How do we meet the demand for affordable housing if cities make it nearly impossible?

The bill preempting municipal zoning and design standards for homes and apartments was held in committee and probably isn’t going anywhere this session.

However, the concept of zoning by right in the legislation (House Bill 2674) is intriguing. And arguably necessary if the supply of affordable housing in the Phoenix metro area is to be meaningfully increased and sustained.

This is more than a simple power grab by the Legislature, which is often the case with preemption bills. The zoning and design standards of cities deter the coming to market of housing products for which there appears to be a strong market demand. Moreover, the local political dynamics make it highly unlikely that there will be a correction at the municipal level.

The zoning density and design standards generally are geared toward upper middle class subdivisions. That makes it difficult to bring to market what used to be called starter homes or single-family subdivisions for lower middle class workers.

Why cities won’t solve this
A bill before the Legislature would grant by-right residential zoning and preempt local design standards.
As one industry insider put it: Every city wants everyplace to be Scottsdale. No one wants to be Maryvale. Or at least Maryvale as it was originally conceived and brought to market.

The industry also believes that there is a potentially big market for smaller homes on smaller lots with minimal external maintenance requirements. The demand is driven, interestingly, by both ends of the demographic spectrum: millennials and active seniors with an interest in a lock-and-leave standalone home rather than a condo. This product is also difficult to bring to market within zoning densities and design standards geared toward upper middle class subdivisions.

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Cities are unlikely to respond to the unmet demand for more affordable housing by loosening zoning and design standards to accommodate it. This is in part a function of local NIMBYism, not in my back yard. And in part reaching for an aspirational character, being Scottsdale and not Maryvale.

Instead, the city approach is to maintain the restrictive standards and subsidize those who can’t afford the resulting product, either by requiring projects to set aside some units for lower income residents or some form of mortgage or rent assistance.

‘By right’ zoning could free up the market
However, the subsidy approach can never scale up to meet the demand for more affordable housing. Only the free market can do that.

HB 2674 would free the market to do that by what it calls by right zoning. It was sponsored by Rep. Steve Kaiser, a Republican, and Cesar Chavez, a Democrat.

Under the bill, any land zoned agricultural or single-family residential would automatically be entitled to building up to eight homes to the acre or a dozen duplexes. Land zoned agricultural or multifamily would be automatically entitled to at least four-story apartment or condo buildings.

Cities would be out of the residential zoning density and design standards businesses. They would be limited to enforcing building safety codes.

The legislation wouldn’t override existing deed or covenant restrictions. In fact, under the Arizona Constitution, it couldn’t.

So, the bill wouldn’t have threatened existing upper middle class subdivisions or luxury home owners. Nor prevent such subdivisions and communities in the future, with their own density and design requirements and restrictions. There would remain a strong demand for that product.

But city zoning density and design restrictions could no longer deter the coming to market of starter homes and lower-middle class subdivisions. Or smaller lock-and-leave homes.

Should politicians or consumers decide?
The industry would still have to create places in which people wanted to live. That would be particularly true for owner-occupied homes, duplexes and condos, which represent a long-term investment.

And that raises a crucial practical and philosophical utilitarian question: Why the assumption that politicians and bureaucrats will make more optimal decisions about things such as zoning densities and design standards than customers making decisions for themselves in a freer market?

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By right zoning would be a big step. Zoning, done appropriately, eases real and potential friction between adjacent property owners and differing land uses. Those are quintessentially local considerations.

But if the conclusion is reached that local zoning and design standards are entrenched obstacles to bringing to market more affordable housing products for which there is a demand, then a big step would be warranted.

Reach Robb at robert.robb@arizonarepublic.com.

SOURCE: https://www.azcentral.com/story/opinion/op-ed/robertrobb/2022/02/16/city-zoning-nimbyism-make-affordable-housing-difficult-override-them/6799688001/

AUTHOR: Robert Robb

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