Why Solutions for Arizona’s Housing Shortage are Facing Fights

Article originally posted on AZ Central on February 14, 2023

Arizona’s housing shortage is straining many renters’ budgets and forcing too many out of their homes.

The state’s population has grown faster than the construction of homes and apartments since the Great Recession, and the resulting shortage pushed up home prices and rents.

Arizona needs at least 270,000 additional homes, and many of them need to be affordable for people making minimum wage.

Burdensome zoning and other regulatory issues are big and costly reasons for not enough rental homes, particularly affordable ones, getting built.

A rapidly rising wave of not-in-my-backyard-ism that has led to packed neighborhood meetings with angry residents putting city council members on the hot seat is another big reason.

As the problem drags out, building and land costs are climbing, making much-needed housing even tougher to build.

A group of legislators, other government officials and housing experts are proposing some potential solutions to the widespread problem after meeting for six months last year.

Many of the recommendations, including allowing cities and counties to require developers to include some affordable housing in housing projects, require legislation and other big lifts.

Housing takes too long to build, according to Sen. Steve Kaiser, R-Phoenix, who was co-chair of the Housing Supply Study Committee created last year. The committee found in many cases it’s taking at least two years for apartments to be planned and built.

Kaiser introduced a bill last week that would limit some of what municipalities can require from developers, expedite the planning and development process and potentially compensate developers who lose money on projects that stall to spur more housing to go up faster.

The bill passed Wednesday, Feb. 8, through the Senate Commerce Committee, which Kaiser chairs.

But the legislation drew criticism at the hearing from some housing advocates and committee members who said it doesn’t specifically address affordable housing.

More: Affordable housing project causes controversy in Chandler. What’s true?

Many Arizonans are Stretched to Afford a Home

Almost 520,000 metro Phoenix residents are paying more for housing than they can afford, according to the Maricopa Association of Governments.

Arizona’s homeless population increased by 23% between 2020 and 2022.

“We need to make progress on the state’s housing problems right away,” said Joan Serviss, director of the Arizona Housing Department, who was on the housing supply committee too. “We need more resources for housing and the unhoused fast.”

Critics Say Housing Legislation is Not Focused on Affordability

Kaiser’s bill calls for:

  • Allowing single-room rentals so more people can rent a room in a house, which could specifically help seniors with fixed incomes facing homelessness, said Kaiser.
  • Reducing design review requirements from municipalities.
  • Building more accessory dwelling units, which are secondary, smaller and less expensive homes on residential lots. These currently are tough to build and require special zoning in many communities.
  • Developing homes on smaller lots and building more townhomes and fourplexes, all of which are tougher to get zoning for now.
  • Adding manufactured homes in neighborhoods as long as their values are in line with other houses in the area.
  • Providing “at-risk” permits that would allow builders to keep developing infrastructure for apartments and homes on conditional zoning approval, so the process isn’t as slow and costly.
  • Allowing multifamily development on commercially zoned land within two miles of light rail.

A view of the construction site for Harmony at the Park, an affordable housing project, near Interstate 10 and Van Buren Street in Phoenix, Ariz. on Dec. 2, 2022.

The bill doesn’t include inclusionary zoning, which allows municipalities to require a certain amount of affordable housing in a residential project.

Tempe Mayor Corey Woods, who was on the housing supply committee, is against the legislation. He said it doesn’t address enough of the group’s recommendations.

“Building more housing doesn’t guarantee affordable homes,” he said. “We need development that requires affordable housing.”

He pointed out Arizona is one of a few states that ban inclusionary zoning and rent control.

Other proposals from the housing supply committee to help ease Arizona’s housing crisis include increasing the amount of money going to the state’s housing trust fund, something Gov. Katie Hobbs supports, as does Kaiser’s bill.

Another recommendation is reviving a statewide government agency group on housing and homelessness, which is already in the works.

Both the study committee and Kaiser’s legislation call for bigger Arizona cities to create a report on available housing and population growth to track housing shortages.

Permanent campers: Rising rents are pushing people to live on public lands

Not Addressing Housing Problems Will Hurt the Economy

Economic development experts say Arizona’s housing shortage and high housing costs are already deterring some businesses from locating here.

A group of real estate and other business leaders formed a housing advocacy group called Home Arizona in late 2021 to encourage policymakers to study the shortage and potential solutions before it becomes a bigger problem for growth.

Due to rising housing costs, the typical restaurant or retail worker couldn’t afford a one-bedroom apartment in metro Phoenix’s 11 biggest municipalities in 2022, according to research on wages and rents economist Elliott Pollack did for Home Arizona.

A home is considered affordable if it doesn’t cost more than 30% of a household’s annual income.

Elementary school teachers and construction workers making around $50,000 can only afford one-bedroom apartments in Phoenix and Glendale. Firefighters can afford one-bedroom rentals in four Valley cities.

None of the essential workers tracked in the survey, including nurses and police officers, can afford to buy a typical Valley house.

Michael Lieb, a real estate broker and developer who co-founded Home Arizona, said not-in-my-backyard attitudes need to be addressed now, or Arizona’s economy will suffer.

“Most neighborhood residents will agree there’s a need for more apartments and other housing, just not within close proximity of their neighborhoods,” he said. “We need to get elected officials to stop listening to the vocal minority in many cases and do what’s best for cities’ long-term needs and approve more housing of all types.”

NIMBYism has never been as divisive in Arizona, and projects that meet a municipality’s zoning and planning requirements can still get voted down.

“Fixing Arizona’s housing shortage is a big lift, and I am afraid the political will is not there,” said César Chávez, a former Phoenix state representative who co-chaired the housing supply committee. “It’s a polarizing conversation.”

He’s now a partner with the lobbying firm Oracle Strategies and said legislators trying to tackle the issue and go against neighbors fighting housing developments should “expect to lose their next election.”