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Sweeping Bill to Address Arizona’s Housing Crisis Shot Down

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by Caitlin Sievers, Arizona Mirror
March 14, 2023

In a rare show of bipartisan agreement, the Arizona state Senate voted down a bill aimed at addressing the housing crisis by a vote of 9-20. 

Senate Bill 1117 would have slashed city control over housing projects, nixing certain zoning requirements and speeding up building by getting rid of a lengthy review and approval processes. 

Proponents, including the bill’s sponsor Sen. Steve Kaiser, a Phoenix Republican, and the powerful Arizona Multihousing Association, said that this bill would allow developers to build more quickly, increasing the state’s housing supply, in turn lowering housing prices that have skyrocketed in the past couple of years. 

Arizona’s housing supply is woefully inadequate for the population’s needs, with a shortage of around 270,000 homes, according to the Arizona Department of Housing. 

The bill would allow for more houses to be built in smaller amounts of space, changing the minimum lot size for single family residential dwellings to 4,000 square feet. Minimum required lot size varies from city to city, with a minimum of 6,000 square feet in Phoenix and 7,000 in Flagstaff. It would also keep cities from imposing exclusionary zoning laws that keep builders from constructing dwellings like townhouses and fourplexes. And it would prohibit cities from banning accessory dwelling units, or casitas, that are not occupied by the owner. 

The bill also sought to make it easier to construct single-room occupancy units, with shared kitchens and bathrooms, which Kaiser said would be a good option for senior citizens, which is a growing homeless population in Arizona. 

In addition, the bill aimed to give developers the options of building residential, mixed-use and multifamily units in commercially zoned areas within two miles of the light rail and would allow manufactured homes, which are generally considered to be affordable, to be placed in communities among traditional homes of similar value. 

“I can say I don’t love everything about this bill,” said Sen. Anna Hernandez, the only Democrat who voted for the bill. “But it will allow more innovative housing.”

She added that she believes this bill is a good first step in attempting to resolve the state’s housing crisis, and commended the cities and Kaiser for their work on the bill and Kaiser’s willingness to compromise. 

But critics said there were two fatal flaws to the bill: It doesn’t actually increase affordable housing and it strips away powers from cities and towns to guide development to meet local needs.

“Zoning is a sacred thing,” Sen. John Kavanagh, R-Fountain Hills, said. “Areas are zoned differently because people have different tastes. This bill kneecaps local control.”

The League of Cities and Towns, and its 91 members, opposed the bill, with lawyer for the League Frank Cassidy telling the Senate Commerce Committee on Feb. 8 that the bill was a “nuclear option” aimed at flooding the market with housing with the idea that the increased supply would eventually trickle down and increase affordability. 

But Cassidy said there’s no guarantee that would actually happen. 

“I have no problem with multifamily development, but it needs to be well thought out,” Cassidy said. “This bill doesn’t even allow for neighbors to weigh in on that.”

The bill is the result of the Housing Supply Study Committee, which spent the last half of 2022 hosting meetings across the state to hear from various stakeholders about issues with a lack of housing, especially affordable housing, and how they hoped the issue could be resolved. 

Tempe Mayor Corey Woods, who was a member of the study committee, expressed disappointment during a Feb. 8 Senate Commerce Committee meeting that some of the major insights he took away from the study committee’s work were not included in the bill. 

Woods pointed out that Tempe, which is landlocked and cannot expand its borders, has increased its housing stock incrementally over the past couple of years, but affordable housing still isn’t easily available there to those who need it. Instead, the housing being constructed there includes luxury and market-rate apartments that price out lower income residents. 

Woods argued that if the state truly wants to incentivize affordable housing, it needs to get rid of the state law that bans inclusionary zoning, which gives cities the ability to require a developer to dedicate a certain percentage of units in its project to affordable housing, in exchange for zoning allowances from the city. 

Arizona is one of only seven states that bans inclusionary zoning, Woods said. He also called for the overturning of the state’s ban on rent control, something that affordable housing advocates have been asking for. 

The Arizona Multihousing Association has long argued against inclusionary zoning and rent control, saying that they both stop developers from wanting to build — driving up the price of housing. 

In the AMA’s view, SB1117 would have gotten rid of one of the most powerful roadblocks in the way of multi housing construction: NIMBYism. The “Not In My Back Yard” crowd tends to show up to public zoning and platting meetings and rail against new construction, saying that apartment complexes bring with them traffic, crime and lower property values, which Association lobbyist Jake Hinman told the Commerce Committee was not true.

The bill also aimed to prevent cities from forcing restrictive design standards onto new housing construction, including what the interior layout must look like, the pitch of the roof, the materials and design for nonstructural outdoor ornamentation and the layout of the front and backyard landscaping. 

“Think about why everyone loves historic districts,” Kaiser said. “It’s because they don’t look cookie-cutter. Imagine what we could have if we had variety.”

Phoenix Democrat Raquel Teran said she opposed the bill not because it deregulated zoning, but because it doesn’t guarantee affordable and attainable housing for low-income people. 

“There’s no assurance that these new units that are built will be affordable,” Teran said. “We’re paving the way for more luxury.”

Kaiser challenged his colleagues who didn’t like the bill to help him make it better, especially since it’s a “problem that all of our constituents have.” 

“This housing issue is not going away,” Courtney Gilstrap LeVinus, president and CEO of the AMA, said in a statement. “There is a broad coalition — Republicans, Democrats, builders, housing activists, policy think tanks — that support SB1117. Opponents to the bill will continue to argue that status quo is working and that the exclusionary zoning policies that have been implemented across the state are defensible. We disagree. We must remove barriers to building more housing at all price points. It’s not an easy solution, but it is the only solution.”  

In total, 47 individuals and organizations have taken an official stance supporting the bill, while 306 officially oppose it. 

Kaiser ultimately voted against his bill for procedural reasons so that he could bring it back for a second vote, in the hopes that he can convince enough senators to back the bill so it can be considered by the state House of Representatives.



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