Arizona Gov. Hobbs signs bill to allow casitas and more dense housing in larger cities

By Bob Christie
Capitol Media Services
PHOENIX -- Larger Arizona cities won’t be able to limit backyard casitas to just one per home and will have to allow much more dense housing near city centers after Democratic Gov. Katie Hobbs signed two major housing bills on Tuesday.
The signing of the casita bill in particular was in doubt because affected cities and some homeowner groups in metro Phoenix had urged her to veto House Bill 2720. They argued it lacked a ban on using the new "accessory dwelling units'' as short-term rentals like Airbnb’s did not address the state's housing crisis and would add to concerns cities have with "party houses.'' Hobbs said that issue could be addressed later -- something highly unlikely from the Republican-controlled Legislature that embraced the industry in 2016 and continues to refuse to limit all but the most basic city regulations. The governor said she was "proud'' to sign the two measures to expand housing options and praised the bipartisan nature of the votes that sent them to her desk.
"I'm glad the Legislature heard my calls to come to the table to pass commonsense, bipartisan legislation that will expand housing options and help mitigate the effects of rising costs to make life more affordable for everyday Arizonans,'' Hobbs said in a statement.
Under the new law, owners of single-family homes in mainly older parts of 15 affected cities will be allowed to build up to two backyard rentals -- one attached to the main home and one in the backyard -- by right.
Homes on larger lots could put in three units. And cities can’t force added parking or require that they look similar to the main home.
Tucson, Phoenix and all but two of the other affected cities already allow one backyard addition with some restrictions. The new law will preempt those city rules.
The second bill, HB2721, is designed to spur the construction of new and smaller "middle housing'' options like duplexes, triplexes and townhomes. The law says cities of 75,000 or larger must let builders put those homes on a portion of all new single family lots and all those within a mile of a central business district, areas cities designate at their core.
Those areas are mainly filled with older neighborhoods that predate Arizona's population explosion and suburban sprawl and some are highly prized by families that work in downtowns. The League of Arizona Cities and Towns, which urged the veto on the casita bill, negotiated with builders, housing advocates and the bill sponsor to limit the reach of the middle housing measure and supported it in its final form.
League Deputy Director Rene Guillen said his group was disappointed the governor signed the casita bill but encouraged by other housing bills that passed this year.
``We want casitas, not Airbnb’s,'' Guillen said. ``We wanted this to be a housing bill focused on housing units, not hotel rooms.''
Still, Guillen pointed to the middle housing bill Hobbs also signed, plus two earlier housing bills she OK'd as important moves. And he noted Hobbs' statement that she wanted the Legislature to work to address concerns about Airbnb’s and investor groups buying properties.
``So I’m at least encouraged that there’s an acknowledgment of the issue,'' he said.
The sponsor of the two bills Hobbs signed Tuesday, Rep. Michael Carbone, R-Buckeye, said he was ``ecstatic'' over her approval.
``It’s a very exciting moment,'' he said, calling the casita bill a win for property rights.
``It’s not going to happen overnight, but hopefully we will see a significant increase in permitting …. as far as single-family homeowners being able to build a casita in their backyard,'' Carbone said. ``And for folks whose kids come out of college and can't afford to live right now, you’ll start having those families make that decision to (build) on that property.''
Carbone said that ``the bigger gift'' will come from adding smaller, more affordable properties using his ``middle housing'' bill. That will help because most new single-family homes are just out of reach of many families.
``We somehow got out of that type of development, where we’re just building 2,000-3,000 square foot homes,'' he said. ``We can’t have those big houses anymore, they’re not attainable based on income.''
Neither of the bills, nor two other housing measures Hobbs signed earlier this year, will apply to newer single-family home areas covered by homeowner's associations. Nearly all new home developments built in the past few decades are covered by associations, which are contracts lawmakers think they can't legally override.
Tuesday’s action bring the total of housing measures Hobbs has signed this year to four. The other two allow "adaptive reuse'' of old commercial sites like strip malls into apartments, and time limits on city zoning change decisions.
They were part of a push to address a dramatic shortage of affordable housing in the state that has appeared in the past several years.
Builders blamed cities, saying they were crimping their ability to react to needed housing by restrictive zoning rules and long delays. Cities fired back, saying they only approve zoning and aren't in charge of building and noted a huge backlog of approved lots developers are sitting on.
The housing shortage has several causes.
Builders helped create the crisis by reacting to the foreclosure crisis after the Great Recession by halting most new construction. By the time they began building again at the same levels, prices had soared, investors had snapped up tens of thousands of homes for rentals and the state’s population had kept growing.
That’s left the state -- along with many others -- dealing with a shortage of new, affordable homes young families can buy.
Hobbs noted that the Arizona she grew up in was one where a middle class family could buy their own home and said she’s working to make that possible again.
"In the past year alone we have made dramatic strides towards making that the reality again for the next generation,” she said, pointing to a series of steps she's taken. They include pushing lawmakers to invest in the state’s Housing Trust Fund, which helps pay for affordable housing, and creating a mortgage assistance program for home buyers.
"Those initiatives, paired with these bills and others I signed last month to streamline rezoning and commercial to residential conversion, are critical parts of fixing our housing shortage,'' she said.
Hobbs did veto one major housing bill pushed by Republican leaders of the Legislature.
The "Arizona Starter Homes Act'' would have required cities to allow very small homes and lots anywhere and preempted many city zoning laws.
She called that bill in her March 18 veto letter "unprecedented legislation that would put Arizonans at the center of a housing reform experiment with unclear outcomes.''
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