Real-estate experts at the Arizona Multihousing Association’s recent Developer Forum praised the rezoning law the association worked hard to pass this year as key to building more apartments and solving the housing crisis.
“You’ve done a huge service in having this bill passed,” said zoning attorney Jason Barclay Morris of Whitney Morris Baugh PLC. “You can’t underestimate (the effort) it took to get it passed. It was monumental.”
Starting in 2025, the legislation signed by Gov. Katie Hobbs known as House Bill 2297, will allow developers to convert vacant strip malls, underused office buildings and commercial lots in large cities into apartments without going through a lengthy rezoning process.
Developers may save as much as a year’s time thanks to the law, Morris said.
“I’m already getting calls from clients saying, ‘How can we use this?’” he said. “We’re seeing it embraced as an economic development tool (by cities) like Phoenix.”
Economic impact of new law
Mark McFate, a multifamily land broker and vice president with CBRE, said housing affordability is a serious concern that could hamper the state’s economic growth.
Arizona is short an estimated 270,000 homes, according to the state housing department. And although apartment development has surged in the past two years, new starts are slowing, McFate said.
“We’re going to go into undersupply again,” he warned. “How do we create enough housing supply to make the Phoenix area an attractive growth market? … (This law) creates a really great framework and starts channeling the opportunities.”
According to a study commissioned by the AMA, the law could spur more than 150,000 units to be built in Maricopa and Pima counties, generating an estimated $61 billion in construction-related economic impact, plus more than 375,000 direct and indirect jobs and $4 billion in annual tax revenue.
“We all benefit from being in a place where people want to come and live. It’s what propels Phoenix forward,” McFate said. “Retaining affordability in the housing stock is a huge part of that.”
Next steps to increase multifamily housing
An essential benefit of the law for developers is lowering the risk of a project being blocked by anti-apartment city council members and staff or neighborhood opposition, said Joe Meyer, a partner with Meyer Development & Construction Services.
“It takes one aspect of the zoning uncertainty out of the equation,” he said.
Delays such as rezoning can cost hundreds of thousands of dollars, which are passed on to renters, Meyer said.
But even with the new law quickening the development timeline, significant roadblocks remain, which Meyer and the other panelists agreed may be useful for AMA to address in future legislation.
These include a shortage of qualified construction workers and subcontractors, allowing prior rights zoning and speeding up building permits.
Steve Kaiser, an AMA consultant and former lawmaker, said the association intends to continue fighting for the multihousing industry.
“The way you win at legislation is incrementalism,” Kaiser said. “Legislation takes collaboration. No one is going to get 100% of what they want, but we worked hard to work with the League of Cities (and other stakeholders). We established a beachhead with this legislation, and we plan to keep pushing forward.”
