In terms of immediate financial and quality of life impacts on average AZ people and families, the most consequential policies emerging from the new political strength of Democrats in Arizona are likely to be efforts to address our housing crisis. In Arizona, and across America, we have an affordability and availability crisis, a homelessness crisis, an inflation crisis, and an eviction crisis all rolled into a true feces-fling of pain and distress for people of average and lower incomes. The Arizona Housing Administration estimates that our state is short 270,000 housing units.
Here in Arizona, we really have very little in the way of a current housing policy that addresses these concerns. After so many years of near-complete GOP control in our state, Arizona’s housing policy is largely to let the free market rule. In other words, developers, rental managers, and owners have a pretty free hand in profit-seeking and are quite determined to keep it that way. There is little help from the State to improve housing access or affordability, nor to strengthen tenants’ protection against the abuses of said free market, and that’s the way the GOP and the economically dominant players want to keep it.
Building the HTF
One thing we do have to help regular folks find and afford housing in Arizona is the Housing Trust Fund (HTF), which can be used for matching funds to access Federal assistance, and provide housing assistance programs for which no federal resources exist, such as funding for homeless shelters, transitional housing, eviction prevention, rapid rehousing, and innovating new programs through the Housing Administration. During Ducey’s tenure, the HTF has been not only chronically underfunded but has suffered sweeps of its funds into the General Fund to backfill for tax cuts to the tune of almost $60m.
Among the few bright spots for the HTF in recent years is that “in 2017, the Arizona Industrial Development Authority (AzIDA) began transferring its single-family mortgage program’s year-end fee balance to the HTF, as required in the legislation that consolidated the bonding programs of the former Arizona Housing Finance Authority into the newly established AzIDA. In a few short years, the HTF has received $20 million from this resource.” Finally, the compromise budget for last year negotiated by Democrats allocated $60m for the HFT; the largest single infusion in many years.
Democrats want to build on that momentum in the coming budget, Governor Hobbs’ budget proposes to add an additional $150m to the HTF this year. More generally, Governor Hobbs has laid out her goals for housing policy in Arizona:
“Whether it’s the rising cost of rent or homeownership, the lack of affordable housing, or the homelessness crisis, our leaders must tackle this challenge in a methodical, forward-looking, and compassionate manner. That’s why Governor Hobbs has a comprehensive plan to address these crucial issues.
Governor Hobbs will bring community leaders, housing advocates, local governments, and our legislature together to:
Empower local communities to build more affordable housing.
Cut needless bureaucracy and unleash American innovation.
Protect Arizonans and address core reasons for rising housing costs.
Address the homelessness crisis in a comprehensive manner.
Lower costs for renters and homeowners.”
New Legislation from Democrats
Filling in some of those details are Arizona’s community activists and our Democratic state legislators who are proposing a number of bills related to making housing more affordable and available.
There is building energy amongst Arizona renters to organize and push for reforms that help average Arizonan tenants. One such organization is Fuerte: The Rent is Too High. They recently released a mini-documentary series about their organizing in Arizona:
I encourage readers to watch the series as it is released.
One way in which Democrats are working in the State Legislature to meet the needs of average Arizonans is by enabling local rent controls. This particular legislative change is more simply enabling legislation than a finished program.
Right now, any local control over rents is precluded by state-level preemption laws. See ARS §33-1329 & ARS §33-1416. One of the key bills Democrats are proposing (HB 2086) is to simply repeal those laws to enable local jurisdictions to make the decision locally whether rent control is needed and would improve housing access in their jurisdictions. Democrats are also hoping to pass a bill (HB 2161) to cap the rate of rental increase to 5 percent annually, plus any cost of living adjustment up to 10 percent unless the rental unit is substantially remodeled to justify the additional rent increase.
Democrats also propose some changes to the residential landlord-tenant act, which protects the rights of tenants and owners. Democrats propose HB 2085, which would prevent discrimination against an applicant for a rental from being discriminated against on the basis of where their income to pay the rent comes from: this is to prevent discrimination against those who receive a subsidy or voucher to pay their rent.
Finally, Democrats are proposing HB 2083, which would prevent landlords from charging a late fee during a five-day grace period following the rent due date. The bill also protects against hidden fees and services as a condition of rental and stays any eviction or termination following acceptance of partial rental payment by the landlord. These provisions curtail some of the worst abusive practices engaged in by landlords to take advantage of tenants.
Market-Driven and Supply-Side Solutions
Developers also have opinions on why more affordable housing isn’t getting built in sufficient quantity or at an adequate rate. Those opinions are informed and valid, and they include Arizona’s overly restrictive and inflexible local zoning ordinances. Many of the recommendations by the development community are included in an excellent report by ASU, which I highly recommend. One of the main culprits is zoning which prioritizes single-family units. “Many municipalities in Arizona zone about half of their land for single-family homes… That means if developers want to build apartments, townhomes or condos, they have to first rezone the land — a process that can take months or even years and opens the proposed project up to community opposition.” “Compared with the rest of the country, zoning and NIMBYism are particularly challenging in Arizona because land already zoned for multifamily housing is so scarce.”
Developers also rightly identify some of the regulatory zoning changes that could significantly expand housing supply; “[c]ities and towns could ease zoning challenges by eliminating single-family zoning, implementing inclusionary zoning or allowing by-right development..”, and automatically allowing accessory dwelling units where there is sufficient space on previously zoned single-family properties. Another key way that communities have met the housing challenge elsewhere is to automatically zone all properties that would otherwise be single-family to allow either duplexes or triplexes on those lots, as well.
Many of these local zoning changes could be urged along by the state government by pre-empting more restrictive single-family housing zoning across the state and requiring or conditioning certain benefits to local governments upon adopting such reforms.” It can be quite difficult to overcome resistance to change at the local level without such assistance.
We also have special challenges for local jurisdictions wanting to require lower-cost units as a condition of development, often termed inclusionary zoning. “Arizona is one of only seven states that prohibit local governments from enacting mandatory inclusionary zoning… meaning state law would have to change before cities and towns could implement it.” See ARS §9-461.16(A). Arizona also restricts any kind of growth management planning that includes mandatory inclusionary zoning. This might be a useful reform for Democratic Members to use one of their 7 allowed bills to propose.
Another significant preemption in Arizona law that is problematic for rental affordability is that on short-term rentals (STRs, such as Airbnb). By restricting local jurisdictions from regulating STRs, Arizona has effectively pre-empted any local experimentation to lessen the impact of STRs on neighborhood quality, and the supply of unit stocks for monthly leases. See ARS §9-500.39. This has been a windfall for landlords seeking the higher day rates of STRs, but often misery for those properties’ neighbors, and detrimental to the availability of rental units for regular leasing.