Everyone agrees Tucson has a housing shortage. So why is the city making it harder and more expensive to build new places for people to live?
A 2024 study commissioned by the city found the region needs over 62,000 new homes and apartments by 2045 to keep up with population growth.
Filling that gap depends largely on developers seeing the city as an attractive place to build.
But for three years running, Tucson has raised fees and added regulations that make construction more costly. That’s a problem, because when building costs go up, housing prices go up too.
“This is Economics 101. If you increase the cost of building, you will discourage new housing,” said Courtney LeVinus, CEO of the Arizona Multihousing Association.
How much are fees actually going up?
The increases aren’t trivial. Here’s a snapshot of recent changes:
- $500,000 – cost for a large apartment community to comply with new Tucson EV charging rules
- 40-45% – increase in impact fees
- 20% – increase in fees for new water connections
- 11% – increase in valuation tables used to calculate development services fees
- 10% – increase in fees for sign, rezoning and entitlement permits
- 7% – increase in fees for development services
- 5% – increase in fees for site review, zoning and grading permits
- 3.5% – increase in rates for water customers
In addition, the city adopted the 2024 International Energy Conservation Code – a building code so burdensome that most municipalities in Arizona and Nationwide have declined to adopt it (or at the very least amend out the expensive mandates).
Not only that, now a new transportation fee will charge developers when construction projects block part of a street.
The Infill Paradox
Perhaps the most counterproductive move: Despite Tucson officials saying they want more infill development, they are raising fees specifically for those projects.
Building within Tucson’s “Infill Development District” – where parcels of underused land bordered by neighborhoods are intended for redevelopment – will now come with a 25% bump in special approval fees.
All of these costs add up fast and make projects unfeasible.
“If Tucson leaders are committed to addressing their housing stock, they may wish to reconsider these decisions or risk developers relocating projects elsewhere,” LeVinus said.
The Opposite of What’s Needed
Developers don’t have to build in Tucson. When regulatory costs stack up, projects move to cities with friendlier environments. That means fewer homes, more competition for existing units and higher rents. In short, it’s the opposite of what Tucson’s own study says is needed.
The city can’t solve a housing shortage by making housing harder to build. If Tucson is serious about meeting its 62,000-housing unit goal, reversing these fee increases would be a good place to start.
