PHOENIX — Facing pressure from even some members of her own party, Gov. Katie Hobbs is now offering her own plan to override some city regulations to allow for more “starter homes.”

That plan is in some ways more restrictive than what the Senate just approved a week ago, applying to even more cities.

But it also comes with a provision that’s not in the Senate version: A requirement that a certain percentage of these new — and, presumably, more affordable — homes be reserved for Arizonans who intend to live there versus investors looking for a bargain.

Her move comes a year after the Democratic governor, at the behest of the League of Arizona Cities and Towns, vetoed a similar measure proponents said would make housing more affordable. She called it “unprecedented legislation that would put Arizonans at the center of a housing reform experiment with unclear outcomes.”

That hasn’t stopped proponents, including seven of the Senate’s 13 Democrats, from advancing the idea this past week that various rules and regulations have priced many Arizonans out of the ability to buy a home and need to go.

Sen. Shawnna Bolick, R-Phoenix, the author of Senate Bill 1229, agreed to some changes from the original vetoed bill to address concerns of cities. For example, it would preserve the rights of cities to charge “impact fees” on new developments to ensure they are paying their fair share of public services needed to serve the community.

That hasn’t satisfied the league. It wants only limited restrictions on the rights of city councils to decide what developments and the homes in them should look like. And it is backing a competing — and less-restrictive — version being advanced by Sen. Vince Leach.

So far, however, the Tucson Republican has been unable to even get his alternative scheduled for a hearing.

That leaves Bolick’s proposal — and, now, what the governor will consider.
Hobbs apparently likes some of what she sees in the Senate-passed bill. For example, the governor is willing to bar cities from requiring lot sizes that are greater than 3,000 square feet, the idea being the more homes per acre will cut down on overall costs.

Cities, in the Leach bill, wanted to be able to mandate 4,000-square-foot lots.
But the governor is willing to be flexible, applying that restriction on only some new homes being built.

For example, in a development of at least 10 acres, her plan would say that just half the homes would have to be on the smaller lots, with at least another quarter where cities can mandate lots of at least 5,000 square feet.

The purpose, according to press aide Christian Slater, is to ensure new developments have a mix of housing options.

Hobbs also says cities should not be required to set new homes back more than 10 feet from the street.

Cities wanted 20 feet. But the only place Hobbs says that is appropriate would be in front of a garage to ensure there is enough room for a vehicle of pretty much any size to park in the driveway.

The governor, however, is unwilling to tell cities they cannot require garages in new homes.

What Hobbs does want to do is bar cities from telling developers how homes and lots should look — to a point.

So, for example, she says cities should not be able to mandate rear yard patios and landscaping. Also beyond city reach would be “nonstructural ornamentation,” designs that have nothing to do with the structure of the home.

And those restrictions would carry forward to the development itself.

Nor could developers require walls, screens and fences except along land bordering nonresidential areas.

One thing that may create debate is the governor’s proposal is that, if approved, its restrictions would apply to all communities of at least 30,000 residents, meaning the rules would impact 30 of the state’s 92 cities. The Senate bill, by contrast, covers only the 15 cities with a population of 70,000 or more.

“We know that there are housing affordability issues not just in the largest cities in our state,” Slater said.

“The governor feels we’ve developed a thoughtful housing policy that will cut red tape and lower the cost of housing and build more starter homes,” he said.

“If it’s a good policy for cities greater than 70,000 people, then it should be a good policy for cities with that 30,000 threshold as well.”

But the biggest fight could come over how to ensure these new affordable homes wind up in the hands of those who need them.

Cities want to limit the initial sale of these starter homes to those whose income does not exceed 120% of the area median household income. That would translate to about $121,000.

That has proven unacceptable to affordable housing proponents like Rep. Leo Biasiucci.

“Doing that will just block out the people that need houses the most like teachers, nurses, police officers, et cetera,” he said.

The other alternative in the Leach bill would allow cities to require that starter homes be sold only to those who agree to live there for 15 years.
Hobbs is unwilling to go that far.

Instead, her proposal would allow cities to demand at least half of the homes on the smallest lots — those of 3,000 square feet — be sold to someone who intends to live there. Any sale within the first five years of construction would have to be to an owner-occupant.

“The governor wants to ensure that if we are building new starter homes that they are bought by Arizonans and not by corporations, investors, housing speculators,” said Slater. “We want to ensure that these starter homes go to everyday families who are looking for a place to live.”

Biasiucci said he has a particular concern with that five-year occupancy requirement. He said people might need to move for their jobs or face a layoff and need to sell their home.

Bolick said the bottom line to coming up with a deal is a recognition that something needs to be done to get families into their own homes.

“My parents were in their mid 20s when they bought their first home,” she told Capitol Media Services.

And now?

“The average age for someone to buy a house is 38,” Bolick said. “And it’s price is almost $500,000, which is insane.”

What remains unknown at this point is whether there is a compromise in the offing that will get the support of a majority of lawmakers and the governor’s signature.