has spoken about the most is altering zoning rules. Kaiser recommends reducing redundancies in the general plan and zoning codes, reducing the need for rezoning, expediting zoning applications, reconsidering whether city councils need to hear every rezoning request, establishing a rural community infrastructure grant plan and allowing developers to go through an appeals process if the city council rejects their proposal. Kaiser said he’s not sure who the developer would appeal to. 

Last session, Kaiser sponsored a bill that would have made some of these changes, but it was transformed into the bill that created the Housing Supply Study Committee instead. 

Following zoning changes, Kaiser recommended making it easier to build properties that are larger than single family homes but smaller than huge multifamily developments, such as duplexes and quadruplexes.  

As he has suggested several times, Kaiser said he supports allowing people to build small affordable units (like mother-in-law suites and living spaces in remodeled garages). He also recommends limiting “discretionary review of design standards” to allow more housing options and styles, including manufactured homes. 

Kaiser also recommended creating a housing data clearinghouse and charge the Arizona Department of Housing and the Arizona Commerce Authority with creating a housing needs assessment. Next, Kaiser wants to reconvene the State Interagency Council on Housing and Homelessness.  

Keeping the senior population in mind, Kaiser called for allowing more small homes to be built, waiving parking space restrictions, funding senior homeless shelters and permanently funding the Housing Trust Fund.  

Sen. Lela Alston, D-Phoenix, has been trying to pass a law to establish permanent housing trust fund monies for years, but she hasn’t been able to get enough support from Republicans.  

Lela Alston

Last year, Alston and some allies got more money put into the Housing Trust Fund, but not the amount she hoped for, and that Kaiser seems to be suggesting again. The two Democrats on the Housing Committee are Sen. Martin Quezada, D-Glendale, and Rep. César Chávez, D-Phoenix, but neither of them is returning to the Legislature next session. Quezada said Alston might be interested in supporting some of Kaiser’s plans and she responded positively to his Housing Trust Fund proposal on Dec. 20. 

Going forward, Kaiser said he’s already working on housing legislation and will continue the stakeholder outreach process.  

Some of the other committee members’ suggestions that Kaiser did not support include changes to the landlord-tenant agreement to further protect renters and letting school districts build teacher housing on their land. 

Another issue that Kaiser didn’t mention is tackling the source of income-based discrimination. The Legislature recently passed a law that allows landlords to discriminate based on the source of income which Tucson and some of the housing supply committee members don’t agree with. 

Several of Kaiser’s recommendations do align with Gov.-elect Katie Hobbs’s extensive housing plan and he expects to see bipartisan support for some proposals from her as well as other Democrat legislators. 

Senate President-elect Warren Petersen, R-Gilbert, issued an economic plan recently that also incorporates some elements of Kaiser and Hobbs’ ideas. Petersen and Kaiser have been communicating on the topic. 

The committee met 12 times since the Legislature adjourned, heard from more than 70 presenters, and traveled across the state to learn about housing needs. 

About 300 people move to Arizona every day, but the housing supply is down an estimated 270,000 homes according to the Department of Housing. 

Last session, bills that aimed to address the housing supply had little success but going into this upcoming session there is interest from lawmakers in both parties and chambers.  

Housing reform bipartisan across country, can be in Arizona

By Rep. Analise Ortiz and Sen. Anna Hernandez

When knocking on doors to win our elections in Maryvale, our community relayed a resounding shared concern: housing costs have increased substantially and simply finding a home has become next to impossible.

We met a retired couple whose adult children had moved back home because they were priced out of apartments. We met seniors on fixed incomes terrified that their rent would be raised on them—again. We met a young couple struggling to find an affordable home to start their family.

Analise Ortiz

Maryvale was one of the first master-planned communities in the country, making the American dream of homeownership attainable to families. Today, a community like Maryvale couldn’t be developed under restrictive zoning laws that regulate design standards, lot sizes, and garage requirements.

These burdensome zoning laws are a root cause of our housing crisis. According to the Arizona Department of Housing, Arizona has a shortage of over 270,000 homes. With 100,000 people moving here annually, we simply do not have enough places for people to live.

Zoning laws create onerous delays in the development process. This finding was emphasized last year during a months-long bipartisan Housing Supply Study Committee. The information gleaned from over 70 presenters—advocates, academics, builders, non-profits and residents —underscored that zoning reform is an important puzzle piece to solve our housing crisis.

We support Zoning Reform
We support efforts to reform zoning laws in Arizona and we strongly encourage our colleagues on both sides of the aisle to do the same. There are currently three measures before the Legislature to create more places for people to live, stabilize the market, and drive down housing costs.

HB2536 would require cities to make zoning decisions in a matter of months as opposed to years. The proposal would legalize backyard casitas and shared living facilities for seniors, who happen to be our fastest growing homeless population. The bill also would remove many of the costly design requirements that have effectively regulated starter homes out of existence in Arizona.

Anna Hernandez

SB1161 would require two cities—Phoenix and Tucson—to allow any low-income housing project to be built “by right” along light rail and streetcar routes. These affordable housing projects – which we desperately need in our two largest cities – would be effectively fast-tracked through the process. The bill would also prioritize Arizona residents in the distribution of housing assistance vouchers.

SB1163 would allow for smaller lots for starter homes. It also would legalize duplexes, triplexes and manufactured housing options. These housing types, which once provided some of the most affordable options for residents, are nearly impossible to build in Arizona currently.

While these three bills may not have everything that we would like to see, we cannot afford to sit on the sidelines until we get the perfect bill. Our constituents—especially those facing eviction and housing insecurity—simply cannot wait.

Zoning has a dark history in this country
You don’t have to search far to learn about the history of zoning in this country. And while de facto racial segregation may not guide modern zoning laws any longer, it’s impossible to ignore this pretext when reviewing today’s housing crisis.

In our short time in the Legislature we have witnessed scare tactics and hyperbole as it relates to housing reform. We’ve heard comments that suggest more housing “will invite more crime,” “will cause more traffic” or “destroy the character of the neighborhood.”

Here’s our response: In a crisis, the needs of the many must outweigh the convenience of the few. Across the U.S., YIMBY groups – Yes, In My Back Yard efforts – have arisen to dampen the impact of pockets of NIMBY neighbors determined to control property they don’t own. We respect the position of those who oppose development efforts. We don’t want to harm their quality of life. But fairness and compassion dictate that we must help our constituents who have been priced out of renting or buying a home.

Reform is bipartisan
States across the country have started to push back on these sordid zoning regulations. Both Republican and Democratic Governors have loudly opposed local zoning laws. Governor Polis of Colorado called for numerous changes in his State of the State address this past January and followed up with specific proposals just last month.

Governor Gianforte of Montana echoed Polis’ sentiments, and Montana lawmakers have introduced several proposals to speed up housing development and remove antiquated barriers.

Massachusetts, Vermont, Washington, Texas, Oregon have all introduced proposals to cut through local red tape and make housing production a priority.

The three reform measures that are currently sitting at our Capitol are also bipartisan with all three bills receiving support from Republicans and Democrats in their committees.

We are at a crossroads with our housing crisis in Arizona. We can either take action to mitigate the crisis or we can continue with status quo. For us, the answer is clear. This is not a question of politics or partisanship. This is about helping human beings achieve their dreams and improve their daily lives. It’s about fairness and acting with grace. We need reform – and we need it now.

Sen. Anna Hernandez and Rep. Analise Ortiz represent Arizona Legislative District 24.

Incoming lawmakers, governor-elect aim to tackle housing

New homes are under construction at the new master-planned community Reserve at Red Rock sits in Mesa, Arizona USA on November 30, 2022. Housing affordability has fallen to its lowest level in 33 years, and mortgage and home prices have surged. (Photo by: Alexandra Buxbaum/Sipa USA)(Sipa via AP Images)

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.

Rep. Steve Kaiser, House, affordable housing
Rep. Steve Kaiser, R-Phoenix

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.

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Katie Hobbs

“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

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.

In this Dec. 4, 2019, photo, the main entrance is seen of a new apartment building opened for a ceremony at the Native American Connections Urban Living on Fillmore affordable housing unit in Phoenix. Republicans and Democrats want to address housing in the upcoming legislative session and some of their proposals overlap. The legislature approved a Housing Supply Study Committee in the most recent session that has been meeting for several months to learn about Arizona’s lack of affordable housing. (AP Photo/Ross D. Franklin)

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.

Income Discrimination

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.  




Petersen praises Hobbs for budget negotiations

Democratic Gov. Katie Hobbs took major heat from many Democrats for negotiating a state budget package with Republican legislative leaders that did not include any changes to the state’s new universal school voucher program.

But Republican Senate President Warren Petersen is heaping praise on Hobbs for the deal, saying she negotiated in good faith, kept her promises and made a rare bipartisan budget happen. And he pointed out that despite Democrats’ anger over school vouchers, “that wasn’t going to get on her desk” because majority Republicans would never vote to curtail the program.

“Kudos to her,” Petersen said about the governor’s direct negotiations with him and House Speaker Ben Toma, which unfolded with direct meetings multiple times a week over two months.

“She was reasonable,” he said.

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Gov. Katie Hobbs (Photo by Gage Skidmore via Flickr)

“And she would keep her word,” Petersen said. “”Whenever she would say ‘I agree to that,’ she did it.”

The deal on the $17.8 billion state budget package for the fiscal year that begins on July 1 came much earlier than many observers expected. Hobbs is the first Democratic governor since Janet Napolitano left office for a Cabinet post in the Obama Administration in 2009, a shock for Republican lawmakers who have had 14 years of working with a GOP governor.

Petersen sat down with Capitol Media Services this past week for a wide-ranging interview as the yearly legislative session takes a virtually unprecedented one-month break called by Petersen and Toma. With the budget done and the only bills remaining needing major work before votes, they called a break in floor sessions to work on those issues.

“We literally have put everything up there that was ready,” for a vote, he said. “And now I’m not going to make people come down here if I don’t have any floor work to do.”

Happy People

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He said he was the one who came up with the plan that doled out chunks of a big budget surplus to each of the 47 Republican lawmakers in the House and Senate. Minority Democrats got smaller amounts, and Hobbs also got a big chunk to control.

What that earned was individual buy-in from GOP lawmakers who for the first time had ownership of a slice of the budget, Petersen said. That’s a huge difference from the way the budget has normally been done, with Republican leaders hammering out a deal with the governor and then presenting it to rank and file GOP lawmakers as a done deal.

“It came from the difference between communism and capitalism and the way things normally go and why we always have problems,” Petersen said of his strategy.

“You normally have six people down here deciding how … all the money gets spent,” he said. “And then those six people try to convince everybody else to vote for the budget.”

Giving each lawmaker a portion of the budget — $20 million each for GOP House members, $30 million for each GOP senator – gave them control they did not have previously.

“This time when we passed the budget everyone was actually smiling and happy,” he said. “It was like literally the first time I’ve been down here where people were happy.”

Normally, he said, people are angry, having had to get “wrangled into it.”

“Everyone went in ready to vote for this budget. Why? Because I gave them all a piece of the budget. Everybody got their own piece, and they owned it,” Petersen continued.

Even many Democrats voted for the plan, although many grumbled about how it was presented to them. Petersen blamed Democratic leaders for not adopting his formula with their members and delaying giving him their budget “asks.”

Proposition 400

In this Jan. 24, 2020 file photo, early rush hour traffic rolls along I-10 in Phoenix. (AP Photo/Ross D. Franklin, File)

After the budget passed and was signed on May 12, what’s left is a series of top-tier proposals that currently don’t have consensus among Republican lawmakers, with the governor having the final word.

The biggest issue is the extension of a half-cent sales tax in Maricopa County which pays for transportation projects.

The 20-year, multi-billion-dollar tax expires in 2025 unless voters extend it. But the Legislature has to give its permission for the issue to be put on the ballot; it’s the only county that requires that step to ask voters to approve a transportation tax.

Last year, lawmakers passed the tax extension proposal but it was vetoed by then-Gov. Doug Ducey. With an even more conservative Republican caucus this session, it faces tough scrutiny.

Petersen said he and others have major problems with the proposal presented by the Maricopa Association of Governments, the entity that doles out the money for freeways, major roadways, buses and light rail and clean air programs.

And Petersen has little faith in the agency.

“MAG is completely unaccountable,” he said. “They’re very, very insulated.”

He said that, on paper, the agency led by mayors who are supposed to have some oversight.

“But not really,” he said. “These mayors are overwhelmed, busy.”

Petersen said the plan’s use of 44% of the funds for mass transit — versus new highways and road construction — is a non-starter. And he said it creates what he called a $2 billion “slush fund” that he worries would be used to extend light rail despite promises that’s not contemplated.

And then there’s the part that says air quality is a consideration in what to fund.

“If they’re just saying, we can use any measures we want, they need to define what air quality programs they want to do,” he said.

Without definitions, Petersen said MAG could potentially impose limits on gasoline-powered cars or adopt cap and trade programs or who knows what. If they want flexibility for future technologies, he said a mechanism for legislative oversight should be added.

“Believe it or not conservatives want clean air,” Petersen said, including for themselves and their children.

“But they need to define what it is,” he said. “And yeah, if it’s reasonable, we put that in.”

Petersen had just left a meeting with Hobbs when he sat for the interview in his office, and said it sounds like she may want to be directly involved in the negotiations over Proposition 400, the tax extension.

Miscellaneous Issues

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Other remaining issues include a revamped proposal to ban city-imposed taxes on home rentals. Hobbs vetoed that bill earlier this session, saying there was no mechanism ensuring renters facing rising housing costs will see the money. She also opposed the $270 million appropriation to compensate cities for the lost revenue for the first 18 months of the ban, saying it came outside the budget plan.

Toma said recently that tying a signing of a rental tax ban and Proposition 400 in negotiations with the governor was a possibility. Petersen, however, said he’s not doing that.

“I don’t horse trade,” he said.

The other key battle remaining is a Republican proposal to override many city zoning laws to boost construction of lower-priced housing options.

That measure has failed once this year. And new versions pushed by Sen. Steve Kaiser, R-Phoenix, don’t yet have the votes to pass and the powerful League of Arizona Cities and Towns is strongly opposed, calling zoning a quintessentially local issue.

Petersen said he does not know if that will get enough support to pass, and if it does not, that’s OK.

“If he doesn’t have the votes, he doesn’t have the votes,” Petersen said. “It’s really that simple.”

Another handful of bills are also in the mix before lawmakers can adjourn for the year.

“We probably have at least 10 bills that are that have loose ends on them that are really important for Arizona,” he said. “And we’re looking at if we can negotiate what to do with those by June 12, and the rental tax is one of them.”

Petersen, who became Senate President in January after a decade representing Gilbert in the House and Senate, said the unusual long break in legislative action is by design.

He recalled frustration after years of coming in to work, saying the daily Pledge of Allegiance and prayer at the beginning of floor sessions and then adjourning for the day because nothing was ready for votes.

“And so I’ve just told my caucus, and they’ve appreciated this ・ that I don’t just bring people down here to pledge and pray,” he said. “We’re not taking a month off, OK. We just don’t have floor work.”